In the initial phase of Singapore company incorporation, it is crucial to choose the appropriate business structure. You can choose from a variety of enterprises and businesses in Singapore, depending on your needs and objectives. In general, the following are the most prevalent:
- Limited liability company
- Limited liability company
- Sole proprietorship
- Partnership
Limited Liability Company
This option is the most popular of all options. In plain English, it is a firm that is privately owned by no more than 50 stockholders. Individuals or companies may participate as shareholders.
The majority of overseas entrepreneurs create a limited liability company in Singapore due to its advantageous attributes. These qualities include independent legal status, restricted liability for members, and eligibility for tax advantages.
Specifically, a private corporation has a legal entity that is distinct from its members. This means that the business can enter into contracts, purchase and sell property, sue and be sued in its own name.
Having a separate legal entity also confers limited liability on the company’s stockholders. In the event of a private company’s bankruptcy, the only loss shareholders incur is the value of their shares. Beyond that, they will have no further personal obligation for the business’s debts.
In addition, a Singaporean limited liability corporation may be qualified for a variety of taxation grants and programs. At 17%, the corporate income tax imposed on Singaporean enterprises is fairly low. However, a private company’s actual tax liability is lower due to numerous tax reduction methods. For instance, it may be eligible for a 75% tax exemption rate and an annual tax rebate.
Public Limited Partnership
A public limited company can have more than fifty shareholders. This firm type possesses all the characteristics of a private enterprise. The primary distinctions between private and public corporations are the number of shareholders and the capacity to raise money. A public limited corporation can offer shares and debentures to the public, but a private limited business cannot.
Foreign entrepreneurs in Singapore typically pick public limited businesses to raise their capital more rapidly. In exchange for this benefit, there are numerous compliance requirements and copious amounts of documentation to complete. Typically, public businesses allocate far greater resources to administrative and management responsibilities.
Exclusive Proprietorship
In Singapore, sole proprietorship is likewise one of the most popular business structures. It is owned by a single individual (sole proprietor).
This type of business lacks a unique legal entity and corporate structure. The firm owner is accountable for all debts and liabilities. Therefore, sole proprietorships are one of the riskiest business structures in Singapore.
Additionally, a sole proprietorship is short-lived because its owner cannot transfer ownership to another individual. Additionally, it is difficult for a sole proprietorship to attract funds due to a negative public reputation.
Regarding taxation, a sole proprietorship is exempt from the 17% corporate tax rate. As it is classified identically to the owner, it will be taxed in accordance with the personal income tax, which ranges from 0% to 22%. This sort of business is also ineligible for a number of tax-reduction programs, just like a corporation.
As a benefit of this business structure, the owner has complete control over the business, including the income. He is free to make any business decision or to spend the entire profit. An investor should also consider forming a sole proprietorship due to the limited amount of compliance obligations.
Partnership
A partnership is a firm formed by two or more individuals whose primary objective is to make profits. Typically, the activities of a partnership focus around the abilities and expertise of the partners.
There are three varieties of partnership, each with a unique set of characteristics: general partnership, limited partnership, and limited liability partnership.
General collaboration
A general partnership is not a legal entity in its own right. The number of partners may range between 2 and 20. They will bear unlimited liability for their own and others’ conduct.
Limited liability partnership
Similar to a general partnership, a limited partnership has no unique legal character. There is no restriction on the quantity of partners. Individuals or corporations may participate as partners. Individuals or companies are permitted as partners. However, the business must be entirely managed by a general partner.
The general partner’s liability is unlimited. In contrast, the liability of other partners, known as limited partners, is limited to their investment.
Limited liability company
This sort of partnership, unlike the previous two, is regarded a separate legal entity. The number of partners may range between two and infinity. Individuals or companies are permitted as partners.
Due to the partnership’s unique legal position, the partners have limited accountability for their investment. However, they may also bear personal liability for their own wrongdoings, but not for the actions of other partners.
This sort of partnership is distinguished from the other two by its independent entity and restricted liability for its partners. It resembles a limited liability company. However, taxation is the greatest disadvantage of this partnership compared to a limited liability company.
A limited liability partnership is taxed on a partner-by-partner basis. Individuals will be subject to Singapore’s personal income tax, while corporations will be subject to Singapore’s corporate income tax.
In conclusion
There are numerous types of companies and businesses in Singapore. It is advised that you form a limited liability business. It can provide you with a high level of security as well as numerous tax advantages.
You can register the firm yourself, but the registration process will take longer. With the assistance of a reputable service provider, you may anticipate receiving the results of your company’s formation within twenty-four hours.
Source: types of companies in singapore , nature of business list singapore
