Are you considering a partnership as your chosen business structure in Singapore? Whether you’re partnering with someone or establishing a professional relationship with a group of individuals, understanding the intricacies of a partnership is vital. In this guide, we’ll walk you through the essential aspects of partnerships in Singapore, including ownership, legal status, registration, taxation, and more.
A partnership is defined as an association of two or more individuals carrying on business together with the aim of making a profit. Here’s what you need to know:
- A partnership typically consists of between 2 and 20 partners.
- In cases with more than 20 partners, except for professional partnerships, incorporation as a company under the Companies Act, Chapter 50, is required.
Partnerships have a unique legal status in Singapore:
- A partnership is not considered a separate legal entity. It operates under the identities of the individual partners.
- Partners have unlimited liability, meaning they are personally responsible for all the partnership’s debts and losses.
- Partners can initiate legal actions or be subject to legal actions in the name of the partnership.
- Unlike some other business structures, partnerships cannot own property in the firm’s name. Property is held in the individual partners’ names.
- Partners are personally liable for the debts and losses incurred by other partners
Yearly Statutory Obligations:
Operating a partnership in Singapore involves specific annual obligations:
- Partnerships must undergo yearly renewals, with options for one-year or three-year renewal periods.
- Self-employed partners must top up their Medisave accounts with the Central Provident Fund (CPF) Board before they can renew their partnership registration.
To establish a partnership in Singapore, you must meet specific registration criteria:
- All partners must be at least 18 years old.
- Eligible registrants include Singapore citizens, Singapore permanent residents, or EntrePass holders.
- If a partner is not a resident in Singapore, they must appoint an authorized representative who is ordinarily resident in Singapore.
- Self-employed partners are required to fund their Medisave accounts with the CPF Board before registering a new business name, becoming a registrant of an existing business name, or renewing their business name registration.
- Similar to Sole-Proprietorships, undischarged bankrupts may need approval from the Court or the Official Assignee to manage a partnership.
Taxation for a partnership in Singapore is straightforward:
- Profits are taxed at the partners’ personal income tax rates. This means that the business’s earnings are treated as part of the partners’ personal income.
Continuity in Law:
The existence of a partnership is subject to the terms outlined in the partnership agreement. It provides flexibility for partners to define the partnership’s terms and conditions.
Closing the Business:
Closing a partnership can be done in two ways:
- Partners can formally cease the business operations according to the partnership agreement.
- The Registrar has the authority to cancel the partnership’s registration if it is not renewed or if the Registrar determines that the business is defunct.
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