Limited Liability Partnership (LLP) Registration
LLP was introduced on 11 April 2005. It is a type of business entity registered under the Limited Liability Partnership Act.
Features of a LLP
- LLP can be formed by registration of a new LLP, conversion of business to LLP and conversion of company to LLP.
- Easy to register but not easy to close
- Hybrid between company and partnership.
- The partners can be natural persons, companies or natural persons and companies.
- There must be a minimum of 2 partners. There is no maximum number of partners in a LLP.
- It is a separate legal entity (i.e. it can sue or be sued in its own name and can own or hold any property).
- For tax purposes, each partner will be taxed on his or its share of the income from the LLP. Where the partner is an individual, his income from the LLP will be taxed at personal income tax rate. Where the partner is a company, its income from the LLP will be taxed at corporate tax rate.
- Perpetual succession
- Limited liability – The personal assets of the partners are not at risk. In addition, owners are not personally accountable for the wrongful acts of other owners. However, partners can be personally accountable for debts and losses resulting from their own careless actions.
- Separate Legal Entity – Can own property in its own name, enter into contract, etc.
- Perpetual succession – Any changes in the LLP (i.e. resignation or death of partners) does not affect its existence, rights or liabilities.
- Ease of Compliance – Like partnerships, there is no need to audit or file annual returns with ACRA. However, the appointed manager must make an Annual Declaration to ACRA stating whether the LLP is able to pay its debts as they become due in the normal course of business.
- Individual partners can commit the partnership to formal business agreements without the consent of the other partners.
- Money and property contributed to the LLP becomes owned by the partnership unless otherwise stated, and the contributor is not entitled to its return except as stated in the partnership agreements
- No corporate tax benefits as compared with a company.