Types Of Company Available

Sole Proprietorships
Any individual who is a Singaporean or Singaporean PR may start his own business by registering with the Registrar under the Business Registration Act. Before a business can be registered, the applicant (the sole proprietor) must apply to the Registry to ensure that the proposed name is available and that his/her medisave payments are up to date.The sole proprietor is entitled to all the profits of the business and is personally liable, without limit, for all its debts and obligations.

 

Owned by One person
Legal Status
  • Not a separate legal entity
  • Owner has unlimited liability
  • Can sue or be sued in individual’s own name
  • Can own property if individual has legal capacity
  • Owner personally liable for debts and losses of business
Registration Requirements
  • Age 18 years or above
  • Singapore citizen/Singapore permanent resident/ EntrePass holder
  • If the owners are not resident in Singapore, they must appoint an  authorised representative who is resident in Singapore
  • Self-employed persons must top up their Medisave account with the CPF Board before they register a new business, become the owner of an existing business name or renew their business registration
Formalities and Expenses
  • Quick and easy to set up
  • Easy to administer and manage
  • Registration cost is low
  • Less administrative duties
  • Must renew registration before the expiry date
Set Up Fee $115 ($15 name application fee and $100 registration fee) for 1-year registration

$175 ($15 name application fee and $160 registration fee) for 3-year registration

Taxes Profits taxed at owner’s personal income tax rates
Continuity & Transferability Exists as long as the owner is alive and desires to continue the business
Closing the Business
  • By owner or authorised representative by filing a Notice of Cessation of Business Registration
  • By Registrar – if the registration has expired and has not been renewed
Partnerships
Two or more persons (up to a maximum 20) who combine some or all of their resources, skill or industry with the object of making a profit, may enter into a partnership. The profit will be shared by all the partners. All the partners are also personally liable for the debts and obligations of the partnership.

*Note: Sole proprietorships and partnerships are not corporate bodies. There is no requirement for filing annual accounts but they must renew their registrations annually and report to the IRAS for annual returns.

 

Owned by Generally between two and 20 partners. A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships).
Legal Status
  • Not a separate legal entity
  • Partners have unlimited liability
  • Can sue or be sued in firm’s name
  • Cannot own property in firm’s name
  • Partners personally liable for partnership’s debts and losses incurred by other partners
Registration Requirements
  • Age 18 years or above
  • Singapore citizen/Singapore permanent resident/EntrePass holder
  • If the owners are not resident in Singapore, they must appoint an authorised representative who is resident in Singapore
  • Self-employed persons must top up their Medisave account with the CPF Board before they register a new business, become an owner of an existing business name or renew their business registration
Formalities and Expenses
  • Quick and easy to set up
  • Easy to administer and manage
  • Registration cost is low
  • Less administrative duties
  • Must renew before the expiry date
Set Up Fee $115 ($15 name application fee and $100 registration fee) for 1-year registration
$175 ($15 name application fee and $160 registration fee) for 3-year registration
Taxes Profits taxed at owner’s personal income tax rates
Continuity & Transferability Exists as long as the partners agree it will
Closing the Business
  • By owner or authorised representative by filing a Notice of Cessation of Business Registration
  • By Registrar – if the registration has expired and has not been renewed
Limited Partnerships (LP)
A limited partnership consists of general partner(s) and limited partner(s). There is no limit on the number of the partners.

A general partner who may be either a corporation or an individual, will be personally liable for all the debts and liabilities while he/she/it remains a general partner. Meanwhile, a limited partner will not be liable for the debts and other liabilities of the partnership beyond the amount of his/her agreed contribution.

 

Owned by At least two partners; one general partner and one limited partner. No maximum limit
Legal Status
  • Not a separate legal entity
  • General partner has unlimited liability
  • Limited partner has limited liability
  • Cannot own property in LP’s name
  • General partner is personally liable for debts and losses of the LP
  • Limited partner not personally liable for the debts or obligations of LP beyond amount of his agreed contribution.
Registration Requirements
  • At least one general partner and limited partner. Both can be individuals (at least 18 years old) or body corporate (company or other LLP)
  • At least one manager ordinarily resident in Singapore (at least 18 years old) if all the general partners are not “ordinarily resident” in Singapore.
Formalities and Expenses
  • Quick and easy to set up
  • Easy to administer and manage
  • Registration cost is low
  • Less administrative duties
  • Must renew registration before the expiry date
Set Up Fee $115 ($15 name application fee and $100 registration fee) for 1-year registration
$175 ($15 name application fee and $160 registration fee) for 3-year registration
Taxes Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)
Continuity & Transferability
  • Exists as long as the partners agree it will and as long as all of the general partners remain in the partnership
  • If there is no limited partner, the partnership will be suspended and will be converted to a firm registered under the Business Names Registration Act
  • Once a new limited partner is appointed, the registration of the LP will be restored to “live”
Closing the Business
  • By general partner – cessation of LP
  • By Registrar – if the registration has expired and has not been renewed
Limited Liability Partnerships (LLPs)
LLPs give owners the flexibility of operating as a partnership whilst giving them limited liability. It combines the benefits of a partnership with those of private limited companies. Liability of the partners are limited to the amount they contributed to the LLP. The partners are not personally liable to the obligations of the LLP. A partner is personally liable for claims from losses resulting from his/her own negligence or wrongful act which will not affect any other partners.

