One of the most important decisions you have to make when setting up a small business in Singapore is the type of business structure you will choose. The structure of your enterprise can affect your liabilities and responsibilities, the potential for expansion, the ability to take out loans, the amount of taxes you have to pay, and even the image of your business among your clients and suppliers.
Small Business in Singapore
What are the types of business structure?
In Singapore, there are five different types of business structures that you can register. These are sole proprietorship, partnership, company, branch office and representative office.
A sole proprietorship is the most straightforward, but also the riskiest among the five types. In a sole proprietorship, the sole proprietor is in charge of the entire business, but he also has an unlimited liability to it. This means that if the business is unable to pay the money it owes, the creditors can come after your personal assets.
A partnership allows two to twenty people to establish and co-own a business. In such structure, the business has no legal existence separate from the partners. This means that the partnership ends with the insolvency, retirement, incapacity or death of a partner.
A partnership has other subtypes. A general partnership involves general partners who all have liabilities to the business. A limited partnership involves limited partners in addition to general partners. The liabilities of limited partners are restricted to their assets invested in the business. However, much like their liabilities, their participation in the management of the business is also limited. A limited liability partnership involves professionals who are interested in jointly practising within their common field. Both the profits and responsibilities of each partner can be specified through a detailed agreement with.
If there are more than twenty partners in the business, the firm already has to be registered as a company in agreement with the Companies Act, Cap. 50.
A company is a business structure that possesses its legal personality. This legal personality is separate from its members. As its entity, a company has the rights to own assets as well as liabilities. As such, it can sue or be sued using its name. This type of structure can protect the personal assets of the members since their liabilities are limited to their assets in the company.
A public company can have over fifty members and may raise capital by offering shares to the public. A private limited company, on the other hand, can only have fifty members or less.
A branch office serves as an extension of its parent company. As an extension, it is not considered as a separate legal entity. This means that the assets and liabilities of the branch office extend to the parent company.
A representative office acts as a temporary entity that has no legal status. As such, it cannot engage in any income-generating activities. Most of the time, this type of business structure is used for conducting market researches and related activities.
What documents are needed?
To register your business in Singapore, you will have to prepare certain information and documents. These include the company name, registered address, description of business activities, shareholder particulars, director particulars, secretary particulars, and the Memorandum and Articles of Association provided by the Singapore Company Registrar.
For Singapore residents, you will need to present your Singapore identity card. For non-residents, you will need your passport, proof of overseas residential address, and other pertinent information such as a personal profile and bank reference letter.
You also have to prepare for fees depending on the type of structure you are registering. Check out the fees at ACRA Website.
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