Starting a business in Singapore is not complicated and there are several ways for a foreign company or an entrepreneur to get started. The simplified registration process in Singapore will help your business! One of the simplest structures available in the country is the Partnership. They can be formed as a General or Limited (partnership).
For this article, we will be discussing only the Limited Partnership. Some of the topics that we will be expanding on are what are some of the characteristics of this business structure, the requisites for the formation of a Limited Partnership, as well as the steps required to take to formally establish one in Singapore. In the next section of this article, we will show more details.
What is a Limited Partnership?
To understand this kind of business structure, we must get the basic concept first. A Partnership is when two parties, or more, get into business together to generate a profit. The parties involved in a partnership are later known as partners, and there should be a minimum of two partners.
Just as with any kind of partnership, a Limited Partnership needs to have a Partnership Agreement. However, this document varies from the one prepared for a General Partnership. In the case of a Limited Partnership, the roles of the partners need to be specified, since the liability changes from partner to partner. Failing to have a Limited Partner will convert this type of business into a General Partnership since it is specified in the Limited Partnership Act, the legislation that regulates the conduct of this kind of business.
Limited Partnership vs. General Partnership
One of the main differences between the General Partnership becomes more once we contrast it in this way:
- A Limited Partnership has a General Partner who has unlimited liability, while the other partner is known as a Limited Partner and his or her liability is limited to their contributions.
- The Limited Partners have a similar role to investors since they are not involved in the day-to-day operation of the business.
- General Partners, are the ones in charge of running the profit-making activities and can reinvest them into the business.
- In a general partnership, all the general partners have the same level of liability.
On another note, Partnerships are different from other types of business structures in the way that they are not recognized as corporations, therefore they are not considered to be a separate legal entities, making the partners personally liable for the debts and other obligations that the business contract from running the operations. Furthermore, as not considered as corporations, the income that is generated by the partners will be considered as being personal income, and it will be taxed as such.
Now that we have a better understanding of the Limited Partnership, we can move into the requirements and considerations section.
What are the requirements before registering for Limited Partnerships?
There are no specific requirements to be fulfilled to register a Partnership, in this case, a Limited Partnership. Besides that, each individual must be 18 years or older, and there are no limitations on nationality. However, some documents and elements of the business need to be prepared in advance, here we will enlist them:
- Choosing a business name.
- Identification documents and proof of residential address of the partners.
- A physical address in Singapore to register as the business address.
- Designation of a manager and preparing the non-disqualification to act as a manager.
- The Partnership agreement must include a signed declaration of compliance of all the parties involved.
Once all the above-mentioned elements have been prepared, the registration process can be started. More about the steps will be discussed in the next section of the article.
What are the steps to register a Limited Partnership?
For the process of registering a Limited Partnership, there are a few steps to take once all the information has been gathered. In this section, we will mention how the process normally takes place:
- Verification of the business name: As per the “Business Names Registration Act”, a business that wishes to register in Singapore must choose a name that is not currently in use, and does not contain any offensive words. In the case that your chosen business name is already taken, an alternative name must be submitted.
- Business registration submission to the Bizfile+: an authorized person must log in to this platform to submit the application to the Accounting and Corporate Regulatory Authority (ACRA). The authorization can be approved within 24 hours after the submission. Nevertheless, in some cases, it can take up to 2 months if further verification is needed with other government agencies of Singapore.
Other considerations for foreigners
The foreign nationals that wish to establish a Partnership in Singapore, in this case, Limited Partnership, need at least one of the partners to be a Permanent Resident of Singapore. In the case that none of the partners is a Singapore resident, they need to appoint a Singapore resident as the authorized representative and seek the assistance of a professional firm that can help with the registration process through the platform Bizfile+.
Additionally, if a foreigner wishes to reside in Singapore for the effect of taking control of the operation of a Partnership, they need to seek approval first from the Ministry of Manpower of Singapore (MoM). Otherwise, the appointment of a local manager must be done to run the business on behalf of the other partners.
Conclusion
A Limited Partnership doesn't have a complicated business structure! However, there are several considerations to take, before choosing to establish one. Although a general partner is in charge of running the business, it is the person with the highest exposure to risk in the partnership! If we compare a Limited Partnership, to other business forms, there is an uneven situation between its partners. Individuals who seek to register a Limited Partnership should consult with the experts and get their questions solved. Understanding all the risks involved in this business structure will help to take the best decision for your business!
FAQs
What is a Limited Partner?
As Limited Partnership is formed by two individuals. One of them is the limited partner, who virtually works like an investor. By assuming this role, this type of partner cannot interfere in the daily operations of the business. Although they have less saying in the business decisions, they are more protected than the other partner(s).
Limited Partnership, what is the difference with the other type of Partnership?
