Different Types of Business Entities in Singapore

comparison of business entities in Singapore

Types of Business & Companies in Singapore

Sole Proprietorship/ Sole Trader
Ordinary Business Partnership
Limited Partnership (LP)
Limited Liability Partnership (LLP)
Private Company Limited By Shares

Key Factors to Consider While Choosing a Business Structure

What is the nature of the business you want to undertake
How many owners will be there
How much capital will you invest
What risks are you able to take
What is the long-term plan for your business
What are the advantages and disadvantages of the different business vehicles
What are the requirements you need
Whether the business vehicle is easy to close

Compare the Different Types of Business Entities in Singapore

	Sole-Proprietorship /Sole Trader	Ordinary Business Partnership	Limited Partnership (LP)	Limited Liability Partnership (LLP)	Private Company Limited by Shares
Definition	A sole-proprietorship is a business owned by one person. The sole-proprietor has the absolute say in the running of the business.	A partnership is a business firm formed by a minimum of 2 partners. The maximum number of partners allowed is 20.	A partnership consisting of 2 or more partners where at least 1 partner is a General Partner (GP) and 1 is a Limited Partner (LP). No limit on numbers of partners.	A limited liability company in Singapore is a partnership where the partners’ liabilities are generally limited. No limit on numbers of partners.	A business entity registered under the Companies Act, Chapter 50. 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
Who can set up	Singapore Citizen/Singapore Permanent Resident/Employment Pass /Dependant Pass Holder/Foreigner who is at least 18 years old. A foreigner must appoint a local manager.	At least 2 Singapore Citizens/Singapore Permanent Residents/Employment Pass /Dependant Pass Holders/Foreigners who are at least 18 years old. A foreigner must appoint a local manager.	Any foreign and/or local individual and/or company. Must appoint a local manager if all General Partners reside outside Singapore.	Any foreign and/or local individual and/or company. Must appoint a local manager.	Any foreign and/or local individual and/or company. Must have a local director. If a foreigner wishes to act as a local director of the company, he can apply for an Employment Pass.
Suitable For	Low-risk business to be run by an individual	Professional firms like accountants, lawyers etc.N.B. professionals like lawyers and accountants can also set up a company to provide services	Where one partner is ready to bear unlimited risk.	The newest business incorporation structure in Singapore combining the features of partnerships and companies. The biggest difference with a company is that the partners are taxed at their individual personal tax rate and are not eligible to the tax exemptions available for a company.	Most advanced and flexible business entity. Most popular option
Legal Status	Not a separate legal entity	Not a separate legal entity	Not a separate legal entity	Separate Legal Entity	Separate Legal Entity
Personal Liability	Owner has unlimited liability	Partners have unlimited liability	General partner has unlimited liability Limited partners have limited liability	Partners personally liable for debts and losses resulting from their own actions Partners not personally liable for debts and losses of LLP incurred by other partners	Members have limited liability
Owing Property	Owner can own property	Cannot own property in firm’s name	Cannot own property in firm’s name	Can own property in LLP’s name	Can own property in company’s name
Tax	Taxed at owner’s personal tax rate	Taxed at partners’ personal income tax rate based on the share of income from the partnership	Taxed at partners’ personal/corporate tax rate based on the share of income from the partnership	Taxed at partners’ personal/corporate tax rate based on the share of income from the partnership	Taxed at corporate tax rate
Tax Exemptions Available	Personal Tax Relief if applicable	Personal Tax Relief if applicable	Personal Tax Relief if applicable. Corporate Tax Relief if the Corporate Partner is eligible.	Personal Tax Relief if applicable. Corporate Tax Relief if the Corporate Partner is eligible.	Start Up Tax Exemption Partial Tax Exemption Dividends tax exempt in the hands of shareholders in Singapore
Formalities	Quick & Easy to Set Up Easy to Administer Minimal Registration Cost Registration to be renewed annually	Quick & Easy to Set Up Easy to Administer Minimal Registration Cost Registration to be renewed annually	Quick & Easy to Set Up Easy to Administer Minimal Registration Cost Registration to be renewed annually	Quick & Easy to Set Up Easier to Administer compared to a Company One time registration Annual declaration of solvency must be lodged by one of the managers	More costly to set up More formalities to administer Must appoint a company secretary within 6 months of incorporation Must appoint an auditor within 3 months of incorporation unless exempt) Various books of records need to be maintained Annual Returns to be filed
Continuity in Law	As long as the owner is alive and wished to carry on the business	Subject to partnership agreement	Subject to partnership agreement	Perpetual succession unless wound up or struck off	Perpetual succession unless wound up or struck off
Closing the Business	By Owner – Termination or Cessation of business By Registrar – if the registration has expired and has not been renewed	By Owner – Termination or Cessation of business By Registrar – if the registration has expired and has not been renewed	By general partner – cessation of LP By Registrar – if the registration has expired and has not been renewed	Winding Up – Voluntarily by members or creditors, Compulsorily by the High Court Striking Off	Winding Up – Voluntarily by members or creditors, Compulsorily by the High Court Striking Off

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