Converting Partnership to Limited Liability Partnership LLP
Converting your existing partnership to a Limited Liability Partnership (LLP) in Singapore is a fairly straightforward process. Here's a quick rundown of the requirements and steps involved:
Requirements:
All existing partners in the partnership will become partners in the new LLP.
You'll need a minimum of two partners at all times.
Process:
Registration: You can register the conversion online via BizFile+ using your Singpass. There's a $40 fee for this process.
Compliance: Ensure you comply with the conversion requirements as outlined in the Second Schedule of the Limited Liability Partnership Act (LLP Act).
Transfer of Assets and Matters: Transfer any business assets and existing contracts to the new LLP. You might need to get new licenses or permits and potentially cancel your GST registration with IRAS, depending on your situation.
Conversion Requirements
The conversion requirements for turning a partnership into a Limited Liability Partnership (LLP) in Singapore are outlined in the Second Schedule of the Limited Liability Partnerships Act (LLPA). Here's a general idea of what the full contents of the Second Schedule covers:
Partner Consent: All partners in the existing partnership must agree to the conversion to an LLP.
Conversion Agreement: You might need a formal agreement outlining the terms of the conversion, including partner ownership percentages in the new LLP.
Appointment of Managers: The conversion process might involve appointing managers for the LLP, depending on the structure you choose.
Compliance with Partnership Agreement: Ensure the conversion adheres to any existing clauses or restrictions within your current partnership agreement.
Conversion's Effects and Post-Conversion Requirements
Converting your partnership to a Limited Liability Partnership (LLP) in Singapore brings about some key changes and post-conversion requirements you should be aware of. Here's a breakdown of both:
Effects of Conversion:
Limited Liability: A major benefit is the introduction of limited liability for partners. This means a partner's personal assets are generally protected from business debts beyond their capital contribution to the LLP.
Legal Structure: Your business structure changes from a partnership to a separate legal entity - the LLP. This offers some advantages, like continuity regardless of partner changes.
Taxation: Generally, tax treatment for LLPs is similar to partnerships. The profits or losses of the LLP "pass through" to the individual partners and are reported on their personal tax returns.
Post-Conversion Requirements:
Intimation to Authorities: Inform relevant authorities like the Inland Revenue Authority of Singapore (IRAS) and banks about the conversion.
Update Registrations and Licenses: Transfer any business licenses, permits, and registrations to the new LLP. You might need to obtain new ones depending on your business activities.
Review and Update Agreements: Revise any existing contracts and agreements to reflect the change to an LLP.
Maintain LLP Agreement: Draft and maintain a comprehensive LLP Agreement that outlines the rights and responsibilities of partners, profit-sharing arrangements, and management structure.
Accounting and Tax Compliance: Continue to adhere to accounting and tax filing requirements, with profits or losses passed through to individual partners for tax purposes.
Additional Resources:
Here are some resources that might be helpful:
Limited Liability Partnerships Act (LLPA): You can find the full text of the Act through the Singapore Statutes Online website. While it might be more technical reading, it includes the Schedules https://sso.agc.gov.sg/Act/LLPA2005.
Additional Points:
Consider applying for relief from stamp duty on the transfer of chargeable assets to the LLP https://www.bestar-sg.com/post/claiming-stamp-duty-reliefs-on-conversion-of-firm-to-limited-liability-partnership.
How Bestar can Help
Bestar can be a valuable asset throughout the process of converting your partnership to a Limited Liability Partnership (LLP) in Singapore. Here's a breakdown of how Bestar can contribute:
Ensuring Legal Compliance: Bestar will ensure your conversion adheres to all legal requirements outlined in the Limited Liability Partnerships Act (LLPA), particularly the conversion specifics mentioned in the Second Schedule.
Drafting Agreements: We can help draft a watertight conversion agreement that clearly defines partner ownership percentages, management structure, and other crucial details within the new LLP.
Reviewing Existing Agreements: Bestar can review your existing partnership agreement and advise on any necessary adjustments to align with the LLP structure.
Navigating Complexities: If your conversion involves complexities, such as intellectual property ownership or outstanding debts, Bestar can guide you through the legalities and potential challenges.
Post-conversion Advice: We can offer ongoing legal advice on matters like maintaining the LLP agreement, complying with regulations, and handling potential disputes between partners.
Understanding Tax Implications: Bestar can explain the tax implications of converting to an LLP. While LLPs are generally taxed similarly to partnerships (profits/losses pass through to partners), we can ensure a smooth transition and advise on any potential tax considerations.
Post-conversion Tax Filing: We can assist with filing tax returns for the LLP and individual partners post-conversion, ensuring proper accounting practices within the new structure.
Reviewing Financial Statements: Bestar can review your financial statements and ensure a smooth transfer of assets and liabilities to the new LLP.
Business Restructuring Advice: If the conversion involves any business restructuring, Bestar can advise on the most tax-efficient and financially sound approach.
Ongoing Accounting Support: We can provide ongoing accounting and bookkeeping services tailored to the specific needs of your LLP.
Bestar can ensure a smooth and successful conversion for your partnership. Bestar tackles the legal aspects, focuses on the financial implications and ongoing tax compliance. Bestar's expertise can provide a well-rounded perspective and address any potential pitfalls throughout the process.
In Conclusion:
While the conversion process itself might seem straightforward, consulting Bestar can offer significant peace of mind. We can ensure you comply with all legal and tax requirements, navigate complexities, and set your LLP up for a successful future.
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