Based on the nature and kind of business you want to run in Singapore, the selection of a legal entity for your business is crucial. The types of legal entities you might choose would determine the image and perception of your business or brand in front of your clients. Even the taxes and other relaxations in rules and regulations depends completely on the type of your business’s legal structure.
The business type also determines the legal documentation required and would reflect the functioning of your business in the long run. Hence, apart from selecting the nature of the business and incorporating a company in Singapore, its legal entity should be determined in advance. Here are some of the business entities that are established in Singapore.
Business Entities in Singapore
Here are different business entities that you can choose for your company in Singapore:
PLC or Private Limited Company
A Private Limited Company is a Limited Liability Company in which the shares of the company are held by less than 50 people. The shares are not available for the general public. Many private businesses in Singapore are registered as a Private Limited Company. These businesses enjoy the following benefits:
- Separate Legal Entity: The owner and the company are not related to each other. The company has its own seal. All the deals are done in the name of the company and not in its owner’s.
- Limited Liability: The liability that falls on the members of the company is limited to the amount of capital they have contributed to the company.
- Perpetual Succession: A company does not end after the death or retirement of its owners. It is run by the mutual decisions taken by the shareholders and other stakeholders of the company. Even after the death or retirement of its owner, a PLC company continues its normal operations on a daily basis.
- Tax Benefits: Singapore’s PLC enjoys various tax benefits. There are no capital gains tax charges in the case of PLC companies in Singapore.
Public Limited Company
A Public Limited Company is also a Limited Liability Company. The shares of this company can be offered to the general public. It must have a minimum of 50 shareholders. As compared to Private Ltd, a Public Ltd. company is bound by more stringent rules and regulations as it has the power to raise funds from the general public. These companies are generally meant for large scale business and are established in Singapore in very few numbers.
It is the most common type of business entity incorporated in Singapore. Unlike other business entities, Sole Proprietorship is more flexible but is very risky. The owner and the company are related to each other. It means that the owner of this company has unlimited liability. In case the company is unable to clear the debts, the owner’s assets and personal property could be used to cover the debts.
Another popular business entity is a Partnership Firm. These companies do not have any legal existence and are not required to register themselves under the companies act. This type of firm ends with death, incapacity, insolvency, or retirement of a partner. In Singapore, there are three types of Partnership Firms, i.e.,
- General Partnership
- Limited Liability Partnership
- Limited Partnership
Which Entity is Best For You?
Selecting a suitable business entity for your firm is not a rule of thumb. It all depends on the nature and scale of your business. There are many agencies and companies that facilitate business incorporation in Singapore. These companies offer different kinds of services that help in the hassle-free incorporation of a company. Right from selecting the best entity for you and providing corporate secretarial service, these agencies can take you in the direction.