Difference between proprietorship and partnership and llp
LLP is also a form of partnership, where the liability of partners is limited as well as any partner will not be held liable for the acts of other partners. General Partnership , on the other hand, brings unlimited liabilities to the partners concerned and so they are jointly or severally liable for the debts. Are you planning to commence a business or want to expand the existing one? You have to take an important decision here, regarding the selection of the form of business organisation.
- Difference between LLP, Pvt Ltd, OPC, Partnership and Proprietorship
- Singapore LLC vs LLP vs Sole Proprietorship
- Private Limited Company vs LLP vs OPC vs Partnership vs Sole Proprietorship
- Major Differences Between Sole Proprietorship & LLP in India
- LLC vs LLP vs Sole Proprietorship – Guide to Business Structures in Singapore
- LLC (Private Limited Company) vs LLP vs Sole Proprietorship
- Differences between Limited Liability Partnership (LLP) and Partnership
- Difference Between Sole Proprietorship and Partnership
- Difference Between Partnership and Limited Liability Partnership (LLP)
Difference between LLP, Pvt Ltd, OPC, Partnership and Proprietorship
Choosing a business structure that suits your enterprise is one of the most important decisions you will make in starting a business. The type of structures that business owners choose are varied. In Singapore, companies are the most popular form of business structure. In , there were approximately , active foreign and local companies in Singapore. Companies are a popular option for serious business owners as they offer many long-term advantages and provide a more credible image.
Sole proprietorships are also widely popular among Singaporeans, with approximately , active sole proprietorships in Contrasted to companies, sole proprietorships are suitable for small, home-run businesses as they provide greater flexibility and more relaxed reporting requirements. Every business structure has different advantages to offer. That being said, different types of business structures also come with different levels of compliance and reporting requirements.
This can significantly impact how you run your business, from how much control you have over your business, the amount of liability you may need to shoulder, to the cost of operations. Before comparing the three different business structures, it is important to understand the concept of limited liability.
Limited liability refers to the concept of a shareholder not being personally liable for the debts of the entity, except for the amount that he had invested into the entity. As a general rule, if the business fails, the shareholder only suffers the loss of the amount he had invested, and not his entire wealth.
A sole proprietorship is a business owned by one person of at least 18 years of age or a Singapore-registered company. The sole proprietor has absolute control over the running of the business as there are no shareholders or partners. The sole proprietorship does not have a distinct legal personality, and the owner and business are treated as the same entity.
While this means that the sole proprietor is not required to maintain separate accounts for auditing purposes, there is no continuity in the business — when the owner dies, the business ends too. The sole proprietorship also has unlimited liability. Sole proprietorships are suitably used by small single-owner businesses that do not carry much risks, for example convenience stores, stationery shops, or freelance tutors and writers.
Partners can be individuals or corporations. Partners are personally liable for debts and losses resulting from their wrongful actions, but they are not personally liable for debts and losses of the entity incurred by other partners. Unlike the sole proprietorship, the limited liability partnership has a distinct legal personality.
This means that the entity can sue or be sued, enter into contracts, and own property in its own name. An LLP has perpetual succession and does not cease to exist if one or more of its partners dies. LLPs are commonly used by small businesses which provide professional services, for example small law practices, accounting firms, and architecture firms. For most entrepreneurs however, the limited liability company is the preferred option. It can sue or be sued, enter into contracts, and the company can own property.
The life of a company is perpetual and does not cease to exist if one or more of its shareholders dies. There are two types of LLC — private limited company and public limited company. The shares of a private limited company may only be offered up to 50 shareholders, and they are not available to the public. Generally, private limited companies are more suitable for small businesses or family-owned businesses, for example a small engineering, construction company or a family-owned catering business.
A public limited company limited by shares must have at least 50 shareholders, and may offer shares to the general public. Usually, the shares of a public limited company are listed on a stock exchange. It is subject to more regulations because of its ability to raise funds from the public. There is a third type of LLC — public limited company limited by guarantee.
However, unlike the first two, this type of company is usually set up for non-commercial purposes, and is typically used by non-profit organizations. The three business structures have some similarities and differences. Often, there can be more than one structure that you may find suitable for your business.
Here are a few factors to bear in mind when deciding amongst the three. If you are starting a small enterprise that is wholly owned by you, a sole proprietorship is ideal as the business owner may keep all of its profits. In contrast, if you are a professional embarking on a business with other partners, starting an LLP is more preferable as the profits of an LLP are distributed amongst the partners.
