Partnership and Limited Liability Partnership Organization

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Introduction

This is a report that shows a comparison between both Partnership and Limited Liability Partnership organization and to advise Mr. Tan on the business organization that is more likely to fit his needs for setting up a new consulting business.

For this particular project, our group assumed that Mr. Tan used to be an accountant working for a big accounting firm and is now looking to set up a small accounting consultancy business.

1Process Required to Setup Business Organization

Below are the processes to setting up a partnership and a limited liability partnership business organization respectively:

1.1Partnership

Firstly, the partners have to fill with the Registrar an application for approval and reservation of partnership name. After the application is being approved, a partnership is required to be registered online via BizFile with ACRA through a professional business registration firm if both of the partners are not local citizen.

The partnership must have at least two partners for registration. Following are the information needed: 1) Proposed name of the Partnership
2) Particulars of the partners/managers (foreign passport or Singapore ID) 3) Residential address of the partners/managers
4) Consent to Act as Manager and Statement of Non Disqualification to Act as Manager 5) If partner is a company: Registration details of the company 6) Singaporean or PR must pay Medisave

7) Declaration of compliance

ACRA will then send an email of notification confirming the registration. A business profile containing the registration details can be obtained as a softcopy via email from ACRA upon successful registration. Softcopies are usually sufficient to all purposes in Singapore. (enterAsia Information Services Pte Ltd, 2010)

1.2Limited Liability Partnership

Firstly, the partners have to fill with the Registrar an application for approval and reservation of LLP name. After the application is being approved, an LLP is required to be registered online via BizFile with ACRA through a professional business registration.

Following are the information needed:
1) Proposed name of the Limited Liability Partnership
2) Particulars of the LLP partners/managers (foreign passport or Singapore ID) 3) Residential address of the LLP partners/managers
4) Consent to Act as Manager and Statement of Non Disqualification to Act as Manager 5) If partner is a company: Registration details of the company 6) Declaration of compliance

ACRA will then send an email of notification confirming the Singapore LLP registration. A business profile containing the registration details can be obtained as a softcopy via email from ACRA upon successful registration of the LLP. Softcopies are usually sufficient to all purposes in Singapore. (enterAsia Information Services Pte Ltd, 2010)

2Legal Characteristics of Each of the Business Organizations

2.1The Characteristics of Partnership (ASSAR, 2011)

Two or more persons: Partnership involves business by a group of persons. There must be at least two persons to bring partnership into existence. Although there is no maximum number required in the Partnership Act, the Companies Act has placed a maximum limit 20 people in a business. A company must be registered if there are more than 20 people in the business.

Contractual Relation: A partnership is a contractual relationship arising out of an agreement among the partners, a person does not become a partner out of his status as is the case in joint family. Persons entering in partnership must be competent to enter into a contract as it is essential, and the agreement among partners may be oral or in writing. A written agreement or deed is preferred because it helps in resolving some disputes among partners later on.

Lawful Business: A partnership agreement only exists in a lawful business.

Sharing of profits:  An agreement among partners must include the...
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