How to Choose the Business Entity in Singapore
by Leslie S. Professional Content WriterWhen 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,
·
Limited
Liability Partnership
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.
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Created on Aug 7th 2020 05:40. Viewed 608 times.