Most experts in Singapore company registration believe that the most commonly registered business structures are the sole proprietorship, limited liability partnership, and private limited company.
- Sole proprietorship
This business structure is the most flexible and easiest to set up in the country. In addition, it has less formalities and legal requirements unlike the other business entities such as partnership and company (or commonly referred as corporation in some European countries and US).
In sole proprietorship, there is only one owner who enjoys full control and authority in managing his business. But being the sole owner, it means that an individual is personally liable for all the losses and acts of its business, meaning, his personal assets are not protected from the debts related to business.
2. Limited liability partnership
LLP is a business structure that combines the benefits of partnership and private limited company. With this, partners can enjoy the flexibility of operating a partnership while they are protected from the debts and liabilities of their business just like in a private limited company.
Most experts believe that LLP is highly ideal for companies that provide the services of architects, lawyers, management consultants, and accountants.
3. Private limited company
For local businessmen who have a long-term and ambitious plan for their business, most experts believe that a private limited company is the most ideal setup as it provides countless of advantages especially in terms of taxation.
For example, newly incorporated companies can enjoy complete tax exemption on their first S$100,000 chargeable income generated within three years registration. In addition to this, they will enjoy another 50 percent tax break on their succeeding S$200,000 chargeable income within the same period.
Aside from these tax exemptions, some companies operating in certain industries like the finance and treasury, offshore dealing, oil trading, etc. enjoy reduced corporate tax rate of 5 to 10 percent.
Another advantage is that shareholder, a term used for company owner, enjoys limited liability protection which means that his personal assets cannot be used to pay off the debts, losses, and liabilities related to his company. With this, a shareholder can only lose the money he had invested to his company in case of bankruptcy and not his entire fortune.
And lastly, a private limited company enjoys perpetual existence since the ownership can be passed from one person to another through the selling of shares, unless the shareholders and directors decide to dissolve the business or merge with another company.
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