Overview: Business Entities In Singapore
Singapore is the country that always tops the list of business-friendly countries. According to many surveys, it has the highest scores when it comes to its political stability, business environment, competitiveness, transparency of regulations, and other important factors that play a very important role in the establishment and growth of any business entity.
Before incorporating a business entity in any destination, a businessman must make calculations for profits and losses, regulations, taxation policies, and many other criteria of that destination. In addition, they are also required to seek which Singapore company type will be more suitable with the business operations he/ she wants to conduct as it is one of the major factors as this will lead to changes in tax policies, paperwork, image, and prescription for clients, personal liability, borrowings, and expansion of business operations.
This article provides you with an overview of different types of business entities in Singapore with the advantages and disadvantages of each of them. Each of them has its tax policies, regulations, and ownership policies. Let’s get introduced to all those types now.
Types Of Business Entities In Singapore
There are many Singapore company types that are allowed to operate in that country. Small introduction with advantages and disadvantages of each of them are as follows-
Public Limited Companies
It is a form of limited liability company. These companies offer their shares for sale to the public. These are required to have 50 shareholders as a minimum number. As these companies can raise funds from the public, there are stricter regulations and rules to be followed by them. Usually, these companies listed their stock in the stock exchange markets. This form is established for large businesses.
A public limited company by guarantee is a type of public limited company. This form is mainly used for non-profit organizations.
A public limited company by share is the second form of a public company. In this type of structure, the liability of members is limited to the number of shares.
Advantages-
- These can be listed on the Singapore stock exchange.
- It has a large option to raise funds as it can raise funds from the public.
Disadvantages-
- These companies have to disclose their financial position to the public. So, there is a lack of confidentiality of information.
- These companies are required to follow stricter rules and regulations.
Private Limited Companies
This is another type of limited liability company. It has 50 members maximum. The shares of these companies are not offered to the public. In Singapore, the name of the company ends with PTE Ltd. The shareholders of these forms of companies are both individuals or entities. These are more advanced and have a flexible nature. These are also the most preferable types of business entities in Singapore.
Advantages-
- There is an easy procedure for registering a private limited company in Singapore.
- These companies have perpetual succession.
- The newly established private limited company attracts many tax exemptions and incentives.
Disadvantages-
- These have to comply with the statutory requirements.
- There is a lengthy process for liquidation of these types of business entities in Singapore.
- There is a high administrative burden on these forms of business entities in Singapore.
Partnership
In this type of business structure, there are two or more owners of the business. This type of business provides extensions to the sole proprietorships as in sole proprietorship there is limited expansion is possible. There is no separate legal entity of partnership firms from its partners. These businesses can be ended only at the death of partners, insolvency, the retirement of partners. In case, a partner wants to discontinue or is unsatisfied due to any reason, he/she can give notice for dissolution of the partnership. These businesses are for limited situations only. For numerous business activities, it is not that much better.
Types of partnerships firms in Singapore-
1. General Partnership
In the case of a general partnership, there are a minimum of 2 partners and a maximum of 20 partners. All the partners are required to pay tax on their incomes only. Each partner is responsible for the actions of other partners also. This is not the most popular type of business entity in Singapore. All the partners are personally liable for the liabilities of the firm.
2. Limited Partnership
This is an alternative form of general partnership form of business entities in Singapore. It has the feature of limited liability along with the general partnership form of business entities in Singapore. The liabilities of partners are limited up to the amount of investment by them through capital or property, but these partners are not allowed to take part in the management activities of these types of business entities in Singapore.
3. Limited Liability Partnership
Among all the other types of partnerships, limited liability partnership is a more advanced form of business entity in Singapore. This type of business entity in Singapore has the combined features of partnerships and companies.
This form is mainly for conducting professional activities where two or more professionals from the same profession can jointly conduct business activities.
Advantages-
- These have to face less statutory control as compared to companies.
- Internal structures of partnership firms are more flexible.
- These are the very cheap type of business entities in Singapore for setting up.
