Partnership and Sole Proprietorship Registration
Partnership and Proprietorship are the 2 main types of businesses you can registered if you do not wish to register a Company. You can register your business with Accounting and Corporate Regulatory Authority (ACRA) online via ACRA Bizfile.
Let us examine the difference between Sole Proprietorship and the different types of partnerships.
Sole Proprietorship is usually a single owner business which is administratively easier to set up and maintain. However, it is more suitable for small business. Unlike a Company, a Sole Proprietorship has no Corporate Secretarial issues like passing resolution and filing Annual Return. It only needs to renew the business periodically (either every 1 or 3 years) via ACRA Bizfile.
The income from a Sole Proprietorship is not separated from the owner and therefore its income flows directly to the owner and is assessed together with other income like employment income and rental income for personal income tax assessment. If the Sole Proprietorship runs out of money to pay its debt, the owner is liable to settle it with his or her personal money. In accounting terms, the Sole Proprietorship does NOT have “Limited Liability”. That means its liability is not limited to the Sole Proprietorship and the owner may lose his or her personal assets like house and car if the Sole Proprietor has financial difficulty.
Partnership business in Singapore behaves very much like two or more Sole Proprietors come together to form a business. Each owner is called a Partner and share the profit based on their Capital injection. A Partnership must be formed by at least 2 owners or Partners.
Similar to Sole Proprietorship, the profit of the Partnership will be added to the other income of the Partner for individual tax assessment purpose. Partnership does NOT have “Limited Liability”. If it is unable to settle the liability, all Partners will be personally liable for it. If there is any malpractice lawsuit against a Partner as a result of his or her negligence, the liability from the lawsuit will spread to the other Partners (i.e. other Partners’ personal assets will be used to settle the liability).
A Limited Partnership is one with a General Partner who is responsible for managing the day-to-day business activities. The other Limited Partners or Sleeping Partner does not participate in decision-making of the business. They just invest in the Partnership.
The General Partner does NOT have “Limited Liability” while a Limited Partner or Sleeping Partner has “Limited Liability” protection (i.e. he or she will only lose up to the amount of capital injected into the Partnership).
Similar to Sole Proprietorship, the share of profit of the Partnership will flow to the Partner and assess together with his or her other personal income for tax assessment.
Limited Liability Partnership
A Limited Liability Partnership (LLP) can have many General Partners managing the day-to-day business activities and all partners have “Limited Liability” protection. If the liability arises as a result of the act of a partner (e.g. negligence), the partner will be personally liable to the extent of his or her personal assets. However, the other innocent Partners’ personal assets will be protected from such liabilities and will only lose up to the capital contributed to the LLP.
Unlike the General Partnership and Limited Partnership, LLP can own a property as if it is a separate entity. It is a mandatory requirement to appoint a Manager for the LLP and the Manager must perform the duties and carry out the obligations of a Manager as set out in the LLP Act. In brief, the Manager must perform the following duties:
- Lodge annual declaration of solvency or insolvency with ACRA,
- Ensure that the LLP’s name, registration number and a statement that it is registered with limited liability are printed on invoices and official correspondence, and
- Lodge changes in particulars of the LLP, Partners and Manager with ACRA.
Share of profit of the LLP will flow to the individual Partner and be assessed to tax similar to that of other Partnership (i.e. added to the Partner’s other income for tax assessment).
Financing Cash Flow
Cash flow may sometimes be an issue when it is a Sole Proprietorship or Partnership set up. Speak to us and let us find various financing options for your business to keep it going.
Sole Proprietorship and Partnership may not be able to set aside a budget for hiring a Tax Specialist. With us, you can have a Tax Specialist without the cost of hiring one. Our helpful Tax Accountant will be able to advise you and file your tax return - personal tax, corporate tax and goods & services tax.
Need Assistance Setting Up a Partnership or Sole Proprietorship?
We can set up any form of Partnership or Sole Proprietorship business for you. Most importantly, it is our practice to understand your needs and business functions and operations first and determine if Sole Proprietorship and Partnership business setup works well for you. We also provide Accounting Services, Tax and Consultancy Services, and offer Accounting Software at special prices. Give us a call now at or email us for more information.