Private Company vs. LLP in Singapore: Which Business Structure Suits You?

Various factors need careful consideration when it comes to selecting the most suitable business structure for setting up a business in Singapore. Today we will navigate into the choice between a Private Limited (Pte Ltd) company and a Limited Liability Partnership (LLP). ?Let’s look at a detailed comparison of Pte Ltd and LLP across key dimensions:

1. Cost of Setting Up:

Pte Ltd: The initial cost of setting up Pte Ltd is higher comparatively.

LLP: In contrast, the setup costs for an LLP are more economical.

2. Requirements of setting up:

Pte Ltd: Mandatory appointment of a local director and a corporate secretary

LLP:? Mandatory appointment of at least one manager who is a local resident. There is no statutory obligation to appoint a company secretary.

3. Tax Rate:

Pte Ltd: Pte Ltd companies are subject to corporate tax rates, capped at 17%, which offers stability and predictability in taxation.

LLP: LLPs are taxed based on personal tax rates, may face rates as high as 22%, potentially impacting smaller businesses and startups.

4. Annual Reporting:

Pte Ltd: Annual reporting for Pte Ltd companies involves compliance with requirements such as corporate secretarial reporting, holding AGMs, and submitting unaudited financial accounts, ensuring transparency. This, however, also increases administrative burdens.

LLP: LLPs have simpler reporting obligations, limited to submitting a solvency or insolvency declaration annually, streamlining compliance efforts.

5. Number of Owners:

Pte Ltd: Offering flexibility, a Pte Ltd company can have one to 50 shareholders, accommodating diverse ownership structures and investment scenarios.

LLP: With a minimum requirement of two partners and a maximum cap of 20 partners, LLPs foster collaboration and equality among partners.

6. Liability and Legal Status:

Pte Ltd: Members of Pte Ltd benefit from limited liability protection, wherein their personal assets are protected from business liabilities. Additionally, Pte Ltd has a separate legal identity, distinct from its members and directors.

LLP: Partners in an LLP enjoy similar limited liability protection, safeguarding personal assets from partnership debts. However, partners may be personally liable in case of any wrongful actions or omissions.

7. Ease of Setup:

Pte Ltd: Despite higher setup costs and stricter compliance requirements, Pte Ltd offers a recognized corporate structure with established credibility in the business landscape.

LLP: With lower setup costs and simplified compliance obligations, LLPs provides an accessible entry point for startups and professional service providers who seek operational flexibility.

8. Capital Raising Potential:

Pte Ltd: Pte Ltd companies have access to funding from investors and banks, as they can raise capital by issuing shares. This ease of capital raising boots operations and growth opportunities.

LLP: While LLPs can raise capital through bank loans or partnerships, it may be challenging as raising capital depends on the credibility of the partners. Limited options for business grants and ineligibility from certain government schemes further may limit funding potential.

Summary of the Key Differences between Pte Ltd companies and LLPs in Singapore

Looking to set up a business in Singapore but unsure which company structure suits you best? Water & Shark offers expert analysis and guidance to help you choose a business structure best suitable for your business. Our team of experts provide hassle- free smooth setup, ensuring compliance and optimal tax planning to maximize your growth. Contact us for consultation and let us be trusted partner in navigating Singapore’s Business Landscape