Different Types of Company Structures in Singapore
In general, there are three basic types of company structures in Singapore, and they vary in terms of liability, the number of owners, and the relationships between them:
Limited Liability Company (Pte Ltd or LLC)
This is the most common choice for entrepreneurs in Singapore. It is an exempt private company limited by shares.
Sole Proprietorship
One individual sets up a business. This option is only for local residents - foreigners must incorporate it under other registration types.
Partnerships
This entity is formed by at least two partners up to a maximum of 20 individual partners. There are several ways to set it up:
General Partnership (or just Partnership)
Similar to a sole proprietorship but with more than one owner.
Limited Partnership
In this entity, partners have different liabilities - one is a general partner and the other is a limited (or dormant) partner. The role of the limited partner is often restricted to funding.
Limited Liability Partnership (LLP)This entity is similar to a Pte. Ltd. This gives owners the flexibility of operating as a partnership while having a separate legal entity like a private limited company.
Which entity will be best for my company?
There are several factors to consider when selecting your entity structure:
Liability: Only Pte Ltd and Limited Liability Partnership provide a separate legal entity and limit the personal liability of founders and shareholders. The other forms expose you to personal risks.
Taxes: Only Pte Ltd companies pay corporate tax rates and can apply for tax exemptions. Other company forms will be subject to personal tax instead. Above a certain level of revenue, it is more beneficial to pay corporate tax compared to personal tax.
Compliance requirements: Pte Ltd requires to appoint a Corporate Secretary and to submit annual reports to ACRA. These duties can however be outsourced to a specialized agency.
Funding: A separate legal entity is usually required to apply for loans and attract investment.
(Source: Osome)
Notes: The above-mentioned details are not intended to serve as, and should not be deemed as, legal or financial advice from Aspire or any of its affiliates. Please seek professional advice before deciding which structure to adopt and how it may impact your business, operations, and affairs (financial or otherwise).
Questions? Chat with us by clicking on the messenger icon at the bottom right of the screen once you are logged in.