Doing Business in Singapore – what business structure
A corporate entity in Singapore can be registered under one of the following business structures:
- Sole-Proprietorship
- Partnership
- Limited Partnership
- Limited Liability Partnership
- Private Limited Company
Please refer to the table below for more information on the various business entities:
| Sole Proprietorship | Partnership | Limited Partnership (LP) | Limited Liability Partnership (LLP) | Company | |
|---|---|---|---|---|---|
| Definition | A partnership consisting of two or more persons, with at least one general partner and one limited partner | A partnership where the individual partner’s own liability is generally limited | A legal entity separate and distinct from its shareholders and directors | ||
| Owned by | One person | 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). | At least two partners; one general partner and one limited partner. No maximum limit | At least two partners (individuals or body corporate), no maximum limit | • Exempt Private Company –20 or less members who are individuals • Private Company – 50 members or less • Public Company – can have more than 50 members |
| Legal Status | Not a separate legal entity | Not a separate legal entity | Not a separate legal entity | A separate legal entity from its partners | A separate legal entity from its members and directors |
| Owner personally liable for debts and losses of business | Partners personally liable for partnership’s debts and losses incurred by other partners | • General partner 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. | Partners personally liable for debts and losses resulting from their own wrongful actions but not liable for debts and losses incurred by other partners | Owners not personally liable for debts and losses of company | |
| Can sue or be sued in individual’s own name | Can sue or be sued in its firm’s name | Limited partner has limited liability | Can sue or be sued in its own name | Can sue or be sued in its own name | |
| Can own property if individual has legal capacity | Cannot own property in firm’s name | Cannot own property in firm’s name | Can own property in LLP’s name | Can own property in company’s name | |
| Registration Requirements | Age 18 years or above | Age 18 years or above | 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 two partners, who can be an individuals (at least 18 years old) or body corporate (company or other LLP) | At least one shareholder |
| Singapore citizen/Singapore permanent resident/ Employment Pass holder/ Dependent Pass holder | Singapore citizen/Singapore permanent resident/ Employment Pass holder/ Dependent Pass holder | At least one manager ordinarily resident in Singapore (at least 18 years old) if all the general partners are not “ordinarily resident” in Singapore. | At least one manager who is an individual ordinarily resident in Singapore (at least 18 years old and not disqualified under the Companies Act) | Any person above the age of 18 years | |
| If owner(s) not resident in Singapore, they must appoint a local manager who is resident in Singapore | If owner(s) not resident in Singapore, they must appoint a local manager who is resident in Singapore | At least one director ordinarily resident in Singapore | |||
| Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become the registrant of an existing business name, or renew their business registration | Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become the registrant of an existing business name, or renew their business registration | If a foreigner wishes to act as a local director of the company, he can apply for an Employment Pass from the Work Pass Division of the Ministry of Manpower under the Entre Pass scheme | |||
| Un-discharged bankrupts may not be allowed to register business registration | Un-discharged bankrupts may not be allowed to register business registration | ||||
| Formalities and Expenses | Quick and easy to set up | Quick and easy to set up | Quick and easy to set up | Quick and easy to set up | More costly to set up and maintain |
| Easy to administer and manage | Easy to administer and manage | Easy to administer and manage | Fewer formalities and procedures to comply with than a company | More formalities and procedures to comply with | |
| Registration cost is minimal | Registration cost is minimal | Registration cost is minimal | Registration cost is relatively minimal and fewer regulatory duties to adhere to than a company | Must appoint a company secretary within 6 months of incorporation | |
| Less administrative duties to adhere to | Less administrative duties to adhere to | Less administrative duties to adhere to | No statutory requirement for general meetings, directors, company secretary, share allotments, etc. | Must appoint an auditor within 3 months after incorporation unless the company is exempt from audit requirements | |
| Must renew registration annually | Must renew registration annually | Must renew registration annually | One time registration - Only an annual declaration of solvency must be lodged by one of the managers stating whether the LLP is able or not able to pay its debts during the normal course of business | Annual Returns must be filed | |
| Statutory requirements for general meetings, directors, company secretary, share allotments, etc. | |||||
| Set Up Fee | $65 ($15 name application fee and $50 registration fee) | $65 ($15 name application fee and $50 registration fee) | $65 ($15 name application fee and $50 registration fee) | $165 ($15 name application fee and $150 registration fee) | $315 ($15 name application fee and $300 incorporation fee) |
| Taxes | Profits taxed at owner’s personal income tax rates | Profits taxed at partners’ personal income tax rates | Profits taxed at partners' personal income tax rates (if individual)/ corporate tax rate (if corporation) | Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation) | Profits taxed at corporate tax rates |
| Continuity & Transferability | Exists as long as the owner is alive and desires to continue the business | Exists as long as the partners agree it will and as long as all of the general partners remain in the partnership | Exists as long as the partners agree it will and as long as all of the general partners remain in the partnership | The LLP has a legal personality separate from its partners | The company, as a separate legal entity, does not cease to exist if one or more of its shareholders die |
| If a general partner dies or leaves the partnership, usually the partnership dissolves and the assets of the partnership must be sold or distributed to pay first the creditors of the partnerships and then the partners. | If there is no limited partner, the partnership will be suspended and will be converted to a firm registered under the Business Registration Act | Its corporate existence lasts as long as its shareholders decide it should. A company’s life is usually perpetual | |||
| The partnership agreement may provide for the continuation of the business | Once a new limited partner is appointed, the registration of the LP will be restored to “live” | The LLP has perpetual succession | Ownership of a company can be transferred and additional shareholders can be appointed | ||
| Closing the Business | By Owner, Termination or Cessation of business | By Owner - Termination or Cessation of business | By general partner - cessation of LP | Winding Up – Voluntarily by members or creditors, Compulsorily by the High Court | Winding Up – Voluntarily by members or creditors, Compulsorily by the High Court |
| By Registrar – if the registration has expired and has not been renewed | By Registrar – if the registration has expired and has not been renewed | By Registrar – if the registration has expired and has not been renewed | Striking Off | Striking Off |
Further information on the different business structures and the resulting impact on administrative work can be obtained from BizFile and Enterprise One.
Advantages of setting up a business in Singapore
- Ease of setting up business in Singapore – everything can be completed within days.
- Singapore’s strategic global location – situated in the heart of Southeast Asia, accessible to the rest of the world through the developed flight network.
- Pro-business environment which attracts sizable foreign investments and business entrepreneurs.
- Attractive, world-class, and productive work-force.
- Attractive effective personal and corporate tax rates, one of the lowest in the region.
- Various tax grants and incentives to manage the cost of doing business in Singapore.
- Single-tier tax policy - income taxed at the corporate level can be distributed to its shareholders as tax-free dividends.
We can provide you the assistance in the incorporation of the business in accordance with the statutory requirements.
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Our clientele comes from various industries of different sizes, with our focus on small to medium sized enterprises.
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