In an LLC, the profits are shared amongst the shareholders in the form of dividends, and this is in proportion to the number of shares each shareholder owns. If your business is small and you do not expect your profits to be sizeable in the first few years of operations, a sole proprietorship or LLP may be preferable.
The profits of both sole proprietorships and LLPs are taxed at the personal income tax rate of individual business owners.
In Singapore, the personal income tax rates are progressive and proportionate to the income of each individual. If you intend to take advantage of corporate tax exemptions that Singapore offers, an LLC may be more suitable. The profits earned in an LLC are taxed at a corporate rate. However, there are many corporate tax exemptions that new businesses can take advantage of.
In addition, the government also provides corporate income tax rebate CIT rebate , where the percentage of rebate is determined from year to year. These exemptions and rebates are especially useful for new businesses which may have limited capital and tight budgets. The table below shows a rough estimation of how much tax you will pay through the different business structures. The figure below includes corporate tax exemptions and partial exemptions, but does not include corporate tax rebates, which changes from year to year.
There are different levels of administrative requirements for the three different business structures. Sole proprietorships are the simplest and easiest form of business structure to set up in Singapore. Apart from the annual renewal of the sole proprietorship, there are no ongoing filing requirements or statutory requirements to comply with. LLPs have more formalities to comply with. For example, LLPs are required to lodge an annual declaration of solvency to state whether the LLP is able to pay its debts in the normal course of business.
If you intend to set up an LLC, you must be prepared to comply with the more complex formalities and procedures. In addition, LLCs are required to appoint a company secretary within 6 months of incorporation and an auditor within 3 months after incorporation unless the company can qualify for an exemption from audit.
If you intend to start a small business but have a tight budget to work with, a sole proprietorship or LLP is most suitable because they involve relatively low costs. However, it is likely that additional costs would be incurred for setting up an LLP as professional legal help is usually needed to draft a partnership agreement.
In contrast, LLCs are more costly to set up. Because of the complex formalities, procedures and statutory requirements which are involved in setting up and running an LLC, it is highly advisable to hire an accounting or law firm to handle the initial set up and ongoing paperwork. Such legal and accounting services can amount to substantial costs. How your business is perceived by key stakeholders such as employees, banks, and customers can significantly impact the direction of your business.
While sole proprietorships offer many benefits such as lower setting up costs and simpler compliance requirement, it is generally perceived to have less credibility and hold lower public perception. LLCs are most highly regarded and they are also perceived as most credible.
This is especially important if your business is dealing with certain institutions such as banks. Raising capital is one of the most important aspects of a business, especially if you intend to expand your business further down the road. There are three ways for businesses to obtain capital: from the business owners, taking a loan, and issuing shares. Sole proprietorships are generally limited to the finances of the business owner while LLPs are limited to the finances of the partners.
However, sole proprietorships only have one business owner while LLPs are allowed to have an unlimited number of partners.
As such, LLPs have greater ability to raise larger sums of money since there are more partners who can contribute. However, bear in mind that both sole proprietorships and LLPs are generally not viewed with much credibility and may find it difficult to borrow from banks.
To secure bank loans, business owners may have to offer up personal assets as guarantee. If you foresee your enterprise requiring large amounts of capital, LLCs are more preferable. LLCs have greater ability to raise money from its business owners and through bank loans. Private limited companies can have up to 50 shareholders and public limited companies can have an unlimited number of shareholders.
To raise capital, LLCs can either sell more shares to existing shareholders, or issue shares to new shareholders. LLCs are also viewed with more credibility by banks and financial institutions, and such institutions are more willing to lend money to LLCs.
If you intend to pass on your business to another person eventually, sole proprietorships and LLPs are not recommended. It is difficult to transfer ownership in these two business structures as the business cannot be sold as a whole, and each assets, licenses and permits would have to be individually transferred. In contrast, ownership of an LLC can be easily transferred partially or fully by sale of shares, or through the issue of new shares to additional investors. If you are a foreigner who intends to set up a business in Singapore, it is especially important that you choose the type of business structure carefully.
Depending on what business structure you choose, and whether you intend to reside in Singapore to run the business, different requirements may apply. However, should you decide to reside outside of Singapore, you must appoint one locally resident authorised representative for your sole proprietorship, one locally resident manager for your LLP, and one locally resident director in your LLC.
Whether you are setting up a sole proprietorship, an LLP or an LLC, if you decide to be present in Singapore to manage the business, you must first seek approval from the Ministry of Manpower before registering your business. This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area.
If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte.
