There are plenty of business structures and business entities in Singapore that help entrepreneurs and small businesses to take shape and propel their business plans. Furthermore, with a stable regulatory system and a business-oriented environment, individuals and international companies can have the certainty that their investments and efforts to run a business will be protected.
In Singapore, the government recognizes 4 basic business structures, the Sole Proprietorship and the General Partnership being grouped in the same category as they’re the simplest of the structures, the limited partnership, which is a different version of a Partnership, the Limited Liability Partnership, which is a new form of business structure, and the Singapore registered company, which one of the most widely used forms of business structures.
In this article, we will focus mainly on the Ordinary Partnership business structure, which is also commonly known as the General Partnership. Some of the topics to explore are: what it is, what needs to be formed, and the steps to register this type of business in Singapore.
What is a General Partnership?
It’s important that, before we go into detail about what it’s a General Partnership, we analyze another word first, the word Partnership. In Singapore, when more than two interested parties get together to form a business, to produce profit, a Partnership can be generated. The maximum number of partners is 20. The parties that are involved in a Partnership are colloquially known as partners. Different from other legal entities, Partnerships are ruled by the Partnership Act, which is different from the Limited Partnership Act, in which its conduct is regulated.
A Partnership agreement is an essential element that must be prepared to form a Partnership, in any of its forms. But why do you need this agreement? With this (document), you can start your business on the same level as your partner(s). The agreement will establish who is who, the tasks, and the liability of each partner. For (general) partners, all the partners have unlimited liability. While, in the limited (partnerships), a limited partner is only responsible for the amount they helped the business with.
A defining element of a (General or Limited) Partnership, is that it’s not a separate legal entity from its founding partners. This means that (General and Limited) partners expose their (personal) assets. Any debt that the business gets, will be covered by them. Moreover, it’s not considered to be a corporation, therefore it’s not subject to corporate tax in Singapore, but rather the profit made by the individuals will be taxed as Personal Tax.
What is required before registering for General Partnerships?
General Partnerships in Singapore have a simple nature. But still, there are a few conditions to create one. For example, if an individual wants to become a partner, they need to be 18 years old. Residents, and people with a visa, can become partners. Foreigners and (foreign) companies can form a partnership too.
Now, thinking about the documentation and information needed, here we prepared a list of some elements:
- You need to find a name for your business.
- For the partners, they will need to provide a copy of their identity documents (Singapore ID or passport).
- Don't forget that you will need their residential address proof as well!
- Choose a (physical) address to register your business.
- If you are not going to be the manager, you can hire a person to act as the manager of your partnership!
- Keep in mind that a manager needs to sign a non-disqualification document to be hired. Don’t skip this step!
- The partnership agreement is crucial! It’s the framework of your business, so take your time to prepare it.
- And finally, get the signature of the compliance declaration from all the partners.
As the (general) partners will be the ones involved in running the business, some of the documentation needed will be of their details. For this reason, the more defined the roles and tasks, the smoother the process will be.
How to register for General Partnerships?
Sorting out the roles and duties of each of the partners is important. Don't take it lightly! If you prepare all the documents and have a defined structure, you should submit your application to the ACRA (Accounting and Corporate Regulatory Authority). The steps to take are the following:
- Business name verification: choosing a name for your business is a pretty standard but important step. Don't take it lightly! Also, don't use confusing or offensive words, or you will face the consequences of the Business Names Registration Act! After checking that your business name is available, it needs to be approved by the authorities to be used.
- Application submission to the authorities: the application to register a business structure in Singapore needs to be realized through the (government platform) Bizfile+. If the application is successful and no further investigation or referral is done by the ACRA (Accounting and Corporate Regulatory Authority) to other government agencies, the partnership could be approved after 24 hours. But, in some (extreme) cases, it will be reviewed and last for 2 months.
Business Account
The issue of running a business is that it needs to send and receive money. People can assume that, since a (general) partnership is very simple, and it’s formed between individual (partners), each of them can use their (personal) account. But in practice, (general) partnerships need their own (business) account. Here we enlist some options:
- Business (corporate) bank account: a service that is provided by a banking institution, getting a (bank) account can prove to be time-consuming. Also, each (banking) institution may have different requirements.
- Business (digital) account: a choice that startups and SMEs (small and medium enterprises) adopt are the (digital) accounts. If you’re searching for a solution to start your transactions (right away) after the incorporation, you can try Statrys.
Foreigners registering a General Partnership
As we have previously mentioned in the registration section, foreigners can set up a Partnership in Singapore. However, a foreigner needs to be a Permanent Resident of Singapore to carry out the registration by himself or herself through the Bizfile+ system.
If the partners are all currently living outside of Singapore, they would possibly not have access to this system under the Singpass, which is a multipurpose access account for Singapore residents. In this situation, they would need to designate an authorized representative that is a Singapore resident and contact a professional service provider to do the registration process on their behalf.
In the scenario of having all the partners living outside of Singapore, they can hire a manager based in the country. If they don't wish to do so, it’s possible for a (foreign) partner to relocate to Singapore. But, keep in mind, it will need to be approved by the MOM (Ministry of Manpower).
Conclusion
General Partnerships help individuals to formalize a business relationship. Think about it in a way that sets a more defined line of roles and duties. It’s a better way to organize your business and improve your operations! But remember, forming this type of structure will expose the assets of the partners! There are other forms of business that can protect you and your investment in a better way.
A person is safer by being a shareholder instead of a General Partner since companies have a separate legal identity! Our advice is to explore the options and consult the experts, they can guide you on your decision!
