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Process for Upgrading Sole Proprietorship or LLP to LLC

Get in touch with us to know about the process of upgrading sole proprietorship or LLP to LLC. We offer the best incorporation services at the lowest rate. We help you in making the process of conversion of your company to an LLC, a very smooth process.

A private limited company, as a business structure, is a versatile and powerful business entity. It is also known as an LLC, a PLC, a corporation, a Pte Ltd and a Pvt Ltd. It is registered under the Singapore Companies Act, Chapter 50 and adds, ‘Pte. Ltd,’ as a suffix to its name to denote its status.

A Singapore owner thinking of converting his or her sole proprietorship or Limited Liability Partnership (LLP) to LLC is on the right track because there are many advantages related with such a conversion. This will make your company more scalable, flexible and acceptable in the eyes of your customers, suppliers and creditors.

The conversion will;

1)      Enable your company to expand its business activities.

2)      Offer security to the company’s assets.

3)      Reduce your personal liability.

4)      Bring tax incentives to the company.

5)      Make raising capital for expansion easy.

An owner must remember that,

  1. A PLC or LLC is a separate legal entity.
  2. It pays its own corporate tax on its taxable income.
  3. Dividends paid to its shareholders are tax free.

Steps to Convert a Sole Proprietorship or LLP to an LLC

Following are some details on how to convert a sole proprietorship or an LLP to an LLC.

  1. The business owner has to incorporate a new ‘Pte Ltd’ company and at the same time, let the authorities know that it is going to take over business activities of an existing firm (sole-proprietorship or the LLP). The details must also include the date of cessation of sole-proprietorship or the LLP.
  2. Each and every business contracts and the assets of sole-proprietorship or the LLP must be transferred to the new Pte Ltd.
  3. Terminate the sole-proprietorship or the LLP and notify the company Registrar about the cessation of business activities of the old business firm.

#1 Register a New Private Limited Company

Check with the ACRA’s business e-portal and get the proposed name of the new company approved. If you want to retain the name of your old business then, you will have to submit ‘No Objection Letter’ to the company registrar.

The old business must stop its operations within the 3 months from the incorporation of the new company.

#2 Transference of Business Undertakings from the Existing business to the New LLC

The business matters of the sole-proprietorship or the LLP must be transferred to the new Pte Ltd.

Assets and Liabilities

An agreement or resolution giving details about how to take care of assets and liabilities of the old business is required. The assets can be converted to paid-up capital after clearing all the outstanding dues to the creditors of the old business.

Bank Account

A new corporate bank account for the Pte Ltd Company should be opened and those in the name of the sole-proprietorship or LLP should be closed.

Lease Agreement

The lease agreements in case of rented properties, machinery, tools or vehicles need to be re-signed under the name of the new Pte Ltd Company.

Contract Agreements

All the existing business contracts and service agreements need to be reworked and re-signed under the new Pte Ltd Company’s name.

Permits

The company owner or its director has to get a fresh set of licenses for the new company.

#3 Terminate the Old Sole-Proprietorship or LLP

Within the 3 months from the incorporation of the new Pte Ltd Company, old business should cease to exist. ACRA needs a ‘Notice of Cessation’ within the same period from the business owner.

In case of an LLP, the business owner can decide to strike it off or wind it up. Winding up of a company is a much more complex process than striking a company off.

A professional service which is bound to be more used to this type of activities is needed to be hired for the conversion of a business. Singapore Accounts is always there to help you in incorporation of any type of business in Singapore.

Please feel free to contact us on +65 6536 0036 or drop in an email at info@accountingservice.com.sg