He has also been external counsel to a couple of multinational corporations, focusing on regulatory issues such as confidentiality, personal data, employment, advertising both traditional and new media and loans. More Posts. Reading Time: 8 minutes Choosing a business structure that suits your enterprise is one of the most important decisions you will make in starting a business.
Sole Proprietorship A sole proprietorship is a business owned by one person of at least 18 years of age or a Singapore-registered company. Keep reading related posts. Next Article I already have a will; do I need to update it?
Singapore LLC vs LLP vs Sole Proprietorship
Skip to content Call Us Today! Categories of Business Entities exist in Malaysia and its differences. The most common types of business organisation in Malaysia are as follow :. Liabilities borne by directors or shareholders are to the extent of unpaid shares only. No personal liability of partner, except for own wrongful act or omission or without authority.
LLP and Partnership Firm are both the types of business formations through which Partnership business can be done. Under the partnership, each partner owns a share of the business. You must be logged in to post a comment. Since the partner and the firm is considered as a separate legal entity.
Private Limited Company vs LLP vs OPC vs Partnership vs Sole Proprietorship
So, you were working on a new idea and this time you were more serious than your last hackathon and you decide to actually formalize something. Now at this point, you would not be knowing what that something is, it could be —. Proprietorship — This is when there is a single owner and you would like to move really fast. There is minimal paperwork required for this purpose. Keep in mind there is an unlimited liability in this case, i. There is an alternative to it that was recently introduced called the One-person company — here the liability is limited and the turnover is supposed to be less than 2 crores. Proprietorships are ideal for small-time traders and merchants as it requires minimal paperwork and is easy to set up.
Major Differences Between Sole Proprietorship & LLP in India
When a business takes the first step into the world of trade, the initial task is to register their firm. In this feature, we expound upon the aspects of each to help make the decision simpler. Start-up founders can be overwhelmed by legal information when they go looking for it. The sheer number of requirements the government places on businesses can, and does, confuse. Consequently, entrepreneurs allow themselves to be misled down paths they need not take.
In India, all the petty retailers, traders, small scale entrepreneurs, etc. On other side, Limited Liability Partnership is formed by at least two partners who invest in the business according to their will and share profit and loss of the company. The liability in case of LLP is protected while in Sole Proprietorship it is not protected and the personal assets of the owner could be seized in case of solvency. A sole proprietorship is a form of business entity that is formed by one person who is responsible for all its operations.
LLC vs LLP vs Sole Proprietorship – Guide to Business Structures in Singapore
One of the first questions to answer when you decide to open a business is the type of ownership the business will have. If you and a fellow business associate came up with the idea for the business, a partnership might seem the natural choice. Or, if it's your brainchild and you want to call all the shots, a sole proprietorship may make more sense.
This article will provide you with the difference between business formations. If you want to start a new business and you are not able to pick one form then here is a glance of differences between various forms. There are few forms prevailing in India such as proprietorship, partnership, One Person Company, limited liability partnership and Pvt Ltd company. The difference between them on various bases is mentioned below:. Not considered as a separate legal entity Not considered as a separate legal entity Considered to have a separate legal entity Considered to have a separate legal entity Separate legal entity Members liability.
LLC (Private Limited Company) vs LLP vs Sole Proprietorship
Many small business owners face a tough decision when starting a business. Will they start the business all on their own, or will they seek others to help in their venture? This ultimately comes down to whether they want to pursue a sole proprietorship or a partnership. In a Sole Proprietorship, the owner is entitled to all profits of the business but is also personally liable for all obligations. Whereas in case of Partnership, each partner is jointly and severally liable for all obligations of the partnership.
Considering moving or expanding your business to Singapore? Sign up to receive useful guides to help you make the right choices for you and your business. Find out the differences between the three in terms of compliance, tax benefits and the advantages and disadvantages of each of these business entities. This guide provides a comparison of Limited Liability Company also known as Private Limited Company or PLC , Sole Proprietorship, and Limited Liability Partnership entity types to assist you in choosing the most appropriate business structure for your needs. Sole Proprietorship in Singapore is not an incorporated entity and therefore has no separate legal identity.
Differences between Limited Liability Partnership (LLP) and Partnership
The most common form of ownership, it accounts for about 72 percent of all U. As sole owner, you have complete control over your business. In exchange for assuming all this responsibility, you get all the income earned by the business.
Difference Between Sole Proprietorship and Partnership
There are various forms of business organization in which the business entity can be organized, managed and operated. Sole Proprietorship is one of the oldest and easiest forms, which is still prevalent in the world. In this type of business, only one person owns, manages and controls the business activities.
Difference Between Partnership and Limited Liability Partnership (LLP)