Sole Proprietorship vs. LLP in Singapore
Embarking on the journey of establishing your own business in Singapore is a commendable endeavor! As you venture into this exciting chapter, one of your initial and critical decisions revolves around selecting the most suitable business structure.
In Singapore, the two popular options are sole proprietorship and Limited Liability Partnership (LLP). This article explores the pros and cons of each to help you pick the best fit for your company.

The Benefits of Sole Proprietorship
Opting for a sole proprietorship offers simplicity, making it a favored choice among budding entrepreneurs:
1. Seamless Setup
The process of registration is swift and economical, with a nominal fee of S$65.
2. Absolute Autonomy
You retain full control over decision-making processes and enjoy the entirety of profits generated.
3. Minimal Maintenance
Ongoing obligations and administrative tasks are notably low.
Downside of Sole Proprietorship
However, the straightforwardness of having a sole proprietorship comes with a significant caveat, unlimited liability.
Unlimited Liability
Your personal assets are vulnerable to business liabilities. In the event of financial downturns, your savings, assets, or even personal property could be at stake.
The Collaborative LLP
Understanding Limited Liability Partnerships (LLPs)
A Limited Liability Partnership (LLP) stands as a versatile legal and tax entity wherein each partner enjoys limited personal liability concerning the partnership’s debts or claims.
Within an LLP, partners can capitalize on economies of scale through collaborative efforts while simultaneously mitigating their liability for the actions undertaken by other partners. However, it’s imperative to emphasize the significance of consulting the legal framework within your jurisdiction (including state laws) before reaching decisions. In essence, seeking counsel from a legal expert is paramount. Chances are, they possess firsthand familiarity with LLP structures and can provide invaluable guidance tailored to your specific circumstances.
Advantages of an LLP
Conversely, an LLP presents several advantages over a sole proprietorship:
1. Limited Liability
Shielding partners’ personal assets from business debts alleviates concerns regarding individual financial exposure.
2. Synergistic Expertise
The option to engage partners allows for skill diversification and workload distribution.
3. Enhanced Growth Prospects
The pooling of resources among partners can facilitate access to additional capital, fostering expansion opportunities.
4. Sustained Continuity
The LLP structure ensures business continuity even amidst partner transitions, safeguarding operational stability.
Downside of an LLP
Nonetheless, certain considerations accompany the adoption of an LLP:
1. Complex Establishment
Establishing an LLP necessitates the formulation of a partnership agreement and entails a marginally higher registration fee.
2. Profit Distribution
Profits are allocated among partners as per the agreement, implying that individual earnings may not necessarily be retained in full.
3. Heightened Compliance
LLPs are subject to annual reporting obligations to the Accounting and Corporate Regulatory Authority (ACRA).
Selecting the Right Fit for Your Business
Choosing between a sole proprietorship and an LLP hinges on your unique circumstances. Here’s a simplified guideline:
- Opt for a sole proprietorship if: You operate solo, have a low-risk business model, and prioritize a straightforward setup.
- Opt for an LLP if: Collaboration with partners, limited liability protection, or future scalability are integral to your business strategy.
Summary
It’s important to recognize that this overview serves as a foundational reference. Seeking tailored advice from a professional advisor is strongly advised. Through meticulous deliberation, you can align your business structure with the vision and objectives of your Singaporean venture, paving the way for sustained success!
Need help for company incorporation in Singapore? Feel free to contact us!