A Closer Look At A Limited Liability Partnership As A Business Entity
Among the three kinds of partnerships—partnership, limited partnership, and limited liability partnership—it is the latter which features very limited liabilities in each of its partners.
Unlike the limited partnership that affords unlimited liability to the general partner and limited liability to the limited partner, all the partners in a limited liability partnership have a limited liability in any issues involving their business.
An LLP is composed of at least two partners (with no maximum number). Unlike other types of partnership, a limited liability partnership is considered a separate legal entity from its partners. Although partners have limited liability, they can sue or be sued under the name of the LLP. Still, unlike other partnerships, an LLP can acquire properties under its name.
When it comes to debts and other obligations, individual partners will be held personally liable for their own actions. Likewise, other partners will not be held liable for a partner’s personal liability.
Like the limited partnership, an LLP needs at least two partners who are either individuals or a corporate body. Individuals need to be at least 18 years old, and the corporate body needs to be either another LLP or a company.
An LLP also needs to have at least one local manager among its partners who is a Singapore citizen, Permanent Resident, or holder of Dependent Pass or Employment Pass. This local manager needs to reside in Singapore as well.
Compared with a company, a limited liability partnership is relatively easier and quicker to set up. It also enjoys lower costs and regulatory duties than a company, and it doesn’t need to comply with statutory requirements for meetings, directors, share allotments, company secretaries, and the like typically required in a company.
Unlike other kinds of partnerships, however, an LLP needs to file an annual declaration of solvency to indicate its ability (or inability) to pay off its debts under a normal business period.
An LLP needs to pay S$165 in total fees for registration. This includes the S$15 name application fee and the S$150 registration fee. A limited partnership, partnership, and sole proprietorship’s fees, meanwhile, are S$65 each.
An LLP’s income is taxed at the personal income tax rates of the partners if they are individuals, and at the corporate tax rate if the partner is a corporate body.
An LLP is also deemed perpetually existent unless it is voluntarily wound up by members or creditors or decided upon by the High Court. The Accounting and Corporate Regulatory Authority can also strike it off the Registry upon breach of any of the laws leading to dissolution.