Comparison of Singapore Business Entities

A Comparison of the Different Business Entities in Singapore A Rikvin Infographic I www.rikvin.com.sg Key Considerations When Choosing a Singapore Business Structure What is the nature of the business you How much capital will you invest? How many owners What risks are will be there? you able to take? want to undertake? What is the long term Is the business entity What are the advantages and disadvantages of the different business entities? plan for your business? easy to close? Sole Proprietorship Partnership Limited Partnership (LP) Limited Liability Partnership (LLP) Company Definition • A sole-proprietorship is a business • A partnership is a business firm formed • A partnership consisting of 2 or more • Partnership where the partners' • A business entity registered under the by a minimum of 2 partners. • The maximum number of partners Companies Act, Chapter 50. • Exempt Private Company -20 owned by one person. partners where at least 1 partner is a liabilities are generally limited. • No limit on numbers of partners. • The sole-proprietor has the absolute General Partner (GP) and 1 is a Limited say in the running of the business. allowed is 20. Partner (LP). members or less and no corporation • No limit on numbers of partners. holds beneficial interest in the company's shares • Private Company - 50 members or less • Public Company - can have more than 50 members • Singapore Citizen/Singapore • At least 2 Singapore Citizens/Singapore • Any foreign and/or local individual • Any foreign and/or local individual and/or company. • Must appoint a local manager. • Any foreign and/or local individual and/or company. • Must have a local director. • If a foreigner wishes to act as a local Who can set up Permanent Resident/Employment Pass Permanent Residents/Employment and/or company. • Must appoint a local manager if /Dependant Pass Holder/Foreigner. • A foreigner must appoint a local Pass /Dependant Pass Holders/ Foreigners. all General Partners reside outside • A foreigner must appoint a local Singapore. director of the company, he can apply manager. manager. for an Employment Pass. Suitable For Low risk business to be run by an • The newest business incorporation Professional firms like accountants, lawyers etc. N.B. professionals like lawyers and accountants can also set up a company to provide services • Most advanced and flexible business Where one partner is ready to bear unlimited risk. individual structure in Singapore combining entity. the features of partnerships and • Most popular option companies. • The biggest difference with a company is that the partners are taxed at their individual personal tax rate and are not eligible to the tax exemptions available for a company. Legal Status Not a separate legal entity Not a separate legal entity Not a separate legal entity Separate legal entity Separate legal entity Personal Liability Owner has unlimited liability Partners have unlimited liability • Partners personally liable for debts and Members have limited liability General partner has unlimited liability Limited partners have limited liability losses resulting from their own actions • Partners not personally liable for debts and losses of LLP incurred by other partners Owing Property Owner can own property Cannot own property in firm's name Cannot own property in firm's name Can own property in LLP's name Can own property in company's name Тах Taxed at owner's personal tax rate Taxed at owner's personal tax rate Taxed at partners' personal/corporate Taxed at partners' personal/corporate Taxed at corporate tax rate tax rate tax rate • Personal Tax Relief if applicable. • Corporate Tax Relief if the Corporate • Start Up Tax Exemption • Partial Tax Exemption • Dividends tax exempt in the hands of Tax Exemptions Personal Tax Relief if applicable Personal Tax Relief if applicable Personal Tax Relief if applicable. Available Corporate Tax Relief if the Corporate Partner is eligible. Partner is eligible. shareholders in Singapore • Quick and Easy to Set Up • Easy to Administer Minimal Registration Cost • Registration to be renewed annually • Quick and Easy to Set Up • Easy to Administer • Minimal Registration Cost • Registration to be renewed annually • Quick and Easy to Set Up • Quick and Easy to Set Up • Easier to Administer compared to a • More costly to set up • More formalities to administer • Must appoint a company secretary Formalities • Easy to Administer • Minimal Registration Cost Company • One time registration • Annual declaration of solvency must Registration to be renewed annually within 6 months of incorporation • Must appoint an auditor within 3 be lodged by one of the managers months of incorporation 9unless exempt) Various books of records need to be maintained • Annual Returns to be filed As long as the owner is alive and wished to carry on the business Continuity in Law Subject to partnership agreement Subject to partnership agreement Perpetual succession unless wound up or Perpetual succession unless wound up or struck off struck off • By Owner - Termination or Cessation • By Owner - Termination or Cessation of business • By Registrar - if the registration has • By general partner - cessation of LP • By Registrar - if the registration has • Winding Up - Voluntarily by members or creditors, Compulsorily by the High • Winding Up - Voluntarily by members or creditors, Compulsorily by the High Closing the Business of business • By Registrar - if the registration has expired and has not been renewed Court Court expired and has not been renewed expired and has not been renewed Striking Off • Striking Off RIKVIN RIKVIN PTE LTD | 20 Cecil Street, #14-01 Equity Plaza, Singapore 049705 | Reg No 200708442E Tel: +65 6320 1888 | Fax: +65 6438 2436 | www.rikvin.com.sg | [email protected] %24