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Starting a business in Singapore – The Different Types of Business Structures

Singapore has always been a pro-business oriented country. To facilitate the ease, the speed and the convenience, the Government has also embarked on the philosophy of being a Smart Nation and to have essential services online, making starting a business in Singapore a whole lot quicker and simpler.

 

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 Proprieter

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

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 owners tax rates

No continuity of business once the owner is no longer alive

Partnership

A Partnership is very similar to a sole proprietorship, difference being it has to have at least 2 owners. 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.

 

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, a Limited Liability Partnership limits the liabilities from each of the other Partners debts and losses from one another; however it does not limit the liabilities arising from the Partners own debts and losses resulting from his or her own wrongly 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 LLPs name
  • Partners have limited liability from each others 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 quantums 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 funs 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
  • Costlier to administer
  • Subject to the Companies Act
  • Statutory meetings are required
  • Annual returns must be filed

 

If you’re still undecided or you have queries or clarifications that you would like to make and to find out more, feel free to get in touch with us to help you.

 

We make it simple, hassle free and quick to get your business up and running and for you to start your business trading.