However this comes with safeguards in law to minimize abuse and provide protection to parties who deal with the LLP. The LLP is a body corporate and has legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of a LLP does not affect its existence, rights or liabilities.

Definition

Owned by
  • At least two partners, no maximum limit
  • Partners can be individuals or body corporate (company or other LLP)
Legal Status
  • A separate legal entity from its partners
  • Partners have limited liability
  • Can sue or be sued in its own name
  • Can own property in its own name
  • Partners personally liable for debts and losses resulting from their own wrongful actions
  • Partners not personally liable for debts and losses of LLP incurred by other partners
Registration Requirements
  • At least two partners, who can be an individuals (at least 18 years old) or body corporate (company or other LLP)
  • At least one manager who is an individual ordinarily resident in Singapore (at least 18 years old and not disqualified under the Companies Act)
Formalities and Expenses
  • Quick and easy to set up
  • Fewer formalities and procedures to comply with as compared to a company
  • Registration cost is low and fewer regulatory duties to adhere to than a company
  • No statutory requirement for general meetings, share allotments, etc.
  • Only an annual declaration of solvency must be lodged by the manager stating whether the LLP is able or not able to pay its debts during the normal course of business
  • One time registration
Set Up Fee $115 ($15 name application fee and $100 registration fee)
Taxes Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)
Continuity & Transferability
  • The LLP has a legal personality separate from its partners
  • The LLP has perpetual succession
Closing the Business
  • Winding Up – Voluntarily by members or creditors, Compulsorily by the High Court
  • Striking Off
Local Private Companies
  • Private Limited Companies – Companies limited by shares pursuant to, and governed by the Singapore Companies Act. The share holders cannot be held personally liable for the debts of Limited Companies, with their liability limited to the amount of shares that have been issued to them which they have not fully paid for. The number of shareholders is limited to fifty or less.
     
  • Exempt/Deemed Exempt Private Limited Companies – A subtype of a private company, an exempt Private_Limited_Company has less than 20 members, none of them being corporate entities. Should the companies turnover exceed S$5million it will no longer be deemed exempt. The status is not specially conferred, it is simply a status by operation of law.For more information about tax exemption of Private Limited companies, please check our Singapore Tax FAQ page.
     
  • Gazetted Exempt Private Companies – Government-owned companies which have been declared Exempt Private Company by the Minister Gazette. 

 

Local Public Companies
Public companies include :

 

  • Company Limited by Share – The number of shareholders can be more than fifty members and the company may raise capital by offering shares and debentures to the public. A public company must register a prospectus with ACRA before making any public offer of shares and debentures.
     
  • Company Limited by Guarantee – Companies limited by guarantee are usually formed for non-profit making purpose. This type of company is more commonly used for trade associations, charitable bodies, clubs, proffesional and learned societies, some religious bodies and the like, rather than commercial undertakings.
     
Comparison: Singapore LLC vs LLP vs Sole Proprietorship

 

Comparison: Singapore LLC vs LLP vs Sole Proprietorship

 

 

Comparing Factors LLC (Pte. Ltd) LLP Sole Proprietor
Legal Status Separate legal identity Separate legal identity Not a separate legal identity
Debt & Liabilities Ownership Limited Liability. Every shareholder’s extent of liability is limited to his investment in the company Limited Liability. Every partner’s liability is limited up till the extent of his investment in the LLP Unlimited Liability. The owner has to bear the responsibility and is personally accountable for debts and losses
Succession Abilities Not limited to the death or retirement of the members, has an enduring structure Not limited to the death or retirement of the members, has an enduring structure Lack of enduring structure and perpetual succession
Ease of Raising Capital Easy to raise capital, since banks and financial institutes view credibility in an LLC Difficult to raise capital. Have to remain limited to private finances and partners’ contributions Difficult to raise capital. Have to remain limited to private finances and partners’ contributions
Registration Timeline 1-2 days 1-2 days 1-2 days
Taxation Regime Profits are taxed at corporate tax rate, i.e. below 9% for profits up to SGD 300,000 and capped at 17% for profits above SGD 300,000 Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime
Transference of Ownership Easy to transfer partial or full ownership of the company, by simple transfer of shares Difficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits Difficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits
Maintenance Requirements More complex structure, hence the need of major setup/compliance costs and paperwork Moderate setup, hence the compliance costs and paperwork are comparatively lesser than an LLC Minimum setup, hence the compliance costs and paperwork are a bare minimum
Point of View of the Public Holds highest credibility and has a strong public perception Holds moderate public image, and comparatively lesser credibility Holds low public perception, and hence has a low image
Dissolution Procedure Needs a strike off process, which is intricate, involves a lot of complexities, and legal compliances Needs a strike off process, which is comparatively less intricate and involves a less number of compliances, than an LLC Least complex, basically involves issuing of a notice of termination, followed by a notice of cessation to registration authorities
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