Disadvantages-
- Any particular partner can be sued for all the debts of the firm.
- In case of a partner shortfall in paying debt, then another partner is liable to pay it off.
- In the case of unlimited liability partnerships, there is a risk to the personal assets of the partners.
Sole Proprietorship
In the case of a sole proprietorship, this is a very cheap form of business entity in Singapore, on the other hand, it is most risky. This type of business entity in Singapore does not have a separate legal entity which means the owner and business are the same.
All the liabilities, expenses, losses, and profits are solely owned by the proprietor. The personal assets and properties of the owner have a high risk. These forms of business entities in Singapore have unlimited liability and also have huge risks. The owner is the only one accountable for any activity.
Advantages–
- There is no profit sharing
- Easier to set up in nature when it comes to these types of business entities in Singapore.
Disadvantages–
- There is no separate legal entity. The firm and the owner himself can be considered the same.
- There are no incentives for corporate tax.
How To Choose A Type Of Business Entity In Singapore To Register?
The selection of business structures for registering a company in Singapore will depend upon the plans and circumstances. The different business entities in Singapore have different features. The selection of best suited for a business entity in Singapore is a most crucial task. The following points will help in selecting the right type of business entity in Singapore.
- In the case of a local person who wants to incorporate small businesses and also wants to be responsible for all the activities. So, it is better to go with a sole proprietorship. However, you must be careful about the drawbacks of this type of business entity in Singapore.
- If you have two or more partners and want to operate a business for providing professional services. So, in that case, you can start a partnership firm or any form of partnership.
- For all the remaining cases, private limited companies are mostly preferred and a better
Necessary Documents for Company Registration in Singapore
For registering a company in Singapore, one must need to have:
- Approval letter of company’s name
- Brief description related to business activities
- Details about shareholders, directors, company secretary
- The registered address of Singapore
- Copy of passport, personal details, bank details in case of a non-resident of Singapore.
Steps To Register A Company In Singapore
The procedure for registering a company is an online process.
The following steps are required to be followed for registering a company in Singapore:
- Apply for the approval of the name of the company to the ACRA of Singapore. The name of the company must be unique and comply with all the requirements of the law of Singapore. Pay the fees through an online mode of $15 for the application form for approval of name.
- Prepare the requirement document as mentioned above as per requirements.
- Fill out the application form online with ACRA with the application fees of $300 and documents.
Conclusion
When it comes to Singapore, neither the country itself is a stranger to the international business opportunities and activities that run throughout a fiscal year nor the various budding and professional entrepreneurs who either already have set up a Singaporean entity or are looking to venture beyond their comfort zone and open a certain type of business entity in Singapore rather sooner along with all the planning that goes behind it.
Business entities in Singapore don’t limit themselves to an extent but are known for utilizing all that the Singaporean government has to offer to help them grow into a big market player.
In this article, we took the agenda of getting to the information that revolves around all the types of business entities in Singapore and what differentiating factors they carry and bring to the mix of foreign-originated companies and revenue-driven businesses.
Starting with taking a look at business entities in Singapore, specific types such as PTE Ltd., etc. we learned about what they are, what they mean, accompanied by listing down their various advantages and disadvantages to know better which one to go for when starting a new entity.
It comes down to whether and which type of business entity in Singapore is the best option for you. To resolve this query, Odint Consultancy is the way to go and the place to be, since we have expertise in providing the right insights and knowledge you’re going to need before starting any kind of business.
FAQ’s
LLC stands for limited liability company. It has a separate legal entity, which means it is separate from its shareholders and directors.
Sole proprietorship, limited partnership, limited liability partnership, limited liability company, partnership are legal entities in Singapore.
Yes, both are the words that show that the company is a private limited company. The difference is only that PTE Ltd is used in Singapore whereas Pvt Ltd is used in India.
Private Limited Company (Pte Ltd) is the most prevalent in Singapore.
A general partnership firm must have a minimum of 2 members.
