Limited Liability Partnership
Essay Preview: Limited Liability Partnership
Report this essay
Question 1In Singapore, there are different company structures for business or company incorporated. The types of business entities are a Sole Proprietorship, Partnership and Company. The business partnership owned/run by a minimum of two individuals or more to make a profit and sharing the profit between them. Both sole proprietorship and partnerships are known as unincorporated association. The individuals are partner and co-owner of the business. The most common partnership is General Partnership as it is the easier and most straight forward. Partner have the responsibilities duty for the commercial enterprise and unlimited liability for debts. They share the benefit such as sharing the profit and obligation for the business which each of the partners must contribute to the business. The advantage of the partnership is that it has a separate tax on business profit; partner needs to file their personal income tax on the profit they receive. Each of the partners has the power and act as the boss of the company. However, it does not have a separate entity, and all partners are liable for all debt and losses.Limited Liability Partnership (LLP) combines the features of partnerships and companies. Profession industry usually uses LLP structure like accountants, law firms or architects. LLP shields co-partner from liability due to misconduct or negligence of one partner. The other partner and their assets will remain protected from the liabilities and only limited to the capital contributed by them. As it rendered a separate legal identity, the firm can own property. LLP firm has the liable to the same extent as the partner. In any changes in LLP do not affect its existence and rights and it is more different structure than a sole proprietorship but uncomplicated than a private limited company. However, it required a minimum of 2 partners and the partner can set different formal business agreement without the permission of the other partners. Limited Partnership (LP) consist of one general partner who is an unlimited liability and one limited partner who has limited liability. Limited partner’s liability will only be the amount that he/she has invested into the company. The general partner has the rights to make the decision for the company and be a liability for any loss. General partner does not need to consult limited partner for the business decision. A limited partner is only the investor of the company and has little control over the business operation. The general partner needs to hold the big responsibility of the business and liability for the business debt and loss. LP will not be liable to a tax on the business; each partner will be tax base on the share income.There is also the business entity that registers under incorporated company. A company is an incorporated association and have a separate legal personality as it separated by the member who created the business. Two or more peoples can form a company, and owners of a company are called shareholder or members. There is fours type of companies Unlimited Companies, Limited Liability, Limited by guarantee and Limited by Share (Public or Private). In unlimited companies, the company does not have any limited on the responsibility on it member or shareholder. Unlimited companies do not obtain the main benefit of incorporation of the potential of limited liability. However, it still treated as a separate legal entity and perpetual succession.
A Limited Liability Company (LLC) is a corporate structure that combines of both sole-proprietorship and a corporation. There is no maximum number of the member to form an LLC. The company will not be held personally liable for the company’s debts or losses. LLC owners report business profit or losses base on their personal income tax as LLC does not has a separate taxable entity. LLC may be “limited by shares” or “Limited by guarantee”. Company set up under limited by guarantee are non-profit organisation and charities. It is incorporating a separate legal entity with limited liability for its member. The company need at least one director, one member and a company secretary. The company has no share capital, and the activities that carry out is more on national or public interest. The organisation need to guarantee an amount to cover the liabilities of the organisation. Members are liable up to a fixed amount stated in the company’s memorandum.Limited by shares company is the most common type of company set up in Singapore. It requires at least one shareholder and one director who resident in Singapore. It has a separate legal entity from its member and directors. The company can own property under company’s name. The members are not personally liable for debts and losses of the company. The company can sue or be sued in its own name. The companies can be divided into Public Company and Private Company.Public Limited Company can have more than 50 members. The members can sell shares to anyone without the permission from other members. It requires at one director and a company secretary to have the knowledge and experience how the company functions. Every year, the company must file Annual Tax Return with Revenue Authority and the accounts must be audited by independent auditors. A public company can raise funds fro the public which the company listed on a stock exchange. The public company has easier and flexible on the transfer of shares. Business under this entity is usually on a larger scale.Private Limited Company (‘Pte. Ltd.’) is the most common type of company and has a limit of not more than fifty shareholders. The company can register with only one shareholder who can be an individual or a corporation. The shareholder does not to be resident in Singapore. The shareholder is limited to the amount that they invested, and there is no minimum capital requirement. The shareholder can transfer/ sell shares to those authorised by memorandum. Staff in the company can make the audits.Private Limited Company is the best forms business structure for John, Tom and Raj. Three of the parties can be the shareholder and director of the company at the same time. Therefore, they can be involved in the day-to-day business activity and have the equal say of the company. Since all members have the same authority, they can control strictly limited to them. As the company is a separate legal personality/entity, they will not be liable for the debt or losses of the company. Whether the company is making money or in debt, the shareholder is immune and does not have to cough up any more money than that which he paid for the shares.