Choosing the Right Business Type – Limited Liability Partnership
There are a few business types that are available in Singapore. One of them is the Limited Liability Partnership (LLP). If anyone is interested instead of registering a company or business in Singapore, they can actually opt for Limited Liability Partnership (LLP).
LLP is a business organization comprises two or more persons for carrying on a lawful business with a view to profit that is registered as such under the Limited Liability Partnership Act 2005.
In order to register for LLP, one must have at least two (2) partners. It can either individual who are 18 years old and above or body corporate (company or other LLP). In addition, LLP also requires at least one manager is an individual ordinarily resident in Singapore.
Despite of its name, it is not regarded as a partnership, the general partnership law does not apply to LLP. An LLP is a partnership where the individual partner’s own liability is generally limited.
As a body corporate with separate legal personality, it can therefore sue, be sued and own property in its own name. Apart from that, LLP is liable for its own debts and the partners and mangers of the LLP cannot be made liable for such debts. Each partner are assessed and taxed individually on their respective share of the profits in the LLP.
An LLP is capable of:
- Sue and being sued in its name
- Acquire and hold property in its name
- Have a common seal
- Doing such other acts and things in its name, as bodies corporate may lawfully do and suffer
However, LLP is not bound by the acts of a partner which are not authorized where either this fact is known to the person dealing with the partner or the person does not know or believe the partner to be a partner in LLP.
LLP allows the partners to retain the flexibility of a partnership agreement but it is not regulated by an identical set of legal principles governing partnership. On top of that, LLP is required to upkeep its financial records as well as report its financial status of solvency or insolvency annually.
In accordance with ACRA, one may choose to either striking off or winding up to dissolve an LLP. As for winding up, it can be member’s winding up, creditor’s winding up or compulsory winding up. On the hand, one may apply to ACRA to strike its name off the register pursuant to Section 38 of the LLP Act, whereby striking off an LLP will require at least 4 months’ time.
Knowing more about business forms that are available in the market now and having more understanding will help you to choose the right types of business to incorporate. One of the ways to achieve this is through engaging services provider. Feel free to contact 3E Accounting for more information.