Singapore is one of the easiest places to do business. One of the main reasons for this is the simple structure and corporate governance which business owners have to adhere to. That being said, it would be wise to understand the various business entities which you can set up in Singapore before embarking on your entrepreneurial journey.
1) Sole Proprietor
This is the simplest type of business entity to set up. This is, as the name suggests, a one-man business. The business entity is the individual. A sole proprietorship is not a separate legal entity as compared to some other business entities. A sole proprietor must be at least 18 years old, ordinarily a resident of Singapore and not an undischarged bankrupt.
Features of a sole proprietor:
– Unlimited liability. Can be sued in the owner’s name.
– Taxed based on personal income tax, not corporate tax.
– Cannot benefit from certain tax incentives and schemes for companies.
– Must fulfil his Medisave liabilities every year prior to renewing the sole proprietorship with ACRA
2) Partnership
A partnership needs more than 1 person to exist. Membership ends upon retirement, insolvency or death. There are 3 types of partnership structures in Singapore
a) General Partnership:
– Similar to a sole-proprietor. The business partners are responsible for the liabilities and debts.
– The partners share responsibilities. Thus the actions of one will have an effect on the rest of the partners. Due to this fact, this business entity structure is not desirable.
b) Limited Partnership:
– The most common partnership structure in Singapore due to the fact that the liabilities are limited to the business’ investments or assets.
– The partners cannot manage the business.
c) Limited Liability Partnership (commonly referred to as LLP):
– The liabilities are limited to the business’ investments or assets.
– The partners can freely manage and run the business.
– Very similar to a private limited company structure.
3) Company
The extended term of reference for this form of business entity is Limited Liability Company (LLC). The assets of the owners of a company are protected from any liabilities and debts which may arise from the business. There are 3 types of LLCs.
a) Private Limited Company:
– The most common business entity.
– Shareholders are only liable up to the amount of share capital contributed.
– Not more than 50 shareholders.
– Shares can be easily transferred or created. Thus for ease of raising capital, such a business entity should be set up.
b) Public Limited Company:
– More than 50 shareholders.
– Shareholders are only liable up to the amount of share capital contributed.
– Usually an option for large businesses.
– This set up will require a more stringent set of accounting and rules and regulations.
c) Public Company Limited by Guarantee:
– Set up for non-profitable purposes.
– This public company is set up to limit the liability to the amount that the members contribute to the assets of the company.
In conclusion, if you are looking to set up and/ or manage a business entity, look for an experienced corporate secretary to handle your matters. You may contact the team at Singapore Secretary Services, a registered ACRA filing agent for more enquiries.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
Yours Sincerely,
The editorial team at Acra Filing Agent
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