Singapore attracts a large number of companies from all over the world due to its prime location, financial position and extremely favorable corporate tax rates. Before you decide to register a Singapore company, you need to understand the types of companies in Singapore in order to choose the right structure for you. So how do you choose the right type of company for you? What are the differences between the different types of companies? Come and learn more about them!
Before you choose what type of company to register, you need to ask yourself these questions, as they relate to your final decision.
- Do you want to run the business by yourself or in partnership with others?
- How much capital do you decide to invest?
- Do you intend to be self-sustaining or do you intend to raise funds from others?
- Do you intend to have limited or unlimited liability?
If you can answer the above questions clearly, it means that you have a preliminary idea about your situation and the formation of your Singapore company. And when it comes to the actual implementation, you may refer to the details in this article to assist you in your decision.
There are four types of business entities to choose from when setting up a company in Singapore.
1: Business, which includes
– Sole-proprietorship
– Partnership
2: Company, including
– Private limited liability company (PTE LTD) or limited company (LTD)
3: Limited Liability Partnership
4: Limited Partnership
For these different types of companies, the incorporation requirements and partner/shareholder responsibilities and tax filing requirements are different.
[Sole-proprietorship]
Registration requirements
- Age 18 years or above.
- Singapore citizen/ Singapore permanent resident/ EntrePass holder.
- If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.
- Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.
- Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.
Business owner liability
- Not a separate legal entity Owner has unlimited liability
- Owner personally liable for debts and losses of business
- Can own property in individual’s name
- Can sue or be sued in individual’s own name
- Can also be sued in business name
Taxes
- Profits taxed at owner’ personal income tax rates
[Partnership]
Registration requirements
- Age 18 years or above.
- Singapore citizen/ Singapore permanent resident/ EntrePass holder.
- If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.
- Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.
- Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.
Business owner liability
- Can owned by 2 to 20 partners. A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships)
- Not a separate legal entity,partners have unlimited liability
- Partners personally liable for partnership’s debts and losses incurred by other partners
- Cannot own property in firm’s name
- Can sue or be sued in firm’s name
Taxes
- Profits taxed at partners’ personal income tax rates
[Company]
Registration requirements
- At least one shareholder.
- At least one director ordinarily resident in Singapore, at least 18 years old.
- If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower.
- Undischarged bankrupts cannot be a director and cannot manage a company without approval from the Court or the Official Assignee.
Partner (shareholder) requirements and liability
- Number of shareholders.
1) Exempt Private Company – 20 members or less and no corporation holds beneficial interest in the company’s shares
2) Private Company – 50 members or less
3) Public Company – can have more than 50 members - A separate legal entity from its members and directors ,members have limited liability
- Members not personally liable for debts and losses of company
- Can own property in company’s name
- Can sue or be sued in company’s name
Taxes
- Profits taxed at corporate tax rates
[Limited Liability Partnership]
Registration requirements
- At least two partners, who can be individuals (at least 18 years old) or body corporate (company or LLP).
- At least one manager ordinarily resident in Singapore and at least 18 years old.
- Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.
Business owner liability
- A separate legal entity from its partners, partners have limited liability
- Partners personally liable for debts and losses resulting from their own wrongful actions
; Partners not personally liable for debts and losses of LLP incurred by other partners - Can own property in LLP’s name
- Can sue or be sued in LLP’s name
Taxes
- Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)
[Limited Partnership]
Registration requirements
- At least one general partner and limited partner. Both can be individuals (at least 18 years old) or body corporate (company or LLP).
- If all general partners are ordinarily resident outside Singapore, they must appoint a local manager who is ordinarily resident in Singapore.
- Self-employed persons must top up their Medisave account with the CPF Board before they register as a partner of a new LP, become a registered partner of an existing LP, or renew their LP registration.
- Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.
Business owner liability
- Not a separate legal entity . General partner has unlimited liability, limited partner has limited liability.
- General partner personally liable for debts and losses of the LP, limited partner not personally liable for the debts or obligations of LP beyond amount of his agreed contribution
- Cannot own property in firm’s name
- Can probably sue or be sued in firm’s name
Taxes
- Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)
For the introduction to the types of entities in Singapore, you can also refer to the official video presentation by the Accounting and Corporate Regulatory Authority of Singapore (ACRA)
Choosing the right type of company can help you to better plan your company’s finances and understand the responsibilities of shareholders or partners in order to plan your company’s growth. If you have any questions regarding the choice of company type, you can also contact the Tassure Asia Group’s service tea.
* This article is an original article of Tassure Asia Group and is not allowed to be reproduced.
