The different type of Singapore Company incorporation and which suits you best?
Once you are convinced that you want to register company in Singapore, it is important that you know the type of company or business entity that you want to incorporate, such as Sole Proprietorship, Partnership, Limited Liability Partnership, or Limited Partnership. Here are all the important details about types of companies in Singapore so that you can choose the best option that’s applicable in your specific situation.
Company A Company is a company limited by shares i.e. its liabilities are limited to the amount of share capital. A company is incorporated by registering with Accounting and Corporate Regulatory Authority (ACRA) of Singapore under the Companies Act. It is a separate legal entity, meaning there is a legal veil that separates owners from the entity. A company can enter into contracts and own assets. It can sue and be sued in its own name.
There are 3 types of Company in Singapore: • Private Limited Company (Pte. Ltd.) • Public Limited Company • Public Company Limited by Guarantee
Sole Proprietorship This is the simplest type of company and it’s easiest to incorporate company in Singapore as Sole Proprietorship. Personal assets and those of the company are under the owner’s name, meaning they are not protected. If the company is in debt, then personal assets are legally not beyond the reach of creditors. This type of company is best suited for individual shop owners or solo entrepreneurs. It’s important that the risks involved in operating such a company are clearly understood before going for registration.
Partnership Company A partnership company does not exist legally on its own without its partners. Membership ends upon death, retirement or insolvency. There are three types of partnership structures in Singapore: general partnership, limited partnership and limited liability partnership.
General Partnership This business structure is similar to a sole proprietor. The business partners are personally liable for the business liabilities and debts. The partners share responsibility as one is held accountable for the actions of a fellow partner. It is not the best business structure in Singapore as it contains a lot of risks.
Limited Partnership In Singapore, this is the most common type of partnership structure in the company. This is because the liabilities are limited to the company’s investments. The risks to all the partner’s personal assets are thus limited to how much they invest into the business. The partners cannot however, manage the business.
Limited Liability Partnership (LLP) This is basically a structure where a registered LLP gives the partners the freedom to run the business and contribute to its management. This company comes along with benefits similar to those found in a private limited company. This partnership is the best for business where professionals have a joint practice. It requires a great deal of organization and planning beforehand.
Conclusion All the business entities and structures are best suitable for different scenarios. A local in Singapore would for instance work best with a Sole Proprietorship if they are the only owner and if the products and services do not present risks and liabilities. If you are a professional who is looking for starting a business with several partners in your field, then you can consider a Limited Liability Partnership. The best choice for a lot of business people and Entrepreneurs is a private limited company set-up.