Partnership — a business structure in Singapore formed by two to twenty partners. There are several partnership types: General Partnership, Limited Partnership, or Limited Liability Partnership. They vary in terms of liability, agreements between partners, taxes, and accounting. Setting up a partnership is an alternative to setting up a company and registering as a sole propritetorship.
What are the advantages of a Partnership?
Partnerships exist to organize a business between several partners. Much as they share the responsibilities, they share the risks, too. Furthermore, there is no protection of limited liability (except with the LLP). Should one partner retire, decease, or become insolvent, the Partnership ceases to exist for the other partners as well. This is why you should only consider setting up a Partnership if the other formats absolutely fail to fit your purposes.
What you need to know about Partnership
One of the biggest risks of setting up a Partnership is disputes between partners. You share the responsibilities and the future of the business including its existence relies on the understanding between the partners. This is why it is crucial to detail all the clauses in the partnership agreement, update and renew it accordingly.
Partnership examples in Singapore
You are a cupcake baker and you don’t want to start your business alone. You find out you have friends who are interested to start business with you: one is a baker, too, specializing in something else. Another one is looking to invest, but wants none of the hassle. Where you would start a Sole Proprietorship alone, you consider a partnership is the best way to include the others, too.