Unlike incorporated business entities, an unincorporated business entity does not have separate legal personality. This means that, the law does not distinguish between the people who set up the business ( the founder) and the business itself. The rights and liabilities of the unincorporated entity are thus treated as the same to the people who own it. In Singapore, the 3 most common types of unincorporated entities are sole proprietors (SP), partnership, and joint venture (JV). Due to the dynamic change of business environment, in 2005, Singapore also allow the formation of limited liability partnership (LLP). These business entity have some features of traditional partnerships although they are incorporated as a separate legal entity and limited liability.
Nevertheless ,there are still some business owner opt to operate as an unincorporated business. They value the simplicity, the low cost involve in setting up the business entities and no separation in taxation.
The 3 main types of unincorporated business entities used in Singapore are:
- Sole proprietorship- Business owned by a single person.
- Partnership- Business owned by 2 or more persons carrying on of a business with a common objective on generating profit.
- Joint venture- Venture undertake by 2 or more parties. Common in property development sector.
We will discuss in greater details in the next few articles.
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