What is a Limited Liability Partnership (LLP).
A Limited Liability Partnership (LLP) is a type of business entity that combines the features of a partnership and a company. It is formed by two or more partners who agree to carry on a lawful business with a view to profit. It is a separate legal entity from its partners, and it has perpetual succession. It can own property, sue and be sued, and enter into contracts in its own name.
Key features of LLPs:
They provide limited liability protection to their members. The partners are not personally liable for the debts or obligations of the LLP, unless they are caused by their own negligence, fraud, or misconduct. The liability of each partner is limited to the amount of capital they have contributed to the LLP.
They offer flexibility and autonomy to their members. Partners can manage the business according to their own agreement, without being bound by any statutory rules or regulations. The partners can decide on the profit-sharing ratio, decision-making process, and admission or exit of partners.
They have a simple and low-cost registration and compliance process. LLC’s only need to register with the Accounting and Corporate Regulatory Authority (ACRA) and renew their registration every year. They do not have to file any financial statements or annual returns with ACRA, as they are not subject to audit requirements.
They are taxed as pass-through entities. This means that the income of the LLP is taxed at the personal income tax rates of its partners, which range from 0% to 22%. The LLP does not have to pay any corporate income tax, as it is treated as a pass-through entity for tax purposes.
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Key Advantages of an LLP
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Limited Liability Protection: It provides a corporate shield. Partners are not personally liable for the business debts of the LLP, nor are they liable for the negligence or misconduct of other partners. - ✓
Operational Autonomy: It offers exceptional internal flexibility. Partners can manage the business according to a private Partnership Deed without being bound by strict statutory corporate governance rules. - ✓
Lower Compliance Costs: The registration and maintenance processes are streamlined. An LLP is exempt from appointing a Corporate Secretary, holding Annual General Meetings (AGMs), and filing audited financial statements with ACRA.
Drawbacks to Consider
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Pass-Through Tax Penalties: Profits are taxed directly at the partners’ personal income tax rates (which can reach up to 24%). LLPs also do not qualify for Singapore’s lucrative Start-Up Tax Exemption (SUTE) scheme. - ✕
Funding & Scaling Limits: Because an LLP cannot issue shares, it has severely limited access to capital. It is highly unattractive to Angel Investors and Venture Capitalists compared to a Private Limited company. - ✕
Strict CPF MediSave Compliance: Local partners are classified as self-employed. They must ensure their mandatory CPF MediSave contributions are fully paid up based on their trade income; otherwise, ACRA will block the renewal of the business registration.
Essential Statutory Requirements
Pass-Through Taxation
The LLP itself pays 0% corporate tax. Instead, income is treated as a pass-through and taxed at the partners’ personal income tax rates (ranging from 0% to 24%).
Mandatory CPF Contributions
The entity must contribute to the Central Provident Fund (CPF) for any local employees it hires. Additionally, local partners must ensure their own MediSave obligations are met.
The 5-Year Record Rule
LLPs must maintain orderly, audit-ready accounts, invoices, receipts, and bank statements for a minimum of five years to legally support business transactions.
Local Registered Address
The business must maintain a physical, registered address in Singapore (residential or commercial) to receive official correspondence. PO Boxes are strictly prohibited.
Resident Manager Requirement
The LLP must appoint at least one manager who is ordinarily resident in Singapore (A Citizen, Permanent Resident, or eligible Pass holder). This manager must be at least 18 years old and holds the authority to manage the affairs of the business.
Minimum Requirements to Register an LLP
Before incorporating your Limited Liability Partnership with ACRA, ensure your founding team meets these baseline statutory requirements.
Minimum 2 Partners
Can be individuals or corporate bodies (local or foreign).
1 Local Manager
Must be a Singapore Resident aged 18 or above.
Registered Address
A physical local address (Hub can provide a virtual office).
Approved Name
Must be unique and not identical to an existing entity.
Documents Required for Registration
To ensure a smooth, same-day incorporation process, you will need to prepare the following documents for all proposed partners and managers:
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Copy of NRIC (for Singapore Citizens/PRs) or Passport (for foreigners). - ✔
Proof of residential address (e.g., utility bill or bank statement).
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For corporate partners: Certificate of Incorporation and Business Profile. - ✔
Declaration of compliance and consent to act as Manager.
Hub Tip: While not legally required by ACRA during registration, it is highly recommended to draft a formal Partnership Agreement to clearly define profit sharing, dispute resolution, and partner exit strategies.
LLP vs. Private Limited Company (Pte Ltd)
Not sure if an LLP is right for you? Compare the crucial differences between Singapore’s two most popular business entities.
| Feature | Limited Liability Partnership | Private Limited (Pte Ltd) |
|---|---|---|
| Legal Status | Separate legal entity | Separate legal entity |
| Ownership Structure | Partners (Minimum 2) | Shareholders (1 to 50) |
| Tax Treatment | Pass-through (Personal tax rates up to 24%) | Corporate tax rate (Flat 17% with Start-up Exemptions) |
| Statutory Compliance | Low (Annual Declaration of Solvency only) | High (AGMs, Annual Returns, ECI, Form C-S) |
| Company Secretary | Not Required | Mandatory (Must appoint within 6 months) |
| Raising Capital | Difficult (Cannot issue shares) | Highly scalable (Can issue shares to investors) |
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