Company Incorporation Options for the Singapore Residents

Last modified: December 12, 2015

Singapore-company-incorporation

Singapore has become known as a great business destination for the entrepreneurs and professionals from all over the world. As a financial hub, it has also attracted global investors. The Singapore authorities have made it easier for these individuals to open a company in Singapore.

Registration of Company in Singapore

The locals, Singaporean citizens and the permanent residents, as well as the work pass holders, have also benefited from the easy Singapore incorporation process. They have 3 options when it comes to setup company in Singapore. The local entrepreneurs can register a Private Limited Company, a Sole Proprietorship, or a Limited Liability Partnership.

The choice of the business structure, obviously, depends on the entrepreneurs’ business needs and their commitment to their goals. We, at Singapore Company Incorporation, help our clients with the appropriate business structure. Whatever the chosen structure, one can register a Singapore company in just a matter of 1 – 3 days. For local entrepreneurs, the registration process is easy and straightforward.

The firms like SG Company Incorporation, one of the Singapore incorporation services, are there to help the entrepreneurs with the Singapore company incorporation process. It contains only 2 procedures, approval of the company name and applying to ACRA to register the company. ACRA (Accounting and Corporate Registration Authority) is also chosen to act as the Company Registrar of the Singapore and hence, it is in a position to govern all the business entities operating in the Singapore.

The following are the business structures that the entrepreneurs can use for their Singapore company incorporation. It is necessary to test the strengths and weaknesses of these legal constructs. Select the one that will support your present as well as future business needs.

Local Incorporation of Company in Singapore

The Singapore residents can incorporate following types of the business entities:

1. Singapore Private Limited Company

A Private Limited Company (PLC) incorporated in Singapore is a form of the limited liability company. This business structure is very popular with the investors and the entrepreneurs as it protects their personal assets.

It limits the liability of the shareholders and the directors of the company towards its debt and the losses. Their liability is limited only to the amount they have used to buy the company shares. The company shares are easily transferable and it does not affect the existence of the company. The number of its shareholders is 1 – 50.

A PLC has separate legal existence from its owners (shareholders). The law has blessed with the perpetual existence until legally dismantled. It can buy property and real estate in its own name and that is why raising capital is easier for a PLC.

The company pays corporate income tax (0% – 17%) on its income. It can also distribute the tax-free dividend to its shareholders. All of these factors make it the most used business structure in Singapore.

2. Sole Proprietorship

A Sole proprietorship is a business structure that allows a Singapore resident to own his or her business completely. The ownership of the assets used for the business activities remains with the enterprising owner.

A Sole proprietorship is a great business structure for an entrepreneur to learn the business. Being the sole owner of the business makes the individual a decision-making authority. However, a Sole proprietorship is not a separate legal entity from its owner. This makes raising capital for the expansion of the firm difficult. It totally depends on the solidity of the character of the owner.

The responsibility towards the losses and the debts of the Sole proprietorship fully rests upon the owner. The income of the Sole proprietorship is considered as the income of the business owner and tax applied to it is not the corporate income tax, but the personal income tax that ranges from 0% – 20%.

3. Limited Liability Partnership

The Singapore residents can register a General Partnership, Limited Partnership, or a Limited Liability Partnership (LLP). However, most of them who want to register this type of business firm choose to register LLP.

A LLP limits the liability of its owners or the members of the partnership. The responsibility of the losses or the debts of the LLP fully reside with the partner/(s) responsible for it. A partner is also responsible for the losses and debts to the LLP arising out of the mistakes, actions, and inactions of the individuals working under his or her supervision. The personal assets of the partner are pledged to the losses of the LLP.

A LLP does not pay income tax on its income. Its income is considered as the income of the partners and they have to pay personal income tax that ranges from 0% – 20%, on it. If a partner in the LLP dies, the partnership automatically dissolves. Alternately, any partner can apply for the dissolution of the partnership.

An entrepreneur interested in the Singapore business incorporation must choose wisely. The choice of the business structure has the potential of influencing the tax rates and the liability of the business owner.