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Singapore
Business Entities refer to company types for business in Singapore. The
following are common choices for business registration:
Singapore Business Entities --
Limited Liability Company
A
Limited Liability Company (LLC) is a company limited by shares i.e. its
liabilities are limited to the amount of share capital. LLC is a business
entity registered under the Singapore Companies Act and a separate legal entity
from its members. In a LLC, the liabilities of the owners are limited to the
assets in the company and their personal assets are protected from business
liabilities. A Singapore LLC can be of the following types:
1.
Private Limited Company
A
private limited company is a LLC in which the shares are held by less than 50
persons and are not available to general public. Most privately incorporated
businesses in Singapore are registered as private limited companies. A private
limited company’s name in Singapore usually ends with Private Limited or Pte
Ltd. For example, our own company Janus Corporate Solutions Pte Ltd is
incorporated as a private limited company. The shareholders of a private
limited company can either be individuals or corporate entities or both.A
private limited company is the most advanced, flexible, and scalable type of
business incorporation in Singapore. It’s also the most preferred type of
Singapore business entity for serious entrepreneurs (as opposed to sole
proprietorship or limited liability partnership). For more detailed information
about private limited companies, refer to Singapore company registration guide.
2.
Public Limited Company
A public
limited company is a LLC that may offer its shares to general public. A public
limited company must have at least 50 shareholders and is subject to
significantly more stringent rules and regulations since they have the power to
raise funds from the public. Usually a public limited company is listed on a
stock exchange. Public limited companies are outside the scope of this article
as they are meant for large businesses.
3.
Public Company Limited by Guarantee
A public
company limited by guarantee is a type of business entity meant for non-profit
purposes. For more details, refer to setting up a non-profit entity in
Singapore.
Singapore Business Entities --
Foreign Company Registration Options
Foreign
companies wishing to setup a presence in Singapore, have the choice of setting
up a branch office, subsidiary, or a representative office in Singapore.
1.
Subsidiary Company.
A
subsidiary company is a private limited company incorporated in Singapore with
the parent company as its shareholder. For small to medium-sized foreign
businesses, a subsidiary company is the most preferred choice of registration
in Singapore.
2.
Branch Office. A branch office is registered in Singapore as an extension of
its parent company and not as a separately incorporated entity. The liabilities
of a branch office extend to its parent company.
3.
Representative Office.
A
representative office is registered in Singapore as a temporary arrangement for
conducting marketing research activities. A representative office does not have
any legal status and cannot be engaged in any profit yielding activities.
Singapore Business Entities --
Sole Proprietorship
A sole
proprietorship is the simplest but the riskiest type of business form in
Singapore. From a legal perspective, sole proprietorship is not a separately
incorporated entity and therefore the owner and the business are one and the
same. The owner personally owns all assets and liabilities of the business.
There is no protection of personal assets from business risks and liabilities.
As the sole proprietor of a business, you have unlimited liability, meaning
that if your business can’t pay all its liabilities, the creditors to whom your
business owes money can come after your personal assets. Many entrepreneurs are
usually unaware of this enormous financial risk. If the business is sued or
can’t pay its bills, the owner is personally responsible for the business’s
liabilities.We consider this a serious drawback and hence do not recommend sole
proprietorship to inspiring entrepreneurs.
Singapore Business Entities
--Partnership
The
partnership type of business structure attempts to address the
limited-expansion constraint faced by a sole proprietorship by allowing two or
more people to establish and co-own a business. A partnership firm has no legal
existance separate from its partners. It comes to an end with death,
insolvency, incapacity or the retirement of a partner. Further, any unsatisfied
or discontent partner can also give notice at any time for the dissolution of
the partnership. A partnership type of business structure may make sense only
in very limited number of situations. We generally don’t recommend this type of
business structure to business owners.
1.
General Partnership
A
general partnership is not a very attractive way to structure a business in
Singapore because a) like a sole proprietorship, partners are personally liable
for the debts and liabilities of the business; b) each partner can be held
responsible for the actions of another partner.
2.
Limited Partnership
The
concept of limited partnership is an alternative to the general partnership
type of business form in Singapore. It introduces the concept of a limited
partner in addition to a general partner. The liabilities of limited partners
are limited to their investment in the partnership (capital or property).
However, such partners are unable to participate in the management of the
business in a limited partnership. In a nutshell, even a limited partnership in
Singapore is not a very attractive vehicle for setting up a business for most
people.
3.
Limited Liability Partnership (LLP)
Among
the three types of partnership business entities, LLP is the most recent and
most advanced business incorporation structure. It combines the features of
partnerships and companies. LLP was introduced in Singapore in 2005 through
enactment of Limited Liability Partnership Act. Registering an LLP gives owners
the flexibility of operating as a partnership while enjoying many of the
benefits that come with a corporate body like a private limited company.
Which business entity type to
choose?
Deciding
on the right business structure to incorporate in Singapore will depend on your
particular situation and plans. As a general rule, you can use the following
guidelines when making your decision:
1. If
you are a local person and would like to register a small business where you
will be the only owner and the nature of your products/service does not carry
liability issues, it might be easier for you to register your business as a
Sole Proprietorship. However, you must carefully consider the fact that in case
of any business liabilities, the claimants can go after your personal assets.
2. If
your business involves selling your services by way of the profession you hold
(e.g. accountant, lawyer, architect, etc.) and you have one or more additional
partners in a similar profession and would like to build a joint practice,
setting up a LLP might be a suitable business structure for you.
3. In
all other cases, incorporating a private limited company in Singapore would be
the best choice. Although compliance requirements are little more complex, it
is by far the best structure in the long run.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
TANNET GROUP : http://www.tannet-group.net, http://en.tannet.com.my