Regardless of what type of business entity you’re looking to set up – whether it’s a corporate secretarial service, offshore incorporation services, bookkeeping services and more – you’ll need to setup your company under one of the specific types of entities.
At this time, there are currently five different types of entities that can be set up under the corporate structure of Singapore. The types include:
- sole proprietorship
- limited liability partnership
- limited partnership
Each one of these entity types have their own specific benefits that need to be discussed. We will now take a closer look at each entity type so that you can have a better understanding.
When a business is owned by one person or one company, this is considered a sole proprietorship. Ultimately, this type of entity exists because there is only one partner. The sole proprietor – whether it is a company or an individual – has the only say as to how the business is run.
Features of the sole proprietorship include:
- owner is personally liable for the debts and losses incurred by the business
- owner can be sued in their own name, but can also sue in their own name as well
- unlimited liability for the owner
In a partnership, a business is formed and has as many as two or 20 partners. If there are more than 20 partners, the business is required to register as a Company under the Companies Act.
Partnership features include:
- unlimited liability for all partners
- the firm’s name can sue or can be sued
- partners are responsible for debts and losses to the partnership when incurred by other partners
When a company is formed, this business entity is registered under Chapter 50 of the Companies Act. A company has a legal personality, which ultimately allows it to own property, sue or be sued and perpetual succession. A Company usually ends with the words LTD or PTE LTD.
The main features of a Company include:
- a private company that has 50 members or less
- a public company that has more than 50 members
- owners have limited liability
- the firm can sue or be sued in its name
- the firm or company can own property in its name
- members of the company are not responsible for losses or debts incurred by the company
Limited Liability Partnership
With a limited liability partnership, this vehicle for doing business in Singapore provides operating flexibility to the partnership. Also allows them to operate as a separate legal entity just like a private limited company.
The LLP is recognized as a corporate body. This means that the partners are separate from the entity. The limited liability partnership acts as a legal personality. If the partners in an LLP change it will not affect any liabilities, rights or its existence.
The important features of a Limited Liability Partnership include:
- must have at least two partners and no maximum limit
- the LLP can own property in its name
- partners are not personally liable for losses and debts incurred in the LLP’s name
With a limited partnership, this is a new type of business entity in Singapore. Ultimately, it is a partnership that has at least a minimum of two partners. It must have one general partner and one limited partner.
The main features of an LP include:
- limited partner has limited liability
- partners are not responsible for obligations or debts beyond agreed contribution amount
When incorporating your new business, use this information to decide which type of company structure makes the most sense for your business.