Business Entities in Singapore
Don’t let its small population fool you, Singapore has been evolving into a major central business district in Asia for the past ten years. Here, a booming business climate and diverse culture come together to create a friendly and open landscape for all types of new businesses –local and foreign. This 2017, Forbes.com ranked Singapore as one of the top countries for business.
The more-than-agreeable government policies and tax rates are known to be highly pro-business and pro-entrepreneur, providing an array of options as to types of companies and the regulations that govern them. However, there are certain standards that must be met across the board. The most important of which, is a Singapore office address. For foreigners who wish to incorporate in Singapore, a representative resident must be appointed. Of course, all individuals involved must be 18 years of age and above, as required by law.
Once this is out of the way, the doors open for different types of companies to set up shop. There are five main structural types of businesses, as well as companies Limited by Guarantee (CLG) that are recognized by the Accounting and Corporate Regulatory Authority (ACRA). These 6 business entities are:
1. Sole Proprietorship
As the name suggests, a sole proprietorship is owned and run by one single person. They are in charge of making all the decisions for the business. The downside is that the owner also absorbs all liabilities incurred as a result of doing business. This type has the lowest cost for registration.
A partnership can exist between 2 to 20 individuals. In this case, though the business can be sued in its name, if any liabilities are incurred then the partners’ personal properties and assets may be affected. Profits from this type are taxed at the personal income tax rates of its owners
3. Limited Partnership (LP)
This must consist of at least one general and one limited partner. The former takes on any liabilities without bounds, while the latter can be held liable only up to the amount they contributed to the business. The limited partner/s must not be in charge of the management of the business.
4. Limited Liability Partnership
Within an LLP, the two or more partners are generally safe from incurring liabilities of the business unless they are personally responsible for such debts and losses.
Within a company, owners’personal assets are protected from debts and liabilities that may occur as a result of business. The company may assume properties and assets in its incorporated name and exists beyond the status of the owners and shareholders.
- Private –maximum of 50 shareholders
- Public –can have more than 50 shareholders.
For foreign businesses and residents, there are other factors to be considered. To learn more about setting up an offshore company, click here.
Four positions within the company must be established and filled at varying periods after incorporation. As declared by ACRA, these are the company director (one or more), secretary, chief executive officer (CEO), and auditor (unless exempted).
In order to start doing business as a company in Singapore, you must first successfully incorporate (applies to companies, LLPs and LPs). To do so, you need to register the official company name. Upon approval, the appointed representative can proceed to BizFile+, also known as ACRA’s electronic filing and information retrieval system,to register. Find out more about this process
6. Company Limited by Guarantee(Link)
These companies do not have shares or shareholders. They are generally non-profit and are set up for charitable purposes.
They should have at least 3 governing board members who agree to provide a predetermined sum of money as liabilities if the company is dissolved.
Click here for ACRA’s guide to starting your business in Singapore.