A partnership is an association formed by two to 20 partners carrying on a business in common with a view to profit. Once there are more than 20 partners, the partnership must be registered as a company under the Companies Act, Chapter 50 (except for professional partnerships).

 

Legal Status of a Partnership

• Partnership is not a separate legal entity

• Partners have unlimited liability

• Partnership can sue or be sued in firm’s name

• Partnership cannot own property in firm’s name

• Partners personally liable for partnership’s debts and losses incurred by other partners

 

Yearly Statutory Obligations

• Yearly renewals (one year or three years)

• CPF Medisave Top-Up required for Self-employed Persons before they can renew partnership

 

Registration requirements for Partnership

• The person can be a Singapore Citizen/Permanent Resident or a EntrePass holder and must be at least 18 years old

• If owner is not resident in Singapore, he must appoint an authorized representative who is residing in Singapore

• Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration

• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee

 

Taxation of a Partnership

Partnership is not considered as a company entity, therefore its profit is taxed at the partner’s personal income tax rates. Singapore’s personal income tax rates for resident taxpayers are progressive from 0% to a maximum of 22% for income in excess of S$ 320,000.

 

Continuity of business

Partnership continues to exist as long the partners agree to keep the partnership subject to partnership agreement.

 

Closing the Business

• Any changes must be submitted either by the partners or authorised representative by filing a Notice of Cessation of Business Registration

• The Registrar can cancel the registration if it has expired and has not been renewed or Registrar is satisfied that the business is defunct

 

Our Opinion

We do not recommend Partnership to entrepreneurs as there is no perpetual succession and profits are taxed at partner’s personal income tax rates. The financial risk is higher than Sole Proprietorship as each partner can be personally liable for the actions of another partner including the debts and losses incurred by other partners.