A Guide To The Different Kinds Of Companies Found In Singapore
Singapore is one of the best places in Asia to do business.(types of companies in singapore)
Its popularity is due in large part to its open economy and clear rules and regulations.
Lion City also has a low tax rate and is good for business, which makes it a great place to start a new business.
If you want to start a business in Singapore, it’s important to know what company types you can choose from.
In this blog, we’ll talk about the different kinds of businesses in Singapore and the pros and cons of each. So that you can start off well!
1. Types of companies that are common in Singapore and what you should know about them(types of companies in singapore)
In Singapore, there are three common types of businesses: Limited Liability Companies, Partnerships, and Sole Proprietorships.
In this section, we’ll talk about what makes each type unique.
1.1. A company with limited liability(types of companies in singapore)
A Limited Liability Company, or LLC, is something you may have heard of more than once.
It’s also a common business structure in Singapore that can be set up in either the private or public sector:
Private sector: Exempt private company and private limited company by shares
Public sector: Limited by shares and limited by guarantee public company
Advantages(types of companies in singapore)
Liability limits
As the owner of a Singapore Limited Liability Company (LLC), you are only responsible for liabilities that are equal to the value of the shares you put into the company.
Separate legal status
Your LLC is a separate legal entity that stands on its own. So it can sign contracts, buy and own assets, sue or be sued in its own name.
Tax advantage(types of companies in singapore)
The income tax rate for your LLC is 17%.
Also, you’ll be able to get a lot of tax breaks and other help from the government.
This can make a big difference in how much you pay in taxes.
Disadvantages(types of companies in singapore)
If you run an LLC, you have to deal with the paperwork.
Still, a private limited company has fewer duties to report than a public company.
In particular, you must do the following for Singapore LLC:
- Getting IRAs to file tax returns
- Getting yearly tax returns to ACRA
- Holding AGMs (Annual General Meeting)
- Putting in financial reports
- Other jobs as needed by the relevant authorities
With our guide to Limited Liability Company in Singapore, you can learn more about what makes an LLC so great.
1.2. Partnership
To form a partnership, you need at least one other person.
Most of the time, a partnership is not its own legal entity. This means that, unless you’re a limited partner, you and your partner will be responsible for all of the company’s debts.
To sum up, here are Singapore’s three main types of partnerships:
- Partnerships in general (GP)
- Limited liability company (LP)
- Partnership with limited liability (LLP)
What’s different about GP, LP, and LLP?
Legal status
GP and LP are not separate legal entities like LLP is.
Partner is responsible
You can be a limited partner or a general partner in an LLP.
The liability of a limited partner is limited to the amount invested. While a general partner is responsible for everything.
For GP and LP, the partners would be responsible for all of the problems and losses of any company.
How many partners
A general partnership in Singapore must have at least two partners and no more than twenty.
LPs and LLPs can have as many partners as they want.
Rates of tax
If you’re in an LLP, you’ll pay personal income tax (if you’re an individual) or corporate income tax (if you’re a business) (for corporations).
A Singapore partnership is less likely than an LLC to get tax relief.
Compliance requirements
In Singapore, the rules for a partnership are easier to follow than those for an LLC.
Check out the all-in-one rules for a Limited Liability Partnership in Singapore and get an instant business edge.
1.3. Being the only owner
A sole proprietorship is easy to register. But managing and maintaining it can be quite challenging.
A single-person business is also called a “one-man show.” This means you are in charge of the business by yourself and are responsible for all of its losses and debts.
Advantages
Compliance requirements
A Singapore sole proprietorship has the least amount of work to do for maintenance.
In particular, the two most important things you need to do are renew your business and send in your tax returns to IRAS.
low price
For a sole proprietorship, you only have to pay for a business license and taxes. Even though it might be different from country to country, the cost of a sole proprietorship is often very low.
Disadvantages
Legal status
The one-person business does not have its own legal entity.
Limitless responsibility
As a sole proprietor, you are responsible for all of your business’s debts, liabilities, and losses.
Taxation
Depending on how much money you make, you’ll have to pay income tax. The rate is between 0% and 22% for people who live in Singapore. For non-residents, the flat rate is between 15% and 22%.
2. Registration of foreign companies in Singapore: What choices should be taken into account?
If you run a business outside of Singapore and want to grow there, you have several options.
Let’s learn about the three most common types of overseas companies in the next section.
2.1. Subsidiary
If you start a subsidiary company, you are essentially a shareholder in the foreign company that is the parent.
A private limited company is one way to set up a subsidiary in Singapore.
So, your subsidiary may get the same benefits and have the same responsibilities as a private limited company in Singapore.
2.2. Office of representation
Let’s say you want to start a business in Singapore, but before you do so, you want to learn more about the market.
In this situation, making an LLC or a subsidiary might seem like too much. You might want to think about having a representative office (RO) in Singapore instead.
Usually, this kind of entity is used to test the market, do market research, or raise brand awareness.
A RO is not legally different from a subsidiary. This means that if anything goes wrong in the office, the parent company in another country is fully responsible.
Also, your RO can’t do anything in Singapore that makes money for them.
2.3. Stem
A branch is a part of a foreign company’s main office.
You can do business as a branch. Still, this type of business is not legally different from any other type. So, the parent company will take on all of the branch’s debts.
Also, your branch is not taxed in Singapore because it does not live there. So there would be no tax breaks or other benefits.
Still, you can set up your branch as a private limited company and take advantage of tax breaks from the government.
3. How to choose the right type of company in Singapore
Choosing the right kind of business is like building a solid well for your future success.
Still, each structure has its own pros and cons, features, and pros and cons. So you should carefully consider your choices and choose the one that works best for you.
You should also think about a number of things before making your choice. For example, ownership, investment capital, tax benefits, and the need to follow rules.
In the end, there’s no company that works for everyone. You can’t start a private company and expect to own it all and run it the way you want. Or, set up a sole proprietorship but pay your taxes as an LLC.
Just figure out what your business needs and make a clear plan for how it will run, and you should be good to go.
If this article got you a little bit interested and you’re ready to start your chosen business structure, you can always use our Singapore company formation service for a quick and easy process.
Source: types of companies in singapore , nature of business list singapore
