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Different Types of Business Entities

Updated: Apr 4

Types of Business Entities


There are 4 main types of business structures to choose from. They are:


COMPARISON OF BUSINESS ENTITIES IN SINGAPORE


Sole-Proprietorship

A business owned by one person


Owned By:

One person


Legal Status:

Not a separate legal entity

Owner has unlimited liability

Can sue or be sued in individual’s own name

Can also be sued in business name

Can own property in individual’s name

Owner personally liable for debts and losses of business


Yearly Statutory Obligations:

Yearly renewals (one year or three years)

CPF Medisave Top-Up required for Self-employed Persons before they can renew sole-proprietorship


Registration Requirements:

Age 18 years or above. Singapore citizen/ Singapore permanent resident/ EntrePass holder.

If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.

Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.

Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.


Set Up Fee:

$115 ($15 name application fee and $100 registration fee) for 1-year registration

$175 ($15 name application fee and $160 registration fee) for 3-year registration


Taxes:

Profits taxed at owner’ personal income tax rates


Continuity in Law:

Exists as long as the owner is alive and desires to continue the business


Closing the Business:

By Owner - Cessation of business

Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct


Partnership


Definition:

An association of two or more persons carrying on business in common with a view to profit


Owned By:

Between 2 and 20 partners.


A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships)


Legal Status:

Not a separate legal entity


Partners have unlimited liability


Can sue or be sued in firm’s name


Cannot own property in firm’s name


Partners personally liable for partnership’s debts and losses incurred by other partners


Yearly Statutory Obligations:

Yearly renewals (one year or three years)


CPF Medisave Top-Up required for Self-employed Persons before they can renew partnership


Registration Requirements:

Age 18 years or above.


Singapore citizen/ Singapore permanent resident/ EntrePass holder. If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.


Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.


Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.


Set Up Fee:


$115 ($15 name application fee and $100 registration fee) for 1-year registration


$175 ($15 name application fee and $160 registration fee) for 3-year registration


Taxes:

Profits taxed at partners’ personal income tax rates


Continuity in Law:

Exists subject to partnership agreement


Closing the Business:

By the partners - Cessation of business Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct


Company


A business form which is a legal entity separate and distinct from its shareholders and directors


Owned By:

Exempt Private Company – 20 members or less and no corporation holds beneficial interest in the company’s shares

Private Company – 50 members or less

Public Company – can have more than 50 members


Legal Status:

A separate legal entity from its members and directors


Members have limited liability


Can sue or be sued in company’s name


Can own property in company’s name


Members not personally liable for debts and losses of company


Yearly Statutory Obligations:

Must appoint a company secretary within 6 months of incorporation.


Must appoint an auditor within 3 months after incorporation, unless the company is exempt from audit requirements


Annual returns must be filed. Statutory requirements for general meetings, directors, company secretary, share allotments must be complied with.


Registration Requirements:

At least one shareholder. At least one director ordinarily resident in Singapore, at least 18 years old.


If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower.


Undischarged bankrupts cannot be a director and cannot manage a company without approval from the Court or the Official Assignee.


Set Up Fee:

$315 ($15 name application fee and $300 incorporation fee)


Taxes:

Profits taxed at corporate tax rates


Continuity in Law:

A company has perpetual succession until wound up or struck off.


Closing the Business:

Winding Up – Voluntarily by members or creditors, compulsorily by the High Court


Striking off


Factors to consider when choosing a business structure


The type of business structure you choose depends on your business needs. You should consider the following factors to determine the best structure for you:

  • How much capital are you prepared to invest?

  • How many owners will there be in the business?

  • What liabilities and responsibilities are you prepared to assume?

  • What risks are you prepared to take?

  • What are the advantages and disadvantages of the different business entities?

  • Is the business entity easy to close?

If you would like to know more, please contact Bestar.




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