Types of Company in Singapore

Types of Company in Singapore | Bestar

Singapore Business Structure Types Explained

Types of Company in Singapore

In Singapore, businesses can be structured in various forms, each with its own legal and regulatory requirements. Here are the main types of companies and business entities:

1. Sole Proprietorship:

• Definition: A business owned and run by one person, with no legal distinction between the owner and the business.

• Liability: The owner is personally liable for all business debts and obligations without limit.

• Taxation: Profits are taxed at the owner's personal income tax rate.

• Setup: Relatively easy to set up and has minimal compliance requirements. Singapore citizens, permanent residents above 18, and EntrePass holders can register. Foreigners residing overseas need to appoint a local authorized representative and engage a registered filing agent.

• Control: The owner has complete control over the business.

• Continuity: The business typically ceases to exist upon the death or disqualification of the owner.

2. Partnership:

• Definition: A business owned by 2 to 20 partners who agree to share in the profits or losses of a business.

• Types:

  • General Partnership: All partners share unlimited liability for the partnership's debts.

  • Limited Partnership (LP): Comprises one or more general partners with unlimited liability and one or more limited partners whose liability is limited to their capital contribution.   

  • Limited Liability Partnership (LLP): Provides limited liability to its partners, meaning partners are not usually held personally liable for the LLP's debts beyond their capital contributions, but they can be held liable for their own wrongful acts. It is a separate legal entity from its partners.

  • Professional Partnership: Can have more than 20 partners and is typically for professionals like engineers, lawyers, and architects.

• Liability: In a general partnership, partners have joint and several liability. In LP, limited partners have limited liability. In LLP, partners generally have limited liability.

• Taxation: The partnership itself is not taxed; instead, each partner is taxed on their share of the income at their personal or corporate income tax rate. The partnership needs to file an annual income tax return (Form P).

• Setup: Requires registration with ACRA. If no partners are Singapore residents, a local authorized representative must be appointed.

• Management: Partners are usually involved in the management. LLPs must appoint at least one manager who is a Singapore resident.

• Continuity: General and limited partnerships may dissolve with changes in partners. LLPs have perpetual succession.

3. Company:

• Definition: A more complex business structure that is a separate legal entity from its owners (shareholders). This provides limited liability to the shareholders.

• Types:

  • Private Limited Company (Pte Ltd): The most common type, with shares not offered to the public and a maximum of 50 shareholders. It is denoted by "Private Limited" or "Pte Ltd" in its name.

    • Liability: Shareholders' liability is limited to the amount of their investment in shares.

    • Taxation: Subject to corporate tax rates in Singapore (currently a standard rate of 17%, with potential exemptions and lower rates for smaller companies). Dividends are tax-free under Singapore's single-tier tax system.

    • Setup: Requires at least one shareholder, at least one director who is a Singapore resident, a company secretary (must be appointed within six months of incorporation), a registered office address in Singapore, and a minimum paid-up capital (can be as low as S$1).

    • Management: Owned by shareholders but may be managed by directors.

    • Continuity: Has perpetual succession. Ownership can be transferred through the sale of shares.

    • Raising Capital: Can raise capital by issuing new shares.

    • Compliance: Higher compliance requirements, including annual filings with ACRA and tax returns with IRAS, and potentially an annual audit.

  • Public Company Limited by Shares: Can offer shares to the public and is listed on a stock exchange. Its name ends with "Limited" or "Ltd."

    • Liability: Shareholders' liability is limited to the amount of their investment in shares.

    • Taxation: Similar to private limited companies.

    • Setup: More stringent regulatory requirements and higher setup and maintenance costs. Requires more than 50 shareholders and can raise funds through an Initial Public Offering (IPO).

    • Management: Managed by a board of directors.

    • Continuity: Has perpetual succession.

  • Public Company Limited by Guarantee: Typically used for non-profit organizations such as charities, NGOs, and educational institutions.

    • Liability: Members' liability is limited to the amount they have agreed to contribute to the company's assets.

    • Taxation: May be eligible for tax exemptions depending on their activities.

    • Setup: Specific requirements for non-profit entities.

    • Capital: Does not have share capital.

