Different Types of Business Entities
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)
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?
Different Types of Business Entities
How Bestar can Help
Bestar is a Singapore-based corporate services provider that helps businesses of all sizes and types to incorporate and operate in Singapore. We offer a wide range of services, including:
Company incorporation: Bestar can help you to incorporate a company in Singapore, including reserving a business name, preparing the necessary documentation, and submitting it to the Accounting and Corporate Regulatory Authority (ACRA).
Accounting and tax services: Bestar can provide you with a full range of accounting and tax services, including bookkeeping, payroll, and tax preparation and filing.
Corporate secretarial services: Bestar can act as your company secretary and handle all of your statutory compliance requirements, such as filing annual returns and holding annual general meetings.
Audit services: Bestar can provide you with audit services to ensure that your company's financial statements are accurate and compliant with all applicable regulations.
Consulting services: Bestar can provide you with a range of consulting services, including business planning, financial modeling, and risk management.
Bestar can help the following types of business entities in Singapore:
Sole proprietorships: Bestar can help sole proprietors to register their businesses with ACRA and comply with all applicable regulations.
Partnerships: Bestar can help partnerships to register their businesses with ACRA and draft partnership agreements.
Limited liability partnerships (LLPs): Bestar can help to incorporate LLPs and provide them with all necessary corporate secretarial services.
Companies: Bestar can help to incorporate companies of all types, including private limited companies, public limited companies, and foreign companies.
Bestar also provides specialized services to certain types of businesses, such as:
Startups: Bestar can help startups to incorporate their businesses, secure funding, and comply with all applicable regulations.
Foreign businesses: Bestar can help foreign businesses to set up operations in Singapore and provide them with all necessary corporate secretarial and accounting services.
Family businesses: Bestar can help family businesses to develop succession plans and manage their finances.
No matter what type of business entity you have, Bestar can provide you with the services and support you need to succeed in Singapore.
If you would like to know more, please contact Bestar.
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