Advantages Of Entities

Click here to view the comparison of Singapore Business Entities & Firms (In PDF).

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No

Type of Entity / Firm

Advantages / Pros

1

Pte Ltd (By Shares)

• Separate legal entity from members and directors, which means that members and directors are not personally liable for the losses and debts incurred
• Easier to obtain funding during start-up years and also eligible for government funded micro loans offered by local banks
• Succession of Company is perpetual, until they are struck off or wound up
• From the Year of Assessment 2020: Your company is required to pay the tax at 4.25% on the Net Profit for the first SGD100,000/-, whereas at 8.5% and 17% for the next SGD100,000/- and beyond first SGD200,000/- respectively effective from the Year of Assessment 2020.
• Singapore companies do not have to pay taxes on capital gains or dividends.
• And many more.

2

Limited Liability Partnership (LLP)

• Lower registration cost and easy to set up
• Reduced compliance obligations – general meetings, directors, company secretary, etc., are not required
• Only an annual declaration of solvency or insolvency is required
• LLPs are considered as a separate legal entity from their owners, which means that owners are not responsible for any debts or losses the business incurs
• Easier than Partnerships and Sole Proprietorships to secure funding for the start-up years of the business
• Succession of LLPs are perpetual, until they are struck off or wound up

3

Limited Partnership (LP)

• Tax benefits: As with a general partnership, the profits and losses in a limited partnership flow through the business to the partners, all of whom are taxed on their personal income tax returns. The difference is that the limited partners in the relationship get to share in the profits and losses, but they do not have to participate in the business itself.
• Liability limits: A limited partner’s liability for the partnership’s debt is limited to the amount of money or property that individual partner contributed to the partnership. This is not true of the general partnership, where any money or property contributed becomes an asset of all the partners.
• The general partners take charge: In a limited partnership, the general partners deal with the daily operations and responsibilities and don’t need to consult the limited partners for most business decisions.
• No turnover issues: Limited partners can be replaced or leave without dissolving the limited partnership.
• Less paperwork: Creating a limited partnership, like a general partnership, requires less paperwork than forming a corporation. However, it’s important to create and file a partnership agreement in the county where your company does business.
• Investment opportunities: A limited partnership is a great way to offer investors the opportunity to benefit from the profits and losses of your business without getting them actually involved in the business.

4

Partnership (General)

• Partnerships face fewer statutory controls than companies.
• There is no requirement to audit or publish accounts or to register the Partnership Agreement. No returns are required to be made by partnerships, except for income tax.
• The internal structure of partnerships is very flexible. Most of the rules for the structure of partnerships can be overridden if the partners agree otherwise.
• Partnerships can be simple and cheap to set up. There is no requirement to have any written documentation, although a Partnership Agreement is advisable (see above).
• Partners owe a duty of good faith to each other. Partners must also account to the partnership for any secret profits that they make from the partnership without the consent of the other partners, including any profits gained from any competing business.

5

Sole Proprietorship

• It is an easy procedure to register a sole-proprietorship.
• It is easy and quick to start trading as a sole trader as there are no formalities to comply with other than notifying the Tax Authorities.
• The business itself is flexible. Any decisions and changes can be made easily as there is only one person to make the relevant choices.
• All the profits generated by the business will belong to the sole-trader.
• Sole-traders own their business and so are able to sell or transfer the business assets & liabilities as they wish.One of the advantages of this form of business is that there are fewer formalities in terms of its formation and registration.
• Pay income tax for your trade income at individual income tax rate.
• CPF contribution is not mandatory.
• Due to flexible structure it’s easy to convert into Partnership just by adding another person as a Partner.

• Corporate matters such as Companies, Businesses, etc

• The Accounting and Corporate Regulatory Authority (ACRA)

• CPF matters

• CPF Board

• Fair Employment Practices (FEP)

• Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP)

• Immigration matters & Student Passes

• Immigration Checkpoints Authority (ICA)

• Taxation and GST

• The Inland Revenue Authority of Singapore (IRAS)

• Skills Development Levy (SDL)

• SkillsFuture Singapore Agency

• Work Passes

• The Ministry Of Manpower (MOM)