HomeProductsCloud ERPFive‌ ‌Company‌ ‌Types‌ ‌in‌ ‌Singapore‌

Five‌ ‌Company‌ ‌Types‌ ‌in‌ ‌Singapore‌

One of Singapore’s main strengths is a straightforward and comprehensive system of corporate structure and governance. ERP systems are one of the things that make a company have a strong business. It is easy for foreign entrepreneurs and investors to understand and understand. However, there are some advantages and disadvantages for each business entity and related corporate structure that are not immediately apparent. This article compares different types of companies to foreign entrepreneurs or investors who want to set up a business in Singapore.

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Company Types in Singapore

1. Sole Proprietorship

This company type, a sole proprietorship is a business that is owned and run by a central individual with no legal separation between the two. Because the sole owner owns and controls the entire company, they carry full responsibility and can sue personally or on behalf of the company. A sole proprietorship is not a legal entity.

Profits made by a sole proprietorship are taxable at the individual rate. So it cannot take advantage of the 0-17 percent effective corporate tax rate or the other tax exemptions created expressly for businesses. One must be 18 years old, a Singaporean resident, and not an unliquidated bankrupt. A sole proprietorship can be a firm, but only a natural person can control it.

In actuality, foreign investors cannot register a sole proprietorship because the sole proprietor must be a Singaporean.

2. Partnership

The main distinction between a partnership and a sole proprietorship is that a partnership can have up to twenty partners. A partnership that exceeds this limit must register as a corporation under the Companies Act.

A local manager must be a Singapore-based natural person over the age of 18 who is not an undischarged bankrupt. This corporate structure permits international persons or corporations to join. The partners set the tax rate, as in a sole proprietorship. If an individual, personal income tax rates apply, if a corporation, corporate tax rates apply. As a result, all partners are individually liable for the partnership’s obligations and losses, even if incurred by other partners.

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3. Limited Partnership

Limited partnerships provide some liability protection for partners. As a partnership, there must be at least two partners, but no maximum. One of the partners will be the general partner, with unlimited liability for all debts and losses. Other partners may be partners, who are only personally liable for agreement debts and responsibilities.

Individuals above the age of 18 or businesses can be general partners. The local manager must choose, in the case where the general partner is not a regular resident. Profits from a limited partnership are taxed at each partner’s personal rate, much like profits from a sole proprietorship or partnership. A corporation’s tax rate would apply.

Also read: Partnerships: Definitions and Tips for Finding the Right Business Partner

4. Limited Liability Partnership

Despite its name, a limited liability partnership (LLP) is not a partnership or a limited partnership. The primary distinction is that LLP partners pay personal income tax. An LLP, as the name implies, limits each partner’s liability. An LLP is regarded as a separate legal entity from its partners and can hold property in its name, but other types of partnerships cannot. 

In addition, partners will only be personally liable for debts and losses resulting from their own inappropriate actions, not from other partners. The LLP, on the other hand, must file an annual solvency declaration, stating its ability to repay its debts. Other types of partnerships are excluded from this rule. You can monitor such a thing with accounting software. This system helps you in performing automatic financial records and providing accurate financial statements.

5. Private Limited Company

This company type is the most common type of company entrepreneurs and investors choose. Owing to the tax benefits that can be obtained, as well as the fact that it is treated as a separate legal entity that is separate and distinct from its shareholders and directors.

The main benefit is that members of a company are not personally liable for the company’s debts or losses. Unlike all other business entities, a private limited company can qualify for tax exemption schemes and is taxed at the effective corporate tax rate of 0-17 percent.

Conclusion

In conclusion, each business entity has its own set of benefits and drawbacks. However, unless one is a small business with low profits and no plans for expansion, forming a partnership is usually not the best option. On the other hand, a private limited company is a far better vehicle because it is easier to obtain loans from financial institutions and presents lower risks in terms of liability for its members.

In order to improve the efficiency of your business, try HashMicro’s cloud ERP Software, which can automate various aspects of your business and is suitable for a wide range of businesses. So that it can assist you in making more accurate decisions with the assistance of cutting-edge business management software.

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Thamia Farisatuddiniyah
Thamia Farisatuddiniyah
I hope readers get value and enjoy what I write.

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