How to choose a business structure when registering a business in Singapore? 

Singapore’s diverse business structure caters to the various needs of the business community. To register a business in Singapore, one should select a business structure before starting the registration process. The choice of business structure affects corporate taxation, business perception, scalability, documentation and paperwork requirements, limitations of liability, ability to borrow, and the scalability of the business.

Singapore’s business structure is not complicated. Each structure has its advantages and disadvantages and vary due to different regulatory policies in the country. Companies in Singapore engage in different forms of business, including sole proprietorships (including sole proprietorships) or partnerships (including more than two owners), with further structures including limited partnerships, limited liability partnerships and companies. It’s entirely up to the company owner to decide which business structure is best for them.

Sole Proprietorship

A sole proprietorship is owned and operated by one person. No one other than the owner himself has any say in the business. Any Singapore Citizen/Permanent Resident/Employment Passport/Dependent Passport Holder/Foreigner aged 18 and above can open a sole proprietorship. This business is best suited for those who do not want to take on more risk and therefore the business is not a separate legal entity.

Tax regulations for registering as a sole proprietorship levy taxes at personal rates and exemptions only apply if there is any exemption on personal income. Registering a sole proprietorship in Singapore is time-saving, simple and fast. You only need to pay a minimum fee to register, and it can be renewed every year.

Partnership

In contrast to the different business structures in Singapore, a partnership consists of more than two members and can have up to 20 partners. Any Singapore citizen/permanent resident/employment passport/dependant passport holder/foreigner aged 18 and above can enter into a partnership agreement, but if controlled by a foreigner, a local manager must be appointed.

These companies are basically recommendations for accountants, lawyers and professionals who want to offer their services by registering their business in Singapore. Therefore, the company is a separate legal entity and the partners have unlimited liability. The tax is a personal income tax that applies to the partners’ share of the income and also provides personal exemptions where applicable.

Limited Partnership

An unlimited partnership consisting of more than one person and including at least 1 general partner. Any foreigner, local individual or legal entity can become a partner, but a local business manager is required. In this type of partnership, the general partners have unlimited liability and the limited partners have limited liability. Taxes are personal income tax, which applies to the partners’ share of the income, and personal exemptions are also provided (if applicable).

Limited Liability Partnership

This is the latest form of business registration, a partnership with limited liability, with no limit on the number of partners in the company. Any foreigner or local individual or legal person can become a partner, but a local business manager is required. It contains characteristics of corporations and partnerships, making it suitable for partnerships and private companies. It is a separate legal entity and partners are responsible and liable for debts and losses resulting from their actions. Partners can also own property in the name of a limited partnership and receive personal tax exemptions.

Private Limited Company

It is one of the newest business companies and is a type of partnership in which the liability of the partners is limited and there is no limit on the number of partners in the firm. Any foreigner or local individual or legal person can become a partner, but a local business manager is required. It contains characteristics of corporations and partnerships, making it suitable for partnerships and private companies. It is a separate legal entity and partners are responsible and liable for debts and losses resulting from their actions. Partners may also own property in the name of the LLP and receive exemptions from personal taxes, if any.

Singapore’s business structure is large and easily managed by the authorities. Before choosing any business structure in Singapore, design business structures for different types of businesses based on various aspects such as risk, investment, number of members, etc. Therefore, the structures mentioned differ from each other due to the factors involved, but they are all very easy and quick to register in Singapore.

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