Singapore, with its robust economy and strong talent pool, is a buzzing metropolis situated right in the heart of Asia, offering businesses the ideal landscape to invest with confidence. 

But before you plunge into registering that business, there are however a few considerations that you should think about. Firstly, the type of company structure that you should go for. Sole proprietorship? Partnerships? Private Limited company formation? To help you decide, scroll on down to understand and to see which suits your business bests. It could save you time, money and trouble just by understanding and operating under the right business structure.

Sole Proprietor

A sole-proprietorship is a business owned by one person or one company. There are no partners. The sole-proprietor has absolute say in the running of the business.

Best suited for businesses with very low risks involved, small trading amounts and a single business owner. Easiest form with the least administrative and compliance requirements, depending on the annual revenue generated.

Requirements:

  • At least 18 years and above
  • Singapore Citizen or PR
  • Not an undischarged bankrupt

 

Pros:

  • Simple and easy to set up
  • Compliance costs is the least amongst all the other structures

 

Cons:

  • Not a separate legal entity
  • Owner has unlimited personal liability
  • Can sue or be sued in owner’s capacity
  • Owner is personally liable for the debts and losses of the business
  • Profits are taxed under the owner’s tax rates
  • No continuity of business once the owner is no longer alive

Partnership

A partnership is a business firm formed by two to twenty partners.

In the absence of a partnership agreement, profits and liabilities of the partnerships are divided equally amongst the partners. Partnerships, just like sole proprietorships provides the ease of maintaining the business without the statutory requirements and obligations of a Pte Ltd Company.

Once there are more than twenty partners, the partnership must be registered as a company under the Companies Act.

Requirements:

  • At least 18 years and above
  • Singapore Citizen or PR
  • Not an undischarged bankrupt

 

Pros:

  • Simple and easy to set up
  • Simple and easy to administer
  • Compliance costs is lower as compared to Pte Ltd Companies.

 

Cons:

  • Not a separate legal entity
  • Partners have unlimited personal liability
  • Can sue or be sued in the Partners’ capacity
  • Partners are personally liable for the debts and losses of the business
  • Profits are taxed under the owners’ tax rates

Limited Liability Partnership

At least 2 owners to set up, there is no limit to the number of partners. A Limited Liability Partnership limits the liabilities from each of the other Partner’s debts and losses from one another, however it does not limit the liabilities arising from the Partner’s own debts and losses resulting from his or her own wrongful or negligent actions. This structure protects the partners from one another, and also provides the ease of maintaining the Partnership without the hassle of a Pte Ltd Company.

Requirements:

  • At least 2 partners, who can either be natural persons or body corporates
  • At least one manager who is ordinarily a resident in Singapore and at least 18 years of age
  • Not an undischarged bankrupt

 

Pros:

  • A separate legal entity from its partners
  • Can sue or be sued in the LLP’s name
  • Partners have limited liability from each other’s wrong doings or negligence
  • Simple and easy to set up
  • Fewer formalities than a Pte Ltd Company
  • Compliance costs is lower as compared to a Pte Ltd Company
  • No statutory requirements for meetings

 

Cons:

  • Partners are personally liable for their own wrongful doings or negligence
  • Profits are taxed under the partners own tax rates

Private Limited Company

The safest form of a business structure – to incorporate a Private Limited Company. A business structure which is a separate legal entity from its owners and directors. It is also the easiest structure to source for funds by way of selling shares of the company and it also has perpetual succession. Ideal for businesses which involves high trading quantum or risky ideas or simply for the ease of funding requirements or transfer of ownership.

Requirements:

  • At least 1 shareholder
  • At least 1 director who is a local resident in Singapore and who is at least 18 years old
  • At least 1 company secretary
  • Not an undischarged bankrupt


Pros:

  • Members and directors have limited liabilities
  • Members and directors are not personally liable for the debts and losses of the Company
  • The Company can sue and be sued in its own name
  • Ease of transferring ownership of the Company
  • Ease of raising funds by way of selling share
  • Companies are taxed at corporate tax rates and are able to enjoy tax exemptions
  • Perpetual succession


Cons:

  • Greater administrative obligations, formalities and compliance
  • More costly to administer
  • Subject to the Companies Act
  • Statutory meetings are required
  • Annual returns must be filed


Still undecided or you have queries or clarifications to make and to find out more, feel free to get in touch with us now.

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