Singapore has been hailed as one of the world’s preferred countries for incorporating new businesses due to its business-friendly policies. With a number of company types available, you will be able to find one that suits your business needs, plan and direction.
1. Sole Proprietorship
Any individual who is a Singaporean or Singaporean Permanent Resident (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 is personally liable for debts and losses of business |
| Registration Requirements | Age 18 years or above. Singapore Citizen/Singapore Permanent Resident/ Entry Pass holder. If the owner is not a resident in Singapore, they must appoint an authorised representative who is a resident in Singapore. The self-employed person must top up his/ her Medisave account with the CPF Board before registering a new business, becoming the owner of an existing business name or renewing the 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 via filing a Notice of Cessation of Business Registration. By Registrar – if the registration has expired and has not been renewed |
2. Partnership
Two or more persons (up to a maximum 20) who combine some or all of their resources, skills or industries 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 Inland Revenue Authority of Singapore (IRAS) for annual returns.
| Owned by | Generally between 2 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 are personally liable for the partnership’s debts and losses incurred by other partners |
| Registration Requirements | Age 18 years or above. Singapore Citizen/ Singapore Permanent Resident/ Entry Pass holder. If the owners are not residents in Singapore, they must appoint an authorised representative who is a resident in Singapore. Self-employed persons must top up their Medisave accounts with the CPF Board before they register a new business, become owners 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 via filing a Notice of Cessation of Business Registration. By Registrar – if the registration has expired and has not been renewed |
3. Limited Partnership (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 is not personally liable for the debts or obligations of LP beyond amount of his/ her agreed contribution |
| Registration Requirements | At least one general partner and limited partner. Both can be individuals (at least 18 years old) or corporate body (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 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 |
4. Limited Liability Partnership (LLP)
LLP gives 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 is limited to the amount they contributed to the LLP. The partners are not personally liable for 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 minimise abuse and provide protection to parties who deal with the LLP. The LLP is a corporate body 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.
| Owned by | At least two partners, no maximum limit. Partners can be individuals or corporate body (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 are personally liable for debts and losses resulting from their own wrongful actions. Partners are not personally liable for debts and losses of LLP incurred by other partners |
| Registration Requirements | At least two partners, who can be an individual (at least 18 years old) or a corporate body (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 |
5. Local Private Companies
Private companies include:
- Private Limited Companies – Companies limited by shares pursuant to, and governed by the Singapore Companies Act. The shareholders 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.
6. 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 the non-profit making purpose. This type of company is more commonly used for trade associations, charitable bodies, clubs, professional and learned societies, some religious bodies and the like, rather than commercial undertakings.
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/ her investment in the company | Limited Liability. Every partner’s liability is limited up till the extent of his/ her 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 credibility 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 |
In summary, it is highly recommended to think about your overall business direction and plans for the future so you can determine the type of structure for your company. We hope the information has been helpful and all the best in your new business venture!
