Limited Partnership (LP) is a business entity formed by at least 2 partners, and it has almost the same characteristics as a General Partnership. The only difference is – there must be at least:
- 1 general partner, whose personal liability is unlimited; and
- 1 limited partner, whose personal liability is limited to his / her / its agreed contribution.
Features of Limited Partnership
- There is no limitation on the number of partners.
- An individual or a company can be a partner of the LP.
- It is not a separate legal entity, therefore:
- The general partner is personally liable for all debts and liabilities incurred by the business;
- However, the limited partner will not be personally liable for any debts and liabilities incurred beyond his / her / its agreed contribution, provided he / she / it does not take part in the management of the LP.
- The business income will be taxed at the partner’s level, which is to say, if the partner is:
- An individual: income to be taxed at personal income tax rate;
- A company: income to be taxed at the prevailing corporate income tax rate.
- It has to be registered with the Accounting and Corporate Regulatory Authority (ACRA) and renew its licence annually.
- It is required to keep its accounting records which can support its transactions and financial position.
Requirements of setting-up a Limited Partnership
- The individual partner must be at least 18 years of age.
- A LP must have a business address in Singapore; while using a residential address as the business address will be subject to Housing and Development Board’s (HDB) approval.
- If the partner is a foreigner or a foreign company, a local resident manager has to be appointed for discharging all obligations of the LP.