|Definition & Ownership
|Legal Status & Liability
|Set-Up & Admin
|Private Limited Company
|A business entity registered under the Companies Act, Chapter 50. Most companies in Singapore are private – “Private Limited (Pte Ltd)” – up to 50 owners. Your company becomes public – with no limit on owners – when it can offer shares, debentures and other interests to the public. The owners of the company are called shareholders. There must be a minimum of one share owned by one shareholder. The value of the share can be just SGD$1.
|It is a legal entity (i.e. it can sue or be sued in its own name and can own or hold any property).
|Profits are taxed at corporate tax rates.
|There are more formalities and procedures to comply with, e.g. appointment of directors, annual general meetings, shareholder resolutions. There must be at least one shareholder and one director. They can be the same person. However, most companies opt to have at least 2 directors as banks and other financial institutions usually require 2 signatories. Directors cannot be bankrupts or persons convicted of dishonesty.
|Limited Partnership (LP)
|A limited liability partnership with limited partners. Minimum of 2 partners, with at least 1 general partner and at least 1 limited partner. No limit on number of partners.
|It is not a legal entity (i.e. it cannot sue or be sued in its own name and it cannot own or hold any property). A general partner has unlimited personal liability and can be appointed as the manager of the LP. A limited partner is not liable for any debts and obligations beyond his agreed investment in the LP. If a limited partner takes part in the management of the LP, he will have unlimited liability as if he were a general partner.
|An individual’s income from the LP will be taxed at personal income tax rate. The company’s income from the LP will be taxed at corporate tax rate.
|Investors may be more willing to join as silent partners, as liability for non-general partners is limited. There is no need to audit or file annual returns, but you must keep accounting and other records to explain its transactions and financial position for at least 5 years. If a LP does not have any limited partners, the LP registration will besuspended and the general partners will become registered under the Business Registration Act as a partnership instead.
|Limited Liability Partnership (LLP)
|A partnership with a minimum of 2 partners. No limit on number of partners.
|It is a legal entity (i.e. it can sue or be sued in its own name and can own or hold any property). It is compulsory for all LLPs to appoint a local manager. The personal assets of the partners areprotected and owners are not personally accountable for the wrongful acts of other owners. Any changes in the LLP (e.g. resignation or death of partners) do not affect its existence, rights or liabilities.
|An individual’s income from the LLP will be taxed atpersonal income tax rate.The company’s income from the LLP will be taxed atcorporate tax rate.
|LLPs combine the limited liability features of companies with the operational flexibility of partnerships. There is no need to audit or file annual returns with ACRA but you must make an Annual Declaration that the LLP can pay its debts.
|A business firm owned by 2 -20 individuals or companies.
|It is not a legal entity (i.e. it cannot sue or be sued in its own name and it cannot own or hold any property). Each partner is personally accountable for all risks, debts and losses.You can also be made accountable for losses incurred by other partners.
|Profits form part of each partner’s personal income and are taxed at personal income tax rates.
|Quick and easy to set-up and administer.Draw up a Partnership Agreement that defines the role, responsibilities and profits due to each partner. Partnerships are automatically dissolved when a partner exits or dies. The remaining partners will have to form a new partnership.
|A business firm with only 1 owner.
|It is not a legal entity (i.e. it cannot sue or be sued in its own name and it cannot own or hold any property).The owner is personally accountable for all risks, debts and losses.
|Profits are taxed at personal income tax rates.
|Set-up and administration requirements are the simplest and least complicated.