How to Choose the Business Entity in Singapore

When you have decided to opt for company registration in Singapore, your next step should be to choose the right business entity to do so. This is not a decision that you can do in a hurry as there are a number of components to it. They are as follows:

• The extent of liabilities in the case of loss
• Compliance requirements
• Ease of scaling the business
• Tax liability of the business
• Ease of transfer of ownership

You need to select the business structure that will fulfill the present and future needs of the company. A wrong choice can affect viability, credibility, branding, and growth of your business.

Business Structure available to Individuals

Individual business owners can start their business as a,

• Private Limited Company
• Limited Liability Partnership
• Sole Proprietorship

If you are a first-timer, finding a mentor or a registered filing agent will put you on the right path. They can advise you on the nature, advantages, disadvantages, and scope of these business structures.

The following are some pointers that can help you in zeroing on the best business structure to fulfill your business needs.

You need to,

• Have a realistic view of the scale of your business idea
• Judge here whether it will work well as a product or platform
• Understand the scope of your business plan
• Understand the scale of intended business activities

Private Limited Company (Pte Ltd)

A private limited company limits the liability of the shareholders to the capital they have invested in its shares. To register a Pte Ltd, you must apply to the Company Registrar for Singapore (ACRA).

A private limited company is the most accepted business structure for company registration in Singapore. You need at least one shareholder and ordinarily resident director. Pte Ltd,

• Is a separate legal entity from its owners
• Is a legal person
• Has the rights of a natural person
• Can buy property in its name
• Can sue or be sued in its own name
• Has perpetual existence
• Pays headline corporate tax at 17%

Singapore allows 100% foreign ownership. It is easy to transfer ownership of shares in a private limited company. The investors, financial institutions, suppliers, & customers consider it more credible than a sole proprietorship or a partnership.

Limited Liability Partnership (LLP)

An LLP combines the advantages of a partnership and a company. Two to twenty individuals and/or corporate can come together to register it. It is most suitable for bringing together complimenting skill sets.

• An LLP is a separate legal entity from its owners
• Owners pay personal income tax (0%-22%) on their income from LLP
• Owners are liable to the losses of the LLP depending on their actions or inaction.
• Charted accountant, lawyer, and architect tend to register an LLP

Sole Proprietorship

The sole proprietorship is the simplest form of business structure in Singapore. It is not a separate legal entity from its proprietor. In the case of a sole proprietorship:

• The owner has unlimited liability for its debts and losses
• The owner's personal assets are at risk
• The proprietorship cannot buy properties or assets in its name
• The proprietor buys properties and assets for business purposes and pays taxes
• The owner's income from proprietorship is taxed at personal income tax rates (0%-22%).
• The credibility of proprietorship depends on that of the proprietor, and raising funds or loans may become difficult.

If you want to have a go at company registration in Singapore, but are new to the Singapore market or new to the business, in general. Get in touch with us to discuss your problems. SBS Consulting is a reputable registered filing agent in Singapore. Call us on +65-6536 0036 or mail us at info@sbsgroup.com.sg for answers.