The International Finance Corporation’s Ease of Doing Business 2010 listed Singapore as the leading economy in employing workers and trading across borders. Many years before globalization re-defined trading, Singapore has already displayed its business potential among the international business consortia.
Its strategic location, impressive infrastructure, ready access to international and domestic transportation, and natural seaport that is known to be one of the world’s largest are all poised to make Singapore the perfect destination for entrepreneurs.
Setting up a Singapore company can be accomplished in five ways, namely as a Sole Proprietorship, Partnership, Limited Liability Partnership, Limited Partnership and a new Company.
Sole Proprietorship. Regarded as the simplest form of business structure, a Sole Proprietorship has one owner, who gains full authority and control over the business’ management, profits, losses, liabilities, and assets.
It is not given recognition as a legal entity. Thus, a Sole Proprietorship enterprise cannot engage in any lawsuit whether as the plaintiff or respondent. Nor can it acquire possessions and assets as the sole proprietor retains absolute ownership.
Any profits gained while on business operations are regarded as personal income of the proprietor and are hence, subject to a personal income tax. Nonetheless, on the bright side, it exempts the owner from filing tax returns with ACRA and from conducting audits.
Partnership. Owned by more than one proprietor or a company, a Partnership in Singapore is a business firm that allows a minimum of 2 proprietors and 20 at maximum. Each partner acquires an implied power that entitles him or her to act in behalf of his or her partners.
Like the Sole Proprietorship, the Partnership is not regarded as a legal entity, and thus, accorded with its due limitations and exemptions. Nonetheless, all partners can be held liable for the loss sustained by another partner.
When it comes to profits, it follows the pattern of a Sole Proprietorship, wherein, the income forms a part of the personal income of each partner, and is therefore subjected to personal income tax.
Limited Liability Partnership. In Limited Liability Partnership, the partners are protected against personal liability for certain partnership liabilities, as far as personal assets are concerned. Nevertheless, partners are accountable for debts and losses arising from their own unwise decisions.
Considered as a legal entity, the LLP can directly sue or be sued and its business name can procure assets and properties and retain their ownership.
To form a Limited Liability Partnership in Singapore, a minimum of 2 partners is required. There is no maximum limit of maintaining partners with LLP.
When it comes to tax, each partner is taxed according to his or her share of income incurred by the LLP, if the partner is an individual. However, should the partner is another company, its income acquired from LLP is taxed at a corporate level.
Limited Partnership. To form a Limited Partnership in Singapore, there should be a minimum of two partners-one acting as a General Partner, while the other the Limited Partner. The General Partner manages the LP and features unlimited personal liability, including debts and obligations of the LP.
On the other hand, the Limited Partner is accountable within the range of his or her investments, yet, he or she enjoys the right to the cash flow of the LP.
The LP can only exist through a registration of a new Limited Partnership enterprise in Singapore. An existing business enterprise or Limited Liability Partnership cannot be converted into a Limited Partnership. Also, it is not entitled to a legal status.
When it comes to taxation, the rules applied to a Limited Liability Partnership hold true in Limited Partnership Company. Based on Chapter 50 of Companies Act of Singapore, a company is a business firm registered as Private Limited by shares.
Unlike a few business structures, the Company is recognized as a legal entity, whereby, its owners are called Shareholders; and among the Shareholders, a Resident Director is appointed as head of the company in Singapore and who is deemed to be above 21 years old from the time of his appointment and maintains a Singaporean citizenship or Permanent Residence.
Regardless of the nature of business, establishing a company in Singapore needs to consider the following rules:
* Anybody or any company can register at Company Registrar in Singapore based on the nature of the business, i.e. sole proprietorship, limited partnership.
* With the exception of a Company, all four other types of business firms must appoint at least one local manager if all proprietors and or partners do not have ordinary residence in Singapore-such as Singaporean citizenship and Singaporean Permanent Residence.
For foreigners to be appointed as the local manager or sole proprietor, an issuance of Entrepass, Employment Pass, and Dependent Pass is required.
When an entrepreneur has already decided which type of business enterprise he or she would like to engage in Singapore, the Registration of the business process shall commence.