The types of business entities in Singapore can be categorized as: Private Limited Company, Sole-proprietorship, Limited Partnership and Limited Liability Partnership.
1. Private Limited Company
A private limited company in Singapore is also known Private Company Limited By Shares. Generally the Shareholder's liability is limited to the amount they paid for. Most small to mid size companies in Singapore are incorporated as Private Limited.
A Private Limited Company "Singapore Company" is incorporated under the Singapore Companies Act and it should be registered with Accounting & Corporate Regulatory Authority (ACRA). The Company is a separate legal entity in comparison to the owners and the owners of the company are not liable for the debts of the company.
Setting up a Private Limited Company
To Register a Company
Company Name
The name of the company has to be approved, before the company can be incorporated.
Directors
A minimum of one resident director (either a Singapore Citizen Singapore Permanent Resident or a person who has been issued an Entrepass, Employment Pass or Dependent Pass) is necessary.
Shareholders
A private limited company can have a minimum of one and a maximum of 50 shareholders.
Company Secretary
According to Section 171 of the Singapore Companies Act, it is mandatory for every company to have a company secretary within 6 months of its incorporation.
Paid up Capital
Minimum paid up capital for registration of a Singapore company is S$1.
Registered Address
A local Singapore address has to be given for registration.
Taxation
In Singapore, registered companies enjoy tax exemptions and incentives.
2. Sole Proprietorship
It is a very simple form but risky form of business. From a legal stand point, sole proprietorships are not a separate incorporated entity and thus the owner and the business are the same. A sole proprietor is a person, who runs the business on his own. There are no directors, shareholders or partners involved. It is the least complex form of business
- A sole proprietorship has unlimited liability and all the profits of the business structure in Singapore are taxed at the personal income level.
- Banks and financial institutions would not be forthcoming to lend a loan to a sole proprietorship.
- Sole Proprietorship has to be registered under the Singapore Business Registration Act.
- Capital generally limited to personal finances and the profits from the business.
3. Limited Partnership
The liabilities of a limited partner are limited to their investment in the partnership (be it capital or property). But such partners cannot participate in the management of the business in a limited partnership.
4. Limited Liability Partnership (LLP)
It is a legal entity that was introduced in 2005. LLP is defined under the Partnership Act. and it needs to be registered with the Accounting & Corporate Regulatory Authority (ACRA).
It is the new entry amongst the various types of business in Singapore. It operates much like a partnership, but allows members of the LLP to take an active role in the business of the partnership, without exposing them to personal liability for other partners' acts. The liability protection is generally limited only to liabilities arising out of malpractice committed by other partners. A partner will not be protected from liabilities arising from contracts or from malpractice committed by partner himself or those he or she supervises.
Many of the legal and tax issues have not yet been fully resolved. The minimum number of partners in an LLP is two. LLP combines the limited liability features of companies with the operational elements of sole proprietorships. The members may agree on how profits and losses are to be shared and how the business is to be run.
