The business laws of Singapore define a partnershipas a business which is owned by a minimum of two and a maximum of 20 people. As is implied by its name, the owners of a partnership are referred to as partners. Any partnership in Singapore which contains more than 20 partners mustbeincorporated as a companyaccording to the specifications of the Companies Act. This ruling, however, does not apply in the case ofprofessional partnerships. As the owners of the business, every partner involved with the partnership is to take anactive role in the management of the business as well as the handling of its daily affairs.
Circumstances in Which Setting Up a Partnership Is Beneficial
Just as is the case with any other business entity, there are certain situations in which setting up a partnership is more beneficial than setting up any other business entity. Therefore, those who plan to start a partnership must be aware of such circumstances and take advantage of them whenever they might arise.
One possible circumstance in which it isadvantageous to start a partnership in Singapore may arise when the partners who own the partnership are subject to higher individual income tax rates than the existing corporate tax rate. Such is the case because taxes paid by a partnership are based on the individual income tax rates to be paid by the partners involved. Therefore, the tax which would be imposed on such a partnershipwould be relatively low, thus allowing more finances to be distributed towards generating additional profits for the business.
Another circumstance in which one might be advised to start a partnership takes place if the partners would face any difficulties in the management and operations of the partnership. Such is the case because a partnership bears one key similarity to a sole proprietorship; this similarity is that both sole proprietorships and partnerships are relatively simple to establish, administer, and manage. The average cost of doing so is also lower than that of other business entities.Furthermore, partnerships in Singapore are also subject to fewer compliance requirements than are the country’s other business entities. Therefore, a group of partners who are interested in starting and operating a small-scale business which is not burdened by many compliance requirements will find that starting a partnership is certainly an appropriate and viable option.
Now that all the situations which would cause a partnership to be the preferred business entity have been detailed, you might have become inspired to start one of your own after having read them. If such is the case, we at Paul Hype Page & Co will offer you our services. Our incorporation team will work with you throughout the entire process so that your partnership in Singapore will be established in the proper manner. Our assistance will ensure that you do not face any major problems during the setup of the business.
Disadvantages of Starting a Partnership in Singapore
Of course, this does not mean that everything surrounding the establishment of a Singapore-based partnership is positive. One possible disadvantage of starting a partnership in Singapore is that the partnership and all of its partners are to be regarded as a single legal entity. Therefore,each of the partners in the partnership have unlimited liability. This unlimited liability makes each partnerpersonally liable for the debts of the partnership as well as any other legal action which is taken against the partnership. In addition, all partners of a partnership are also personally liable for all actions taken by other partners in the business. Therefore, all partners who are involved in a partnership must be able to prove to the other partners that they are trustworthy. For the purposes of the maintenance of the stability of the partnership, a well-crafted partnership agreement will usually be of much assistance.