Different legal structures are appropriate for different scenarios and considerations. This table sets out the possible options of legal structures and significant factors or considerations relating to each.
| Sole Proprietor / Partnership | Company (Pte Ltd) | Limited Liability Partnership (LLP) | |
| Legal Status | § Sole proprietor is a single owner. Partnership is where 2 or more owners partner in owning and running the business.
§ Not a separate legal entity from the owner(s). § Owner(s) exposed to unlimited liability of the business. § Owner(s) personally liable, exposed to bankruptcy. § Can sue or be sued in owner’s name or firm’s. § Sole proprietor can own property if the owner has legal capacity. § Partnership cannot own property in the firm’s name. |
§ A separate legal entity from its members / shareholders and officers e.g. directors.
§ Members, shareholders, officers not personally liable for company’s debts. Only the company exposed to insolvency. § Can sue or be sued in company’s name. § Can own property in company’s name. § Exempt private company: 20 members or less; no corporation holds beneficial interest in the company’s shares. § Private company: 50 members or less. § Public company: more than 50 members. |
§ There must be at least 2 partners. No maximum number of partners.
§ Partners can be individuals or corporate bodies. § Separate legal entity from its partners. § Partners not personally liable for LLP’s debts. Partners exposed to limited liability. Only the LLP exposed to insolvency. Individual partners personally liable for their own acts or debts, not for other partners’ acts or debts. § Can sue or be sued in LLP’s name. § Can own property in LLP’s name.
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| Registration Requirements | § Age 18 years or above.
§ Singapore citizen/Singapore permanent resident / EntrePass holder. § If the owner is a foreigner or not resident in Singapore, he must appoint an authorised representative resident in Singapore. § Self-employed persons must top up their Medisave account with the CPF Board before they register a new business, become the owner of an existing business name or renew their business registration. Must continue making Medisave contributions. § No registration needed if owner trades in their own name. If trading under another name, business name registration required. § May require approval of referral authorities if it’s a regulated business. |
§ At least 1 shareholder.
§ At least 1 director ordinarily resident in Singapore. The rest of directors may be non-local resident. § Foreigners can be shareholders up to 100% ownership. § If a foreigner wishes to act as a local director of the company, they can apply for an EntrePass from the Ministry of Manpower or letter of approval if they’re presently an Employment Pass holder in Singapore. § May require approval of referral authorities if it’s a regulated business. |
§ At least 2 partners, who can be individuals who are at least 18 years old or body corporate (company or other LLP).
§ At least 1 manager who is an individual ordinarily resident in Singapore who is at least 18 years old and not disqualified under the Companies Act. § May require approval of referral authorities if it’s a regulated business. |
| Address Requirements | § Need a business address.
§ May use residential address subject to prior approval from HDB or URA. § Owners and company officers must provide their residential address to ACRA at the point of registration. These will be made publicly available when the public purchases information about the business entity. Alternatively, opt for Alternate Address for a fee if you prefer not to disclose your residential addresses publicly. |
§ Need a registered office address.
§ All notices to the company will be addressed to it. § Company’s registers and records must be kept there. § Corporate service providers with corporate secretary services may offer use of their address as registered address. § Registered office must be operational and accessible to the public during normal office hours, but need not be where the business conducts its activities. § Owners and company officers must provide their residential address to ACRA at the point of registration. These will be made publicly available when the public purchases information about the business entity. Alternatively, opt for Alternate Address for a fee if you prefer not to disclose your residential addresses publicly. |
Same as for companies. |
| Formalities & Expenses | § Quick and easy to set up.
§ Easy to administer and manage. § Registration cost low. § Less administrative duties. § Must renew registration before the expiry date. |
§ Slightly higher cost to set up and maintain.
§ More formalities and procedures to comply with. § Must appoint a company secretary within 6 months of incorporation. § Must appoint an auditor within 3 months after incorporation unless the company is exempt from audit requirements (exempt private company). § Annual Returns must be filed. § Statutory requirements for general meetings, duties of director/company secretary, share allotments, etc. |
§ Quick and easy to set up.
§ Fewer formalities and procedures to comply with as compared to a company. § Registration cost is low and fewer regulatory duties to adhere to than a company. § No statutory requirement for general meetings, share allotments, etc. § Only an annual declaration of solvency must be lodged by the manager stating whether the LLP is able or not able to pay its debts during the normal course of business. § One time registration. |
| Registration Fee (payable to ACRA) | § $15 name application fee.
§ $100 registration fee. § $30 Renewal fee. § Processing times. |
$315 ($15 name application fee and $300 incorporation fee). | $115 ($15 name application fee and $100 registration fee). |
| Applicable Tax Rate | § Profits taxed at individual owner’s personal income tax rates. | § Company’s profits taxed at corporate tax rate 17%. | § Profits attributed to individual partner taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation). |
| Continuity | § Exists as long as the owner is alive and continues business. | § The company, as a separate legal entity, does not cease to exist if one or more of its shareholders die.
§ Its corporate existence lasts as long as its shareholders decide it should. A company’s life is usually perpetual. § Ownership of a company can be transferred and additional shareholders can be appointed. |
§ The LLP has a legal personality separate from its partners.
§ The LLP has perpetual succession. |
| Closing The Business | § By owner or authorised representative by filing a Notice of Cessation of Business Registration.
§ By Registrar – if the registration has expired and has not been renewed. |
§ Winding Up – voluntarily by members or creditors; compulsorily by the High Court upon the application of members, creditors, liquidators, etc.
§ Striking Off the company from the Register. |
§ Winding Up – voluntarily by partners; compulsorily by the High Court upon application of partner, creditors, liquidators, etc..
§ Striking Off from the Register. |
We will not consider here Limited Partnerships (LPs) and Variable Capital Companies (VCCs), which are generally used for investment funds.