Types of Companies in Singapore and their charactistics

To officially start a business, you need to register with Accounting and Company Regulation Authority (ACRA).

There are essentially 4 kinds of registrations namely

• Sole-proprietorship
• Company (Private Limited)
• Partnership limited liability (LLP)
• Limited Partnership (LP)
  

Characteristics of a sole-proprietor/Partnership

A business can be a sole-proprietorship or a partnership and you can limit to 20 partners. The business is owned by 1 person in sole-proprietorship or 2 to 20 persons in partnership. Sole proprietor/Partnership is subject to personal income tax from the business profits.

Pros of registering as a business (Sole-proprietorship or Partnership)

• Easy and relatively cheap way to start a business
• $65 for registration and $20 renewal annually
• Lesser compliance matters and requirements

Cons of registering as a business (Sole-proprietorship or Partnership)

•  Full liability (Your personal assets is not safe from debtors)
• The perception of your business operation may be relatively small scale

Requirements to register a sole-proprietorship/Partnership

• Legal age of 18 and not a bankrupt
• A business name (Some names take longer to get approval, seek professional advice if you need help)
• A business address (Can be your residential address or need to seek approval from HDB if you are residing in a HDB apartment (Not advisable as you don’t want people to visit your house for all kinds of reasons) or get a virtual office package which includes a registered business address)
• Start up capital

(For printing of name cards, website and email hosting, printing of invoices, virtual office cost/rental and other miscellaneous cost that may be involve in your business)

Characteristics of A Company (Private limited)

A company is a business entity registered under the Companies Act, Chapter 50. It can have a number of shareholders limited to 50. It is a legal entity of its own meaning it has rights to own properties, it has perpetual succession and it can sue or be sued in its own name. It usually has the words 'Pte Ltd'.

Pros of Registering Company

• Has limited liabilities as company and shareholders are different entities (unless the directors sign personal guarantees)
• Able to employ employees
• Enjoy tax exemption for corporate tax of up to SGD$100,000 profit for its first 3 years of incorporation
• The perception of your business operation is bigger than a sole-proprietorship

Cons of Registering Company

• Costly to register($315) and yearly accounting and submission fees
• Many compliances and requirements
• Every company must appoint a secretary within 6 months of the date of incorporation
• Every company needs to strike off by application if it is believe that the company is not carrying on business and the company is able to satisfy the criteria for striking off and it takes about 5 months.
• Obligations to conduct and submission of Annual General Meeting (AGM)

Requirements to register A Company

• A company must have at least one director who is a “ordinarily resident in Singapore” i.e. Singaporean Citizen, Singaporean Permanent Resident, or a person who has been issued an Entrepass/Approval-In-Principle letter/Dependant Pass
• A business name (Some names take longer to get approval, seek professional advice if you need help) (Usually a professional corporate secretary can advise you on this)
• A business address (Can be your residential address or need to seek approval from HDB if you are residing in a HDB apartment (Not advisable as you don’t want people to visit your house for all kinds of reasons) or get a virtual office package which includes a registered business address)
• A professional corporate secretary to do your filings and compliances with ACRA. (Please refrain from doing it yourself if you do not have the experience)
• Start up capital

(For printing of name cards, website and email hosting, printing of invoices, virtual office cost/rental and other miscellaneous cost that may be involve in your business)

Characteristics of Limited Liability Partnership

• A Limited Liability Partnership (LLP) gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company. A LLP is seen separate entities from its owners. The LLP has perpetual succession, which means any change in the partners of a LLP will not affect its existence, rights or liabilities.

Pros of registering a Limited Partnership

• Has limited liabilities as owners and corporate body are 2 different entities (Unless owners sign personal guarantees)Will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP
•  Relatively cheap to register as a Limited Liabilities Partnership ($165)
•  Has the flexibility of a sole-proprietorship yet has limited liabilities (Not as many compliances and requirements as a private limited company)

Cons of registering a Limited Liabilities Partnership

• Obviously you need at least 1 partner before you can register this (Sometimes it can be quite a pain to find the right partner)
• A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act
• A LLP have to apply to ACRA to strike its name off the register pursuant to Section 38 of the LLP Act. ACRA may approve the application if there is reasonable cause to believe that the LLP is not carrying on business and the LLP is able to satisfy the criteria for striking off.
• The perception of your business operation may be relatively small scale

For more information or assistance in formation of a company, please refer to www.paramountassetscorp.com/corpservices/incorp.php