4. Other Business Structures:

• Branch Office: An extension of a foreign company registered in Singapore. It is not a separate legal entity from the parent company, which assumes full responsibility for its debts and legal actions. It is taxed as a non-resident entity and can only engage in activities similar to those of the parent company.

• Representative Office: An administrative or liaison office for a foreign company to conduct market research or coordinate activities but not to engage in profit-generating activities.

Choosing the right business structure depends on various factors, including the scale of operations, liability considerations, tax implications, compliance requirements, and future growth plans. For instance, startups and SMEs often choose the Private Limited Company structure for its limited liability and scalability. Sole proprietorships are suitable for individual entrepreneurs in low-risk ventures, while partnerships are for collaborations between a few individuals. Public companies are for large corporations seeking to raise significant capital. Non-profit organizations typically opt for the Public Company Limited by Guarantee. Limited Liability Partnerships offer a hybrid structure suitable for certain types of businesses and professions.

How Bestar can Help

Types of Company in Singapore

Professional help can be invaluable for navigating the complexities of setting up and running different types of companies in Singapore. Here’s how Bestar can assist:

• Company Structure Advice: Bestar can advise on the most suitable legal structure for your business based on factors like liability, taxation, and long-term goals (Sole Proprietorship, Partnership, LLP, Private Limited, Public Limited, etc.).

• Company Incorporation: We can handle the entire incorporation process with ACRA (Accounting and Corporate Regulatory Authority), ensuring all legal documents are correctly prepared and filed. This includes:

  • Drafting the company's Constitution (Memorandum and Articles of Association).

  • Ensuring compliance with the Singapore Companies Act.

  • Appointing initial directors and company secretary.

• Shareholders' Agreements: For companies with multiple shareholders, Bestar can draft agreements outlining the rights and responsibilities of each party, dispute resolution mechanisms, and exit strategies.

• Commercial Contracts: We can help draft, review, and negotiate various commercial agreements crucial for your business operations.

• Intellectual Property Protection: Bestar can advise on and assist with the registration of trademarks, patents, and designs to protect your company's IP.

• Regulatory Compliance: We can provide guidance on ongoing legal and regulatory requirements to ensure your company stays compliant.

• Financial Structure Setup: Bestar can help establish your company's accounting systems and processes.

• Tax Planning: We can advise on the most tax-efficient structure for your company and help with tax compliance, including GST registration and filing of corporate income tax returns.

• Bookkeeping and Financial Reporting: Professional accounting services ensure accurate and timely bookkeeping, preparation of financial statements, and management reports, which are crucial for decision-making and compliance.

• Auditing: For certain types of companies or when required by law, Bestar can conduct audits of financial statements.

• Payroll Management: We can handle payroll processing, ensuring compliance with employment laws and tax regulations.

• Statutory Compliance: Under the Singapore Companies Act, every company must appoint a company secretary within six months of incorporation. They are responsible for ensuring the company complies with statutory requirements, including:

  • Filing annual returns with ACRA.

  • Maintaining statutory registers.

  • Organizing and minuting board meetings and general meetings.

  • Advising directors on corporate governance matters.

• Administrative Tasks: We handle various administrative tasks related to the company's legal and regulatory obligations.

• Market Entry Strategy: For foreign companies looking to set up in Singapore, Bestar can provide insights into the local market, competition, and regulatory landscape.

• Business Planning: We can assist in developing a comprehensive business plan, including financial projections, market analysis, and operational strategies.

• Operational Efficiency: Bestar can analyze your business processes and recommend improvements to enhance efficiency and reduce costs.

• Funding and Investment: We can advise on fundraising strategies and connect you with potential investors.

• Expansion and Growth: As your company grows, Bestar can help develop strategies for expansion into new markets or diversification of products/services.

• Corporate Account Setup: Bestar can assist in setting up corporate bank accounts and provide advice on various banking services.

  
  

In summary, engaging professional help can save you time, ensure compliance, provide expert advice, and ultimately contribute to the smooth establishment and successful operation of your chosen company type in Singapore. For instance, a startup might initially focus on Bestar for incorporation and basic compliance, while a growing company might also need Bestar for strategic planning and expansion.

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