Singapore is perhaps one of the leading financial centers of the world, which is immensely popular for its business environment. It promotes and encourages the growth of the private sector by providing a host of benefits and incentives for emerging ventures.
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Singapore, a global leader in financial matters, offers a business-friendly environment. Its robust support for the private sector, coupled with a plethora of benefits and incentives for emerging ventures, creates an optimistic outlook for entrepreneurs. The country's international trade and exponential growth across sectors and industries further reinforce its position as a top choice for business.
However, while doing business, choosing an offshore company structure in Singapore is an important decision. It can impact the success of your business. Business owners must be well-informed and considerate when selecting the type of business entity for setting up a company in Singapore. It dictates the operational and financial aspects of the business.
Types of Singapore Company Structures
Let's explore the various types of business structures in Singapore:
Sole Proprietorship
A sole proprietorship in Singapore is easy for a single person to own and operate. In this business type, you are solely responsible for your business debts and profits. If you opt for sole proprietorship but stay outside of Singapore, you must designate a local authorized representative. It is a crucial requirement you must be aware of before opening a company in Singapore.
Private Limited Company
The maximum number of shareholders for a Private Limited Company in Singapore is 50. The company operates as a separate legal entity from its shareholders, who are liable for the company’s debts and losses only to the extent of their capital. It means that their private assets are protected.
Exempt Private Company
As a sub-type of private limited company, an exempt private company can have up to 20 shareholders. This type of business entity does not allow corporate shareholders. Its shares cannot be directly or indirectly held by a corporation. The company structure is well-received in Singapore because it has fewer compliance requirements than other structures.
Branch Office
The branch office in Singapore is a legal extension of its parent company and is not a separate body in its own right. The activities of the branch must be within the scope of the activities that the parent company is allowed to undertake. Also, you must have a registered office address to start a branch office in Singapore.
Representative Office
A representative office in Singapore cannot engage in any business activities. It is allowed to perform market research, feasibility studies, and liaison work for the parent company. Additionally, representative offices exist for temporary purposes, and you need to apply to Enterprise Singapore to register them.
Limited Partnership (LP)
A Singapore Limited Partnership requires at least two partners: a general partner and a limited partner. It does not have a separate legal identity from its partners. The general partner is liable for all the business debts and is responsible for the overall management of the company. On the other hand, the liability of the limited partner extends to the amount of their investment, provided they do not actively participate in the management.
Limited Liability Partnership (LLP)
An LLP is a separate legal structure, not a partnership. In an LLP, partners are not responsible for each other’s actions. Each partner is liable only for their actions and for the liabilities that may arise from them.
Public Limited Company
Public companies can be one of the following two types:
i) Public Company Limited by Shares
It can have more than 50 shareholders. It may or may not be listed on a stock exchange; however, it must register the firm with ACRA before offering its shares to the public.
ii) Company Limited by Guarantees
A company limited by guarantees is another viable company structure in Singapore. It is usually a non-profit organization because it is limited by guarantee. Examples of public limited companies include charitable organizations, clubs, and religious groups.
Legalities and Taxes for Different Types of Business Structures in Singapore
Now that we have understood the types of business structures in Singapore, let’s explore their legalities and tax implications:
Sole Proprietorship
Partnership
Limited Partnership
LLP
Company
Yearly Legal Requirements
The owner must comply with MediSave contributions.
The owner must comply with MediSave contributions.
The owner must comply with MediSave contributions.
The manager must file the annual declaration of solvency/insolvency with the authority to demonstrate their financial health.
Must appoint the CS within 6 months of incorporation.
Appointment of an auditor is mandatory within 3 months of incorporation, unless exempted from audit requirements.
Filing of the annual return is mandatory.
Must fulfill statutory requirements for the director, CS, general meetings, and share allotment.
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Registration norms
Applicant must be 18 years old or above/a permanent resident/EntrePass holder.
Non-residents must appoint a local, authorized representative for incorporation purposes.
Applicant must be 18 years old or above/a permanent resident/EntrePass holder.
Non-residents must appoint a local, authorized representative for incorporation purposes.
Both partners must be at least 18 years old.
Non-resident partners must appoint a Singaporean individual as a local manager.
At least one manager should be Singaporean and at least 18 years old.
Approval from the Court or the Official Assignee is mandatory for undischarged bankrupts' partners.
At least one director must be Singaporean and at least 18 years old.
A foreigner must apply for an EntrePass to act as a local director.
Approval from the Court or the Official Assignee is mandatory for undischarged bankrupts.
Taxes
Profit is taxed at the owner’s personal income tax.
Profit is taxed at the owner’s personal income tax.
Profits are taxed at the partners’ personal income tax.
Profits are taxed at the partners’ personal income tax.
Profits are taxed at corporate tax rates.
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Why Choose BSW?
Business Setup Worldwide (BSW) is your comprehensive solution for all company setup needs. With over 8 years of experience in offshore company formation, our experts are here to guide you through the entire process and offer extensive support. Contact us to choose any of the offshore company structures in Singapore.
Frequently Asked Questions
Which structures in Singapore are ideal for small businesses?
Sole proprietorships, Limited Partnerships, and LLPs are ideal structures for small businesses. However, the Private Limited Company (Pte Ltd) is actually the most common and recommended structure for small businesses due to liability protection and tax benefits.
Can an exempt company in Singapore have more than 20 directors?
No, legally it is not permissible.
How many shareholders can a private limited company hold?
50 is the upper limit for such a structure in Singapore.
Do I need to pay corporate tax on foreign income in Singapore?
Foreign-sourced income that is not remitted in Singapore and qualifies for a tax exemption is not taxable.
Why should I choose the BSW for company formation in Singapore?
Business Setup Worldwide (BSW) has a strong presence worldwide with its elite team of incorporation professionals and 8+ years of experience. We stand as a top-rated service provider for diverse offshore needs.
