Establish a Profitable Business in Singapore
Incorporating a business necessitates the selection of the most advantageous business structure. Your decision can impact the image and reputation of your firm among clients and banks, administrative procedures, taxes, personal liability, and the capacity to grow commercial operations. To assist you in choosing the best business entity for your firm’s growth, we have given you with an overview of the many types of business structures available for Singapore company incorporation. Each entity is subject to regulatory and tax rates that vary based on its structure and ownership.
If you have doubts concerning an appropriate business entity for your company’s incorporation, our skilled staff is also available to speak with you.
Limited Liability Company
Locally incorporated Private Limited Companies are the most flexible and modern business structure in Singapore. In addition, it is the most popular business form in Singapore since it shields the owner’s personal assets from obligations committed by the company and enjoys tax perks and exemptions.
Private limited companies must end their names with “Private Limited” (Pte Ltd). The maximum number of shareholders is fifty. While 100% foreign ownership is permitted, a Singapore citizen/resident or Employment Pass (EP) holder must serve as the company’s local director.
Variations of this company structure include Private Limited Company, Exempt Private Limited Company, Public Limited Company by Shares, and Public Limited Company by Guarantee.
Feature Highlights
Personal property security for shareholders
Transferable ownership and the nomination of additional shareholders permit the infusion of additional cash for corporate expansion.
Strong establishment of business credibility, devotion to the profession, and vision
Increased professional business image increases the likelihood of receiving bank and other financial institution loans.
Permanent existence with corporate activities undisturbed by ownership changes; holding pattern
Enjoyes an effective and very competitive corporate tax rate
Zero tax on the first SGD 100,000 in taxable income for the first three years of a new Singapore company’s existence.
Maximum tax rate of 8.5% on taxable income between SGD 100,001 and SGD 300,000 for the first three years for a new Singapore company.
On taxable incomes above SGD 300,000, a 17% flat rate applies.
Zero taxes on capital gains and income
Regular evaluations of Singapore Companies Act procedures to promote business expansion and startup formation.
Exclusive Proprietorship
A sole proprietorship is a business structure held by a single individual. The Sole Proprietor (i.e., owner) has decisive authority and responsibility over all of the business’s assets and obligations. The Sole Proprietor is not a separate legal entity from the firm and is consequently liable for all of the business’s losses and debts. Unlike Private Limited Companies, Sole Proprietorships do not enjoy the tax perks and exemptions granted to Private Limited Companies.
As a Sole Proprietor, any Singaporeans, Singapore Permanent Residents (PR), Employment Pass (EP), and Entrepreneur Pass (EntrePass) holders can register. Individuals and businesses from outside the country may also register, provided a local management is selected.
Feature Highlights
The business is not a legally distinct entity from its owner.
The sole proprietor is completely accountable for any business-related obligations and losses.
Profits of a sole proprietorship are classified as the owner’s personal income and taxed at the personal income tax rate.
Not perpetual nor transferrable in part, as the business terminates with the owner’s death.
As a legal entity, a Sole Proprietorship cannot register another business entity.
The registration number of the Sole Proprietorship must appear on all letterheads, invoices, bills, and other papers used for conducting business.
Investors’ reluctance to deal with unincorporated firms restricts capital infusion and expansion choices.
All modifications to the business’s particulars must be submitted to the Registrar within 14 days of the date of the change.
A Sole Proprietorship must renew its registration annually.
Partnerships
Unlike a sole proprietorship, a partnership permits two or more persons to start and co-own a business. This corporate structure allows you and your partner to obtain finance, skills, and strategic assets on mutually agreeable conditions. However, partnerships are not eligible for the tax perks and exemptions available to Limited Liability Companies.
The Singapore Companies Act limits the number of partners in a business to 20, and all partnerships with more than 20 partners must register as a Private Limited Company.
General Association
A General Partnership functions similarly to a Sole Proprietorship because all partners are personally liable for all business obligations and liabilities. Partners should consult a lawyer to draft a Partnership Agreement that defines each partner’s position, obligations, and share of the profits. Each partner can be held accountable for the activities of the other.
As a result, this structure is not favored by foreigners and Singaporeans seeking to incorporate a business.
Citizens of Singapore, Permanent Residents of Singapore, and Employment Pass (EP) holders may create a Limited Partnership. Foreigners may form a Limited Partnership, but they must pick a local management to oversee the business.
Feature Highlights
Not a legal entity distinct from the partners
A quick and simple setup using ACRA
Not obliged to file yearly returns or conduct an audit with ACRA
On the basis of the pooled assets of all partners, it may be less difficult to get loans for business expansion, allowing for greater access to capital.
Each partner bears equal responsibility for the business.
A partner might be held responsible for a loss brought on by another partner.
Profits are taxed at the personal income tax rate of the partners, if they are individuals, or the corporate tax rate, if the partner is a business.
There are no tax breaks or exemptions.
Not everlasting since partnerships are automatically dissolved at the demise of one partner.
All partners must reach consensus on partnership-related decisions.
Exclusive Partnership
Minimum requirements for a Limited Partnership are one active (general) partner and one inactive (limited) partner. The partners are accountable for all liabilities, and the profits are taxed at their individual tax rate.
A Limited Partnership firm may be registered by Singapore nationals, Singapore permanent residents, and Employment Pass (EP) holders. Foreigners may form a Limited Partnership, but they must pick a local management to oversee the business. The partners may be individuals, Singaporean firms, or foreign firms.
Feature Highlights
Minimum of two partners, including at least one general and one limited partner.
No maximum number of partners is imposed.
General partners have unlimited personal liability and are accountable for all partnership actions, debts, and obligations.
Limited partner is not responsible for any debts or obligations in excess of his investment.
Not a separate legal entity
Profits are taxed at the personal income tax rate of the partners, if they are individuals, or the corporate tax rate, if the partner is a business.
Source: types of companies in singapore , nature of business list singapore