Just like choosing an ideal name for your company, finding the type of business entity for your new business is equally daunting. Which brings us to the next point; it is extremely vital for entrepreneurs to take note of their decision. When starting a business in Singapore, you might want to note the different business entities available in this country. The activity of a business is detached from the personal activities of the owner and of course the employees. This concept applies to all businesses regardless of their legal statuses. To put it simply, any transaction that connects to the business is recorded accordingly.
There are mainly seven business entities in Singapore: Public Limited Company, Public Company Limited by Guarantee, Limited Partnership, General Partnership, and the three most common, Limited Liability Partnership (LLP), Private Limited Company and Sole Proprietorship.
Sole Proprietorship is generally for entrepreneurs with small scale businesses. This type of business entity is considered to be the simplest arrangement as it is the most basic form of the business structure. Since it is formed with only one individual, the owner of the business is entirely accountable for his/her business activities.
Possibly the most popular business entity, Private Limited Company is applicable for almost all professions and trades. Unlike Sole Proprietorship, entrepreneurs who choose Private Limited Company get to have certain perks like tax benefits though this only applies to corporate entities. One of the many reasons why entrepreneurs pick Private Limited Company is because it’s more secure. This business entity supports reliability, which is a key factor if you were to start a business in Singapore.
Are you an architect like the fictional character Ted Mosby? Planning to start your own firm? In that case, Limited Liability Partnership is probably for you. While the compliance requirements are more perplexing than Sole Proprietorship, it is easier than Private Limited Company. One of the pros in choosing this business entity is that it has a separate legal identity. However, it is a requirement to have a minimum of two partners for this business vehicle.
Other less common business entities like General Partnership is formed by two to twenty partners. This is an alliance where both business partners share equally in terms of responsibility and liability.
Next up, Limited Partnership is formed with a minimum of two partners, with at least one general partner and at least one limited partner. A general partner holds account for the actions and is responsible for all debts of the Limited Partnership. If the limited partner does not participate in the Limited Partnership, he/she is not liable for the obligations of the Limited Partnership.
Public Limited Company is exactly what its name suggests. It is suitable for listed companies with fifty or more shareholders. It is a requirement for the company to register a prospectus with the Monetary Authority of Singapore before making any public offers of shares and debentures.
Last but not the least, Public Company Limited by Guarantee is a business structure which have some basis of national or public interest. This business entity is basically used for charities as it fulfils non-profit activities.
So if you were to start a business in Singapore, be sure to familiarise yourself with the various types of business entities available in our sunny island. Entrepreneurs who have strong ideas about their businesses and with willingness to understand the business world would have a lot of potential for a successful career. After you’ve pooled your expertise, it is time making difference and meeting expectations. Just remember: anything is possible if you reach for the stars.