Singapore
Limited Liability Partnership

LLP gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company. There must be a minimum of 2 partners. However there is no cap on the maximum number of partners in a LLP.

This type is highly favored by and suitable for individuals engaged in professional services such as lawyers, architects, accountants, management consultants etc. Foreign individuals and companies can form a LLP but must appoint a local manager. Citizens, Residents, Employment Pass holders, local companies can register a LLP.

However this comes with safeguards in law to minimize abuse and provide protection to parties who deal with the LLP. The LLP is a body corporate and has legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of a LLP does not affect its existence, rights or liabilities.

Merits

• Separate legal entity, hence partners are not personally liable for losses or debts, or wrongful acts of other partners. However a partner is personally liable for claims against his personal wrongful acts or omissions
• Compliance requirements are simpler as compared to private limited company

Demerits

• Constraints in transfer of ownership
• Still does not command a distinguished image as a private limited company
• Profits taxed at partners’ personal income tax rates if individual) or at corporate tax rate if corporation

LLPs are taxed in a similar manner as partnerships. This means that members of LLPs are treated as if they are carrying on business personally and taxed as self-employed. The members of LLPs are also treated for taxation purposes as owning the assets of the business personally.