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LLC Vs LLP Vs Sole Proprietorship

Following excerpt shows the comparison between LLC vs. LLP vs. Sole Proprietorship. All three are different in their scope, purpose, and responsibility. It is wiser to incorporate an LLC i.e. a private limited company in Singapore, due to various advantages it brings along.

The fast-track incorporation of companies in Singapore and low progressive taxation implemented there has lured investors, individual entrepreneurs as well as corporate entities to the Singapore. This has increased the number of companies that are being incorporated in Singapore tremendously. Singapore Citizens and permanent residents are also forming their own companies to take the advantage of the situation.

The scalability, flexibility and acceptability and in turn, success of a business depends to some extent, on the business structure selected for it. A local entrepreneur can choose to incorporate a Limited Liability Company (LLC) also known as Private Limited Company (PLC), a Limited Liability Partnership (LLP) or a Sole Proprietorship to fulfill his business needs. These business structures have certain differences in their scope of operations, purposes and responsibilities.

The table given below compares these companies which may help you in knowing more about them.

Comparison: Singapore LLC vs LLP vs Sole Proprietorship

Comparing Factors LLC (Pte. Ltd) LLP Sole Proprietorship
Legal Status Separate legal identity Separate legal identity Not a separate legal identity
Debt & Liabilities Ownership Limited Liability. Every shareholder’s extent of liability is limited to his investment in the company Limited Liability. Every partner’s liability is limited uptil the extent of his investment in the LLP Unlimited Liability. The owner has to bear the responsibility and is personally accountable for debts and losses
Succession Abilities Not limited to the death or retirement of the members, has an enduring structure Not limited to the death or retirement of the members, has an enduring structure Lack of enduring structure and perpetual succession
Ease of Raising Capital Easy to raise capital, since banks and financial institutes view credibility in an LLC Difficult to raise capital. Have to remain limited to private finances and partners’ contributions Difficult to raise capital. Have to remain limited to private finances and partners’ contributions
Registration Timeline 1-2 days 1-2 days 1-2 days
Taxation Regime Profits are taxed at corporate tax rate, i.e. below 9% for profits up to SGD 300,000 and capped at 17% for profits above SGD 300,000 Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime
Transference of Ownership Easy to transfer partial or full ownership of the company, by simple transfer of shares Difficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits Difficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits
Maintenance Requirements More complex structure, hence the need of major setup/compliance costs and paperwork Moderate setup, hence the compliance costs and paperwork are comparatively lesser than an LLC Minimum setup, hence the compliance costs and paperwork are a bare minimum
Point of View of the Public Holds highest credibility and has a strong public perception Holds moderate public image, and comparatively lesser credibility Holds low public perception, and hence has a low image
Dissolution Procedure Needs a strike off process, which is intricate, involves a lot of complexities, and legal compliances Needs a strike off process, which is comparatively less intricate and involves a less number of compliances, than an LLC Least complex, basically involves issuing of a notice of termination, followed by a notice of cessation to registration authorities

The snippets of information presented in the table gives enough information for a local entrepreneur to decide which company type is more suitable for his business. We incorporate companies in Singapore for our clients. The incorporation experts at Singapore Accounts are always ready to help you in registering your company. They can also advice you on the business structure most suitable for your business.

If you want to incorporate an LLC, LLP, or a sole-proprietorship in Singapore, just give us a call on +65 6536 0036 or mail us at info@accountingservice.com.sg