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There are many business structures for setting up a business in Singapore. Regardless of whether you are thinking big and setting up a company in Singapore or just starting out testing a new business idea by forming a partnership with someone, we have the solution for you. Consult the table below and contact us for a complimentary 30-minute consultation on which business structure will be best suited to you for setting up a business in Singapore. We also work closely with our clients to assist them in accordance with the local compliance requirements to ensure that they meet corporate obligations for running a business in Singapore.
| Type of business structure | Sole Proprietor | Partnership | Limited Partnership (LP) | Limited Liability Partnership (LLP) | Companies | Variable Capital Company (VCC) |
|---|---|---|---|---|---|---|
| Description | A business owned by one person | An association of two or more persons carrying on business in common with a view to profit | A partnership consisting of two or more persons, with at least one general partner and one limited partner | A partnership where the individual partner’s own liability is generally limited | A business form which is a legal entity separate and distinct from its shareholders and directors | All VCCs must be managed by a Permissible Fund Manager |
| Key Difference/Feature | Not a separate legal entity | Not a separate legal entity
Between 2 and 20 partners. |
Not a separate legal entity
At least 2 partners; one general partner and one limited partner. No maximum limit Limited partners have limited liability if they don’t take part in the management of the LP. General partners are liable for all debts and obligations of the LP |
A separate legal entity from its partners. Most common form of partnership in Singapore
At least 2 partners, no maximum limit |
A separate legal entity from its members and directors
Exempt Private Company – 20 members (shareholders) or less and no corporate shareholder Private Company – 50 members or less (can have corporate shareholder) Public Company – can have more than 50 members |
All VCCs must be managed by a Permissible Fund Manager under the Securities and Futures Act |
| Taxes | Profits taxed at owner’ personal income tax rates | Profits taxed at partners’ personal income tax rates | Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation) |
Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation) |
Profits taxed at corporate tax rates | Profit taxed at corporate tax rates. (Regardless of the number of sub-funds an umbrella VCC has, the umbrella VCC, being a single entity, needs only to submit one set of income tax forms in respect of the entire structure.) |
| Pros | Simple and low cost to run and operate | Simple and low cost to run and operate | Limited partners can be replaced or leave without dissolving the limited partnership
Requires less paperwork than forming a company A great way to offer investors the opportunity to benefit from the profits and losses of a business without getting them actually involved in the business |
Lower registration cost and easy to set up
Lesser compliance obligations – (e.g. general meetings, directors, company secretary, etc., are not required) Succession of LLPs are perpetual, until they are struck off or wound up |
Members and Officers are protected from the debts of the Company
Ease to raise capital by brining in investors/shareholders Can enjoy preferential tax incentives for companies where applicable Business may be passed down to member’s family members upon their death |
Flexibility in the capital structure of the company according to its requirements
Ability to have sub-funds under the main VCC |
| Cons | Unlimited liability for the sole proprietor. Personal assets of sole proprietor are not protected
Business cannot be passed down to proprietor’s future generation upon death |
Unlimited liability for the partners. Personal assets of partners are not protected | General partners bear most of the risk of the debts of the LP
Limited Partners do not have much say in decision-making |
Profits are taxed are based on the owner’s income level
Not eligible for Government funded micro loans |
Generally more costly to operate than partnerships
Regulatory compliance requirements such as filing of Annual Returns, audits and tax filing are more onerous |
Only available to a limited category of companies under the VCC Act
Additional requirements and criteria to fulfil under the Securities and Futures Act |
| Examples | A hawker stall owner | A hawker stall where 2 siblings own the business | A group of investors who pool their money to invest in a property | A law firm with many partners | A trading company buying and selling goods | A mutual fund setting up a VCC in Singapore |
After choosing a suitable name for your business, conduct a search on ACRA BizFile+ to check for its availability.
Avoid selecting names which are:
• identical to an existing business.
• undesirable i.e. names which are vulgar, obscene or offensive.
• prohibited by order of the Minister for Finance or other government agencies
You are required to specify the primary and secondary activities of your business by choosing the most relevant Singapore Standard Industrial Classification (SSIC) code corresponding to your business activity.
An Exempt Private Company (EPC) is a private company which has not more than 20 shareholders. No corporation can hold (directly or indirectly) any beneficial interest in the EPC’s shares. An EPC can also be a company the Minister has gazetted as one.
A director of a company incorporated under the Companies Act, Cap 50 has to comply with a number of statutory obligations under the Act. The following are two of the statutory obligations which ACRA usually takes enforcement action for breaches:
You must decide on the first FYE of your new company as it will determine when your corporate filings and taxes are due. Common choices by companies include 31 March, 30 June, 30 September or 31 December. You must also decide whether your accounting period covers 12 months or over 52 weeks.
Companies must notify ACRA of any subsequent change in FYE. A company cannot change its FYE without the Registrar’s approval:
– if the change in FYE will result in a financial year longer than 18 months; or
– if the FYE was changed within the last 5 years
The minimum paid-up capital requirement for setting up a company in Singapore is S$1.00.
Directors of a Singapore company must be at least 18 years of age.
Yes you can but you would have to retain the exact business name for use in the company name. You would also have to undertake to terminate the business firm upon incorporation of the company by indicating the business name and business registration number in the company application form.
Yes, basic information about the shareholders and directors of a company is available to the public. The Registrar of Companies lists this information in the business profile of the company which can be purchased by any person for a nominal fee.