It is no more a hidden fact that the Singapore is known to be a favorite business destination for global entrepreneurs. From last few decades, the Republic has been attracting a massive number of foreigners to incorporate a company in Singapore. Just like foreigners, local Singaporeans are also showing overwhelming response when it comes to company incorporation Singapore. The residents who have an entrepreneurial bent of mind usually kickstart business venture to fulfill their innate skills.
This blog will outline the company incorporation Singapore options available for Singapore residents.
What are the types of business Entity available under Singapore jurisdiction?
It makes sense to take a few crucial factors into consideration before taking the final plunge into company incorporation Singapore. Out of all factors, deciding on the right business entity is an important one. This decision of yours will have a lasting impact on the amount of tax payable, public perception about your business, compliance requirements and so on.
Leaf through the list of key business entity types in Singapore:
1. Limited Liability Company
a. Private Limited Company
b. Public Limited Company
2. Sole Proprietorship
3. Partnership
a. General Partnership
b. Limited Partnership
c. Limited Liability Partnership
When it comes to popular business entities among Singapore residents, the three types of business entities that come to one’s mind are the private limited company (a form of LLC), sole proprietorship and Limited Liability Partnership (LLP). Nevertheless, a local Singaporean can start his business in any one of the types listed above based on nature of his business and areas of interest.
Let us dive little deeper into the features and characteristics of popular business entity types available for Singapore residents.
Private Limited Company
The private limited company in Singapore is the favorite choice for both foreign and local entrepreneurs due to its numerous advantages. In an LLC, the shares are not available for general public. The number of the shareholders can be up to 50. Most of the privately-owned businesses in Singapore are registered as the private limited company. The company name ends with the suffix such as Pte. Ltd (Private Limited). Any local individual of 18 years and above can own a company in Singapore. Both an individual or corporate entity can act as the shareholder of a company in Singapore.
If properly incorporated, a private limited company is the most tax-efficient entity in Singapore. Similarly, it is the most advanced and flexible business entity. There is a ton of advantages that the company has to offer.
• It is an independent legal entity and can acquire assets in its name. A company can sue or be sued in its name.
• The liability of the shareholders is limited to the amount in shares they contributed to the company.
• The company continues to exist even after the retirement, death of the member(s) or the transfer of ownership.
• It builds a credible image of the entity, and thus, potential investors, customers, and suppliers are willing to engage with the company.
• It is easier to raise the capital either by bringing in new shareholders and selling new shares to existing shareholders.
• A private limited company is entitled to enjoy the various benefits of Singapore taxation. The profits are taxed at corporate tax rates.
Company Incorporation Singapore: What is the process?
A company must be registered with the national regulator i.e. ACRA (Accounting & Corporate Regulatory Authority). It is just a two-steps method. Thereby, the process is simple, fast and convenient. Both steps have been computerized and can be completed in a jiffy. The first step is company name reservation and the second one is company registration. Since it is a completely online process, the chances of bureaucratic hurdles are very less or zero.
Sole Proprietorship
A sole proprietorship is considered to the easiest and simplest business entity to incorporate and operate. It is suitable for a sole-owner with limited resources. However, the liability of owner in a sole proprietorship is unlimited and so, is the riskiest type of business. Unlike a private limited company, a sole proprietorship is not a separate legal entity, and therefore the owner and business are not different. It is owned by a single owner, and he is personally liable for any debt or loss incurred by the business. Hence, the personal assets of the owner are not protected.
Any natural person of minimum18 years of age can own a sole proprietorship. There must be one manager who is ordinarily resident in Singapore. Any Singapore citizen or PR (Permanent Resident whose age is at least 21 years) can act as a manager of a sole proprietorship firm. Thus, a Singaporean owner can be a manager of his business.
Fast Facts of Sole Proprietorship in Singapore:
• There must be a local registered address, and the owner is allowed to use his residential premises by taking prior approval from the concerned authority such as HDB (for HBD properties) and URA (for private properties).
• It is worth noting that locals (SG Citizen & PR) must ensure that their Medisave accounts have adequate funds before venturing into sole proprietorship business.
• The profits earned by a sole proprietorship is treated as income of the individual (owner of the business) and taxed at personal income tax rates.
Limited Liability Partnership (LLP) in Singapore
LLP is a type of partnership business in Singapore. It is the most advanced and recent business structure that was being introduced in 2005 through the enactment of Limited Liability Partnership Act. The owner(s) of an LLP gets the flexibility of operating a partnership business while reaping the benefits of a company.
Technically, an LLP is meant for practicing professions such as lawyers, tax consultants, accountants, architects, etc. In an LLP, two or more professionals of same areas of interest and skill-sets can practice in a common field while co-owning the business structure.
• An LLP is considered to be a separate legal entity that is distinct from its partners.
• A partner of an LLP cannot be held responsible for the wrongful commission or omission of the other partners.
• The mutual right and duties of the partners are regulated by the Limited Liability Agreement.
A local Singapore resident can choose any of the business entity mentioned above to fulfill his entrepreneurial desire. The selection should be based on the objectives of the business, nature of activities, funds and many other factors. Each of the entity types has its share of advantages and disadvantages. You are advised to do some groundwork before taking the leap of faith. Among all, private limited company is the most popular choice for serious entrepreneurs. Thereby, company incorporation Singapore continued to receive an overwhelming response from the people from both within and across the border.
SBS Consulting
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