Singapore, renowned for its vibrant economy and business-friendly environment, is a global hub for entrepreneurs and investors. If you’re considering starting a business here, forming a Limited Liability Company (LLC) is one of the most efficient ways to establish a legal entity. In this guide, we’ll walk you through everything you need to know about setting up an LLC in Singapore, from the incorporation process to the benefits it offers. Let’s dive in!
Read More: Company Formation in Singapore
What is a Limited Liability Company (LLC) in Singapore?
A Limited Liability Company (LLC) in Singapore is a legal business structure that combines flexibility with protection. In this structure, the company is regarded as a separate legal entity from its owners, ensuring that shareholders’ personal assets are shielded from any liabilities the company may incur. It’s the go-to structure for businesses looking to scale, attract investors, and operate with lower personal risk.
Features of a Limited Liability Company in Singapore
- Separate legal entity from its shareholders.
- Limited liability protection for owners.
- Flexibility in ownership structure, allowing 100% foreign ownership.
- Capacity to raise capital through issuing shares.
- Perpetual succession, meaning the business can continue despite changes in shareholders.
Procedure to Incorporate an LLC in Singapore
The process of incorporating an LLC in Singapore is straightforward, thanks to the efficient regulatory framework. Here’s a step-by-step guide:
- Company Name Approval: The first step is to select a distinct name for your LLC and submit it to the Accounting and Corporate Regulatory Authority (ACRA) for approval. The name should not be identical or similar to any existing Singapore company name.
- Appointment of Directors and Shareholders: At least one Singapore resident director is required for an LLC. The director might be a Singaporean, a permanent resident, or a holder of an Employment Pass or an EntrePass. The LLC must also have at least one shareholder, and there are no restrictions on stockholders’ nationality or residency.
- Registered Address: All formal correspondence must be forwarded to an LLC’s registered address in Singapore. This can be a residential or commercial address, but not a P.O. Box.
- Company Constitution: It is necessary to draft a company constitution, commonly known as the Memorandum and Articles of Association. The laws and regulations that govern the LLC are outlined in this document.
- Filing of Documents: After completing the preceding stages, the relevant paperwork, including the company name approval, director and shareholder information, and the company constitution, must be filed with the ACRA.
- Payment of Fees: The final step is to pay the fees associated with the LLC’s incorporation. Fees vary depending on criteria such as share capital and shareholder count.
Documents Required to Register an LLC in Singapore
To ensure a smooth registration process, you’ll need to gather the following documents:
- Company name approval from ACRA.
- Company constitution (previously referred to as Memorandum & Articles of Association).
- Details of directors and shareholders, including identification documents like passport copies.
- Residential address of each director and shareholder.
- Consent to act as a director form signed by each director.
- Registered address of the LLC in Singapore.
Requirements to Establish a Limited Liability Company in Singapore
To establish your LLC in Singapore, you need to follow the specific requirements:
- At least one shareholder (individual or corporate entity).
- At least one local resident director (Singapore citizen, PR, or someone with an EP).
- A qualified company secretary within six months of incorporation.
- A registered Singaporean office address (P.O. boxes are not allowed).
- Minimum paid-up capital of SGD 1.
Advantages of Setting Up an LLC in Singapore
Setting up an LLC in Singapore offers numerous benefits, especially for those seeking growth opportunities. Some of the key advantages include:
- Personal Asset Protection: Shareholders enjoy limited liability protection, so personal assets are shielded from business debts.
- Credibility and Trust: An LLC lends credibility, making it easier to secure financing and partnerships.
- Tax Incentives: Singapore offers one of the most competitive corporate tax rates globally, along with various tax exemptions and rebates.
- Full Foreign Ownership: You can own 100% of the company, even as a foreigner, with no restrictions on profit repatriation.
- Global Hub: Singapore’s strategic location, robust infrastructure, and access to major markets make it an ideal base for international business.
Taxation for Limited Liability Company in Singapore
Singapore’s tax system is one of the most attractive for businesses. The corporate tax rate is a flat 17%, with several tax incentives available:
- Startup Tax Exemption Scheme: Eligible new startups enjoy tax exemptions on their first SGD 200,000 of chargeable income for the first three consecutive years.
- Partial Tax Exemption: Even if your company doesn’t qualify as a startup, the first SGD 200,000 of chargeable income still qualifies for partial tax exemptions.
- No capital gains tax and no tax on dividends distributed to shareholders.
Conclusion
Setting up an LLC in Singapore is a smart move for entrepreneurs seeking to capitalize on the city-state’s favorable business environment, tax incentives, and global connectivity. With clear processes and minimal barriers, establishing an LLC is a relatively quick and straightforward venture.
OnDemand International specializes in helping businesses navigate Singapore’s incorporation process with ease. From filing paperwork to ensuring compliance, our expert team is here to assist every step of the way. Contact us today to kickstart your LLC journey!
Frequently Asked Questions (FAQs)
1. How long does it take to incorporate an LLC in Singapore?
The process can be completed within 1-2 days, provided all documents are in order and the company name is approved.
2. Can foreigners set up an LLC in Singapore?
Yes, foreigners can fully own an LLC in Singapore, though they will need to appoint a local resident director.
3. What is the minimum capital requirement to start an LLC in Singapore?
The minimum paid-up capital required is SGD 1, making it highly accessible.
4. Do I need to be physically present in Singapore to register an LLC?
No, you can incorporate your LLC remotely. However, you will need a local registered address and a resident director.
5. Are there ongoing compliance requirements for an LLC in Singapore?
Yes, companies must file annual returns, hold AGMs, and maintain proper financial records.
