As there are multiple types of company incorporation in Singapore, you may find it confusing when trying to choose the right company structure which suits your business as there are many similarities between the types of company structures, where each type has its own distinct features/benefits.
Two of the most common company incorporation types in Singapore are limited liability company (LLC or also known as a private limited company) and limited liability partnership (LLP).
As limited liability companies or private limited companies in Singapore are limited by shares, this means that the shareholders are not liable for its debts or losses beyond the amount of share capital they have invested in the company. The personal wealth and personal assets are not at risk as they are protected, by the definition of a limited liability. It is also a separate legal entity which means it will still be subjected to taxation.
The choice of company type has the potential to affect the tax rates and statutory compliance that will become applicable to the proposed
business entity after the registration. It may also impose restrictions on the ability of the business to raise capital for the future
expansion of its business activities and hence it is imperative to make an informed decision on the choice of company structure for your
A Singapore private limited company (LLC) is viewed as being more trusted and credible by banks and various financial institutes, therefore raising funds for a Singapore private limited company is relatively easier.
In a case of an LLP, it usually has to remain dependent on private finances and partner’s contributions.
In the case of a transfer of ownership, transferring partial or full ownership in an LLC is easy and can be done by simple transfer of shares.
For transfer of ownership in an LLP, it cannot be sold as a whole. The owners have to individually sell each of the assets, licenses, and permits.
In LLP, profits are distributed among the partners and they are taxed at the personal income tax rate while in LLC, the company’s revenues are taxed at the country’s corporate tax rate that is capped at 17% of the company’s chargeable income.
While there’s nothing of such nature defined in laws, LLP in Singapore is generally more suitable for individual professionals coming together such as lawyers, accountants and consultants.
A private limited company in Singapore, on the other hand, is the best suited for entrepreneurs, particularly those looking to do long-term
LLC (private limited company) is the most commonly found business structure in Singapore as a large proportion of company incorporation in
Singapore are in the form of Singapore private limited companies. If you are looking for an easy incorporation procedure, lower tax rates,
ability to raise funds and better credibility, choosing LLC as a business structure could prove to be a better choice..
Precursor has years of hands-on experience, a track record of working with some of the world’s famous multinationals and award winning team of local experts who deeply care in serving the needs of our clients at all stages, right from knowledge dissemination to consultancy, support and a full suite of corporate services.
|Precursor. © 2023 | All Rights Reserved.|