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ChoosingABusinessStructure
Learnmoreabouteachbusinessstructureandchooseonethatismostsuitableforyourbusiness.
Itisimportanttounderstandandchoosethemostsuitablebusinessstructureasitcanaffectyouinvariousways:
numberofownersinthebusiness
recordsandaccountsyouhavetokeep
taxesyouhavetopay(personalversuscorporatetaxrates)
yourfinancialliability(personalversuslimitedliability)
waysyoucanraisefunds
howmanagementdecisionsaremadeinthebusiness
howeasyitistoclosethebusiness
AllbusinessstructuresmustberegisteredwiththeAccountingandCorporateRegulatoryAuthority(ACRA).
Formoredetails,pleaserefertoACRAsBusinessFormsComparisonChartontheBizFilewebsite

Business
Structure

Definition&Ownership

LegalStatus&Liability

Taxes

SetUp&Admin

Sole
Proprietorship

Abusinessfirmwithonly1
owner.

Itisnotalegalentity(i.e.
itcannotsueorbesued
initsownnameandit

Profitsaretaxed
atpersonalincome
taxrates.

Setupandadministration
requirementsarethesimplestand
leastcomplicated.

Profitsformpart
ofeach
partnerspersonal
incomeandare
taxed
atpersonalincome

Quickandeasytosetupand
administer.

cannotownorholdany
property).
Theownerispersonally
accountableforallrisks,
debtsandlosses.

Partnership

Abusinessfirmownedby2
20individualsorcompanies.

Itisnotalegalentity(i.e.
itcannotsueorbesued
initsownnameandit
cannotownorholdany
property).
Eachpartner
ispersonally
accountableforallrisks,

taxrates.

DrawupaPartnership
Agreementthatdefinestherole,
responsibilitiesandprofitsdueto
eachpartner.
Partnershipsareautomatically
dissolvedwhenapartnerexitsor
dies.Theremainingpartnerswill
havetoformanewpartnership.

debtsandlosses.
Youcanalsobemade
accountableforlosses
incurredbyother
partners.

Limited
Liability
Partnership
(LLP)

Apartnershipwithaminimum
of2partners.Nolimiton
numberofpartners.

Itisalegalentity(i.e.it
cansueorbesuedinits
ownnameandcanown
orholdanyproperty).
Itiscompulsoryforall
LLPstoappointalocal

Anindividuals
incomefromthe
LLPwillbetaxedat
personalincome
taxrate.
Thecompanys

LLPscombinethelimitedliability
featuresofcompanieswiththe
operationalflexibilityof
partnerships.
Thereisnoneedtoauditorfile
annualreturnswithACRAbutyou

Share

manager.
Thepersonalassetsof
thepartnersare
protectedandowners
arenotpersonally

incomefromthe
LLPwillbetaxedat

mustmakeanAnnual
DeclarationthattheLLPcanpay

corporatetaxrate.

itsdebts.

accountableforthe
wrongfulactsofother
owners.
AnychangesintheLLP
(e.g.resignationor
deathofpartners)donot
affectitsexistence,
rightsorliabilities.

Limited
Partnership
(LP)

Alimitedliabilitypartnership
withlimitedpartners.

Itisnotalegalentity(i.e.
itcannotsueorbesued

Anindividuals
incomefromthe

Investorsmaybemorewillingto
joinassilentpartners,asliability

Minimumof2partners,withat
least1generalpartnerandat

initsownnameandit
cannotownorholdany
property).

LLPwillbetaxedat
personalincome
taxrate.

fornongeneralpartnersislimited.

Ageneralpartnerhas
unlimitedpersonal
liabilityandcanbe
appointedasthe
manageroftheLP.

Thecompanys
incomefromthe
LLPwillbetaxedat
corporatetaxrate.

least1limitedpartner.No
limitonnumberofpartners.

Thereisnoneedtoauditorfile
annualreturns,butyoumustkeep
accountingandotherrecordsto
explainitstransactionsand
financialpositionforatleast5
years.
IfaLPdoesnothaveanylimited

Alimitedpartnerisnot
liableforanydebtsand

partners,theLPregistrationwillbe
suspendedandthegeneral

obligationsbeyondhis
agreedinvestmentinthe

partnerswillbecomeregistered
undertheBusinessRegistration

LP.

Actasapartnershipinstead.

Ifalimitedpartnertakes
partinthemanagement
oftheLP,hewillhave
unlimitedliabilityasifhe
wereageneralpartner.

Company

Abusinessentityregistered

Itisalegalentity(i.e.it

Profitsaretaxedat

Therearemoreformalitiesand

undertheCompaniesAct,
Chapter50.

cansueorbesuedinits
ownnameandcanown

corporatetax
rates.

procedurestocomplywith,e.g.
appointmentofdirectors,annual

MostcompaniesinSingapore
areprivatePrivateLimited

orholdanyproperty).

generalmeetings,shareholder
resolutions.

(PteLtd)upto50owners.

Theremustbeatleastone
shareholderandonedirector.

Yourcompanybecomes

Theycanbethesameperson.

publicwithnolimiton
ownerswhenitcanoffer

However,mostcompaniesoptto

shares,debenturesandother
intereststothepublic.

haveatleast2directorsasbanks
andotherfinancialinstitutions
usuallyrequire2signatories.

Theownersofthecompany
arecalledshareholders.

Directorscannotbebankruptsor

Theremustbeaminimumof

personsconvictedofdishonesty.

oneshareownedbyone
shareholder.Thevalueofthe
sharecanbejustS$1.

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Lastupdatedon26Mar2012
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