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Singapore’s Various Corporate Structures

Start a Profitable Company in Singapore

Success in incorporating a firm hinges on picking the correct business structure. What you choose to do can have far-reaching consequences for your company, including its public profile and standing with customers and financial institutions, internal operations, tax burden, exposure to personal liability, and growth prospects. To get you started on the path to incorporating a company in Singapore, we have offered an overview of the various business structures available to you. Depending on their structure and who owns them, businesses face varying levels of regulation and taxation.

If you need advice choosing the right legal structure for your new company, our expert team is here to help.

Corporation That Requires Confidentiality To Be Maintained

For maximum adaptability and modern convenience, businesses in Singapore should form as Private Limited Companies using the local incorporation process. In addition to enjoying tax benefits and exemptions, it is the most popular company structure in Singapore since it shields the personal assets of the owner from business debts.

A private limited firm must end its name with “Private Limited” (Pte Ltd). The maximum number of stockholders is 50. There must be a Singaporean or Singaporean permanent resident or Employment Pass (EP) holder serving as the company’s local director even though 100% foreign ownership is permitted.

There are several forms of this company structure, including the Private Limited Company, the Exempt Private Limited Company, the Public Limited Company by Shares, and the Public Limited Company by Guarantee.

Features

Shareholders’ Assets are Protected from Personal Liability

The ability to sell shares and appoint new shareholders will allow the company to raise more money to fuel its expansion.

Credibility, dedication, and vision in company all firmly established.

Improved credibility increases interest in lending from financial organizations like banks.

In other words, the company will continue to exist and operate regardless of who its shareholders are or what kind of ownership structure they choose to adopt.

With a business tax rate that is among the lowest in the world

For the first three years of operation, a new Singaporean company pays no tax on the first SGD 100,000 of its yearly taxable income.

For the first three years of operation, a new Singapore business is subject to a maximum annual tax rate of 8.5% on taxable revenue from SGD 100,001 to SGD 300,000.

Earning more than SGD 300,000 is subject to a low, flat tax rate of just 17%.

Tax-free dividends and capital gains

The Singapore Companies Act is often reviewed to improve corporate development and new venture creation.

Self-Employed or Owned by One Person

As the name implies, a “Sole Proprietorship” is a company that is owned and operated by a single person. The firm’ assets and debts are wholly within the sole proprietor’s control and responsibility. The sole proprietor is personally responsible for any business debts and losses because the business and the proprietor are treated as one in law. Unlike Private Limited Companies, Sole Proprietorships are not eligible for the tax benefits and exemptions that are available to LLCs.

A Sole Proprietorship in Singapore can be set up by any citizen or permanent resident of Singapore, as well as any holder of an Employment Pass (EP), or an Entrepreneur Pass (EntrePass). Registration is also open to foreign persons and businesses who have designated a local resident management.

Features

The company and its owner are treated as one in legal matters.

All obligations and losses incurred by a sole proprietorship are the sole responsibility of the proprietor.

All of a sole proprietorship’s earnings are added to the owner’s personal income and taxed accordingly.

The death of the owner puts an end to the company, therefore it is neither permanent nor transferrable in part.

A sole proprietorship is not a valid business entity and hence cannot register a subsidiary.

The Sole Proprietorship’s registration number is included on all business correspondence, including letterheads, invoices, bills, and any other papers.

There are fewer opportunities for growth or capital infusion since investors shy away from dealing with unincorporated businesses.

Within 14 days following the effective date of any modification to the business’s particulars, an amendment must be filed with the Registrar.

The registration of a sole proprietorship must be renewed every year.

Partnerships

By allowing two or more persons to form and co-own a business, a partnership removes some of the restrictions associated with a sole proprietorship. Capital, talent, and strategic assets can all be acquired on favorable terms for both parties under this business arrangement. However, unlike Private Limited Companies, partnerships do not qualify for the tax breaks and deductions that these corporations receive.

According to the Singapore Companies Act, every business with more than 20 partners must register as a Private Limited Company.

Coalition at Large

In a General Partnership, each member is directly responsible for the business’s obligations and liabilities, making it very similar to a Sole Proprietorship. Partners should consult a lawyer to draft a Partnership Agreement that spells out each partner’s responsibilities and share of the earnings. In addition to their own conduct, each partner may be held accountable for the behaviors of the others.

Thus, both non-Singaporeans and Singaporeans who are interested in incorporating a business tend to avoid this structure.

A Limited Partnership can be formed in Singapore by any citizen or permanent resident who holds an Employment Pass (EP). Limited Partnerships can be formed by non-residents, but they still need to hire a management from the host country to conduct operations.

Features

lacks the status of a legal body apart from that of its partners

Setup is a breeze using ACRA.

They need not undergo financial audits or submit yearly reports to ACRA.

The pooled assets of all partners increases the company’s access to capital for growth.

Every partner bears equal responsibility for the company.

One partner may be held liable for another’s misfortune if the two partners are in a partnership.

If a partner is an individual, profits are taxed at their marginal income tax rate; if a partner is a business, profits are taxed at the corporate tax rate.

Not even any tax breaks

Since the death of a partner results in the dissolution of the partnership, it is not perpetual.

Each partner must give consent for any partnership-related decisions.

Source: types of companies in singapore , nature of business list singapore

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