For a Rewarding Singapore Business Formation, Know your Facts
In a Singapore business formation, the most important issue that you need to decide is which legal form to choose. A suitable choice for your company is crucial as it can have critical implications, pertaining to the personal risk involved in the business, in extension the bright prospects of a business for giving back high returns. You would profit in the long run by considering imperative issues including formation, incorporation, asset liability, business asset appreciation, and tax obligations. Therefore, before you decide on your business form; read this article and understand your options. You will certainly seek legal advice from your lawyer because it is prudent that you understand the basics of all legal forms before you meet your lawyer and proceed further with your venture.
For a Singapore business formation, there are mainly three types, companies, sole proprietorship, and partnerships.
Company: A company should be registered under the Singapore Companies Act. You can incorporate or initiate a Singapore business formation with unlimited liability; yet almost all organizations in Singapore are established as limited liability companies. This is owing to advantages over other forms of company formation.
Limited Liability Company (LLC): The limited-liability company format is a relatively new. Its chief characteristic is that the liabilities of the owners are limited to the assets of the company, meaning their personal assets are protected from business liabilities.
Limited liability companies in Singapore business formation can be of the following types:
1.Private Limited Company
2.Public Limited Company
Sole Proprietorship: Only one person can be called the owner in a Sole Proprietorship. The proprietor has sole ownership of all the assets and liabilities of the business. Perhaps, the most uncomplicated form for your Singapore business formation, it is relatively economical to manage a business of this nature. In fact, it is easy to establish as well as terminate this type of business. Being in complete control of its operation, a sole proprietor need not wait to have a decisions approved. The drawback, however, in ways surpass the benefits. As you and the business are a considered a single entity, the tax payment is directed to you. Moreover, as a sole proprietor, you have unlimited liability, meaning, the creditors to whom the business owes money can come after your personal assets.
Partnership: A partnership is an association of two or more individuals, who are the co-owners of a business and its profits. In Singapore, partnerships are mainly of three types:
- 1.General Partnership is not always economically feasible way to structure a business in Singapore. This is because similar to sole proprietorship; it isn’t a separate entity, meaning unlimited liability.
- 2.Limited Partnership entails the concept of having limited partners, besides a general partner. Liabilities of limited partners are restricted to their investment in the partnership (capital or property), though such partners cannot contribute in business management
- 3.Limited Liability Partnership (LLP) In Singapore was introduced in 2005, with the enforcement of Limited Liability Partnership Act. Owners have flexibility of operating as a partnership while enjoying several benefits that come with a corporate body. This partnership formation must have at least two partners at all times. These are primarily suited to the needs of service professionals (accountants, law firms, architects, etc.)
This detailed information will help in making a fruitful decision about your business initiation.