Of all the decisions you will be making to incorporate a company in Singapore, the most difficult and the most important decision you shall be taking is to decide upon the type of business structure you are going to be heading soon.
The type of business structure you choose has an imperative impact over your business operations and their efficiency. Along with the same, your liability, your paperwork, and your tax liabilities and requirements get affected as well. This is why it is very important to completely understand all the options available at your disposal to determine what suits you and your operations and what does not.
Here is a quick guide on things that you need to know!
What is an incorporated entity?
In Singapore, an incorporated entity is defined as a corporation, a limited partnership or a company – types of business structures which are completely separate from their legal individual owners.
What is Singapore entity?
In Singapore, there are different kinds of entities that are operated by both other companies and individuals.
They are all varied by different kinds of owners and types.
- For foreign individuals
- Sole proprietorship
- Limited liability companies
- For foreign companies
- Subsidiary company
- Representative office
- Branch office
What is UEN number in Singapore?
In Singapore, every business entity requires a UEN number to transact their business operations in the country.
UEN number is a Unique Entity Number, which is a 9 to 10 digit alphanumeric code, is offered by the Government of Singapore.
What is LLC in Singapore?
LLC is a Limited Liability Company in Singapore under which the liability of the shareholders of the company is limited by the capital they invest in terms of shares in the company.
The rules and regulations governing an LLC are set by Accounting and Corporate Regulatory Authority (ACRA).
There are primarily three different kinds of companies in Singapore, –
- Private Limited Company
- Public Limited Company
- Public Limited Company by Guarantee
What is a Public Company in Singapore?
A public company in Singapore is a type of LLC that is also listed on the stock exchanges.
The general public can indulge in the buying and selling of shares and debentures of the company through trading mechanisms.
A public company that is limited by guarantee is another kind of public company. The sole purpose to start a public company, limited by guarantee is to promote non-profit services.
What is a Pte Ltd Company in Singapore?
A Pte Ltd Company in Singapore is a type of company in which the total shares of the company are held by all the shareholders, which are 50 or less in number. The shares of such a company are not available for general public to purchase.
Benefits of incorporating a Pvt. Ltd. Company.
In comparison to its counterparts, a Pvt. Ltd. Company offers a variety of benefits. It is credible enough in the eyes of all kinds of financial institutions, tax authorities, stakeholders, and customers.
Moreover, a Pvt. Ltd. Company is also beneficial in terms of tax benefits and other incentive schemes by the Government of Singapore. In the long run, it of course lowers your operating costs down.
Partnerships in Singapore
The Government of Singapore allows for two or more entities to amalgamate and register as a partnership. This way, two or more individuals and corporates can come together, transact, and earn more profits. Partners can range from 2 to 20.
There are three kinds of partnerships –
- General partnerships
- Limited partnerships
- Limited Liability partnerships
What is a general partnership?
A general partnership is very similar to the concept of a sole proprietorship. Such partnerships have the partners share equal amounts of risk and liability in terms of debt and losses. A general partnership also holds all partners responsible for any kind of losses or debts incurred, no matter their lack of individual involvement.
What is a limited partnership?
Limited partnerships are different in comparison to a general partnerships. There are no maximum limit to the number of partners that can be added to the same, however, at least one of them needs to be a general partner and one should be a limited partner. In a limited partnership, the liability of the partners is only limited to the amounts that have already been specified in the original partnership agreement. But, in case of general partners, the liability is unlimited.
What is a LLP in Singapore?
A preference of plenty business owners in Singapore, LLP amalgamates the features of both a company and a partnership. LLP – Limited Liability Partnership involves two or more qualified individuals with a similar skill set, transacting business together and earning profits. The liability of the partners is determined on the basis of the partners’ actions and inactions.
Sole proprietorship in Singapore
A “solely owned by you” business enterprise involves you as the procurer of all the capital, as the sole authority in setting up your business, procuring and managing all the assets, and the sole responsible being for your future growth. With all the hard work you put in, you also garner all the benefits.
However, with a sole proprietorship, comes the risks of losses, which might not be able to be covered completely by your business funds.
Options for foreign companies to establish operations in Singapore
In addition to attracting foreign and local individuals, Singapore also attracts foreign companies to set up operations here. Foreign companies wishing to expand their operations in the country can choose from the following three kinds of options –
- Subsidiary company
Subsidiary companies are a type of Private Limited Companies, that are incorporated in Singapore under the aegis of their foreign parent company, also acting as their original shareholder. Any small and medium scale business entity can operate as a subsidiary company in Singapore.
- Branch Office
Branch offices can be established and registered in Singapore by a foreign company, as their extensions. The branch offices shall not be considered as a separate entity in any case. The liabilities of a branch office are extended to the parent company.
- Representative Office
A registered representative office in Singapore is a temporary arrangement, catering to the marketing and research needs of the foreign parent company. The representative office does not have a separate legal status and thus cannot be engaging in any kind of profit yielding activity.
What business entity suits you the most?
Every business scale – small, medium and large has something to choose from in Singapore. From a small proprietorship to a partnership to an incorporated company – the choices are plenty. All offer their own set of benefits and dangers.
Choose what suits you the most! Undertake your entrepreneurship journey with us!