Limited Liability Company (LLC) vs Limited Liability Partnership (LLP)
Today a prospect client, wanting to incorporate a new business, enquired about & was convinced by me to incorporate a LLC ( or we call private limited company ) after hearing my views of 4 major benefits of a LLC over a LLP, here is my sharing :-
1. Funding
LLC : Easy to raise capital, since banks & financial institutes view credibility in an LLC
LLP : Difficult to raise capital. Have to remain limited to private finances and partners’ contribution
2. Taxation
LLC : Profits are taxed at corporate tax rate, i.e. about 6% for profits up to SGD 200,000 and capped at 17% for profits above SGD 200,000
LLP : Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime ( highest tiered tax rate at 22% )
3. Ownership Transfer
LLC : Easy to transfer partial or full ownership of the company, by simple transfer of shares
LLP : Difficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits
4. Credibility
LLC : highest credibility & has a strong public perception
LLP: Holds moderate public image, & comparatively lesser credibility.
Generally, other characteristics of LLC & LLP are quite similar, example legal status, limited liability, succession ability, and registration lead time.
LLC (a private limited company) is the most powerful business structure. Most of the incorporations in Singapore are LLC.
Wish you success !
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