FAQ ON COMPANY REGISTRATION
There following are the main types of business structures to choose from:-
• Sole Proprietorship
• Partnership
• Limited Liability Partnership
• Limited Partnership
• Private Limited Company
BUSINESS ENTITIES COMPARISON
|
|
Sole-Proprietorship |
Partnership |
Limited Partnership |
Limited Liability Partnership |
Company |
|
Definition |
A business owned by one person |
An association of two or more persons carrying on business in common with a view to profit |
A partnership consisting of two or more persons, with at
least one general partner
and one limited partner |
A partnership where the individual partner’s own liability is generally
limited |
A business form which is a legal entity which is separate and distinct from its shareholders and directors |
|
Owned By |
One person |
Between 2 and 20 partners. A partnership of more than 20 partners
must incorporate as a company under the Companies
Act, Chapter 50 (except
for
professional
partnerships) |
At least 2 partners; one general partner and one
limited partner. No maximum limit. |
At least 2 partners, no maximum limit. |
Exempt Private Company – 20 members or
less and no corporation holds beneficial interest in
the company’s shares Private Company –
50 members or less Public Company – can
have more than
50 members |
|
Legal Status |
Not a separate legal entity Owner has unlimited liability Can sue or be sued in individual’s own name
and can also be sued in business name Can own property in individual’s name Owner personally liable
for
debts and losses of
business |
Not a separate legal entity Partners have unlimited
liability Can sue or be sued in firm’s name Cannot own
property in firm’s name Partners personally liable for
partnership’s debts and losses incurred by other partners |
Not a separate legal entity General partner has unlimited liability Limited partner
has limited liability Can probably sue or be sued in firm’s name Cannot own
property in firm’s name General partner personally liable
for debts and losses of the LP Limited partner not personally liable for the
debts or obligations of LP
beyond amount of his
agreed contribution |
A separate legal
entity from its partners Partners have limited
liability Can sue or be sued in LLP’s name Can own property in LLP’s name Partners personally liable for
debts and losses resulting from their
own wrongful actions Partners not personally liable for debts
and losses of
LLP incurred
by other partners |
A separate legal
entity from its members and directors Members have limited
liability Can sue or
be sued in company’s name Can own property in company’s name Members not personally
liable for debts and losses of
company |
|
Yearly Statutory Obligations |
Yearly renewals (one year or three years) CPF Medisave Top-Up
required for Self-employed Persons before they can
renew sole-proprietorship |
Yearly renewals (one year or three years) CPF Medisave Top-Up
required for Self-employed Persons before they can
renew partnership |
Yearly renewals (one year or three years) CPF Medisave Top-Up
required before they can renew LP |
Annual declaration of solvency/insolvency must be lodged by
one of the
managers
stating whether
the LLP is able or not able to
pay its debts during the
normal course
of business. No statutory requirement for
general meetings, directors,
company secretary, share
allotments
etc. |
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 Annual returns must be filed. Statutory requirements
for general meetings,
directors, company secretary, share
allotments must be complied
with. |
|
Registration Requirements |
Age 18 years or
above. Singapore citizen/ Singapore permanent resident/
EntrePass holder. If owner not resident
in Singapore, he must appoint an
authorized representative who is
ordinarily resident in
Singapore. Self-employed persons must top up their Medisave account with the CPF Board
before they register
a new business name, become a registrant of
an existing business name, or renew
their business name registration. Undischarged bankrupts cannot manage the business
without approval from the
Court or
the Official Assignee. |
Age 18 years or
above. Singapore citizen/ Singapore permanent resident/
EntrePass holder. If owner not resident
in Singapore, he must appoint an
authorized representative who is
ordinarily resident in
Singapore. Self-employed persons must top up their Medisave
account with the CPF Board
before they register
a new business name, become a registrant of
an existing business name, or renew
their business name registration. Undischarged bankrupts cannot manage the business
without approval from the
Court or
the Official Assignee. |
At least one general partner and limited partner. Both
can be individuals (at least
18 years old) or body
corporate
(company or
LLP). If all general partners are ordinarily resident outside Singapore, they must
appoint a local manager who
is ordinarily resident in
Singapore. Self-employed
persons must top up their Medisave
account with the CPF Board
before they register
as a partner of a new LP, become a registered partner
of an existing LP, or renew their LP registration. Undischarged bankrupts cannot manage the business
without approval from the
Court or
the Official Assignee. |
At least two partners, who can be individuals
(at least 18 years old) or body
corporate
(company or
LLP). At least one manager
ordinarily resident in
Singapore and at least
18 years old. Undischarged bankrupts cannot manage the business
without approval from the
Court or
the Official Assignee. |
At least one shareholder. At least one director ordinarily resident in Singapore, at least 18 years old. If a foreigner wishes to
act as a local director of the company,
he can apply for an
employment pass EntrePass
from the
Ministry of Manpower. Undischarged
bankrupts cannot be a director and cannot manage a company
without approval from the
Court or
the Official Assignee. |
|
Taxes |
Profits taxed at owner’ personal income tax rates |
Profits taxed at partners’ personal income tax rates |
Profits taxed at partners' personal income tax rates (if individual)/
corporate tax rate (if corporation) |
Profits taxed at partners’ personal income tax rates (if individual)/
corporate tax rate (if corporation) |
Profits taxed at corporate tax rates |
|
Business continuity |
Exists as long as the owner
is alive and desires to continue the business. |
Exists subject to partnership Agreement. |
Exists subject to partnership Agreement. If there is
no limited partner, the LP registration
will be suspended
and general partners are deemed registered under the Business Registration Act. Once a new limited partner is
appointed, the registration of the LP will be restored to “live” and general
partners’ registration under the Business Registration Act ceases. |
The LLP has perpetual succession until
wound up
or struck off. |
A company has perpetual succession until
wound up
or struck off. |
|
Closing the Business |
By Owner - Cessation of Business. Registrar can cancel
registration if not renewed or
where Registrar is
satisfied business is defunct |
By the partners - Cessation of business Registrar can cancel
registration if not renewed
or where Registrar is satisfied business is defunct |
By general
partner - Cessation of
business or dissolution of LP. Registrar can cancel
registration if not renewed
or where Registrar is satisfied business is defunct. |
Winding Up – Voluntarily by members or creditors,
compulsorily by the
High Court. Striking off |
Winding Up
– Voluntarily by members or creditors,
compulsorily by the
High Court Striking off |
IN A NUTSHELL
|
|
Subsidiary (private company)
|
Branch |
Representative Office |
|
Legal structure
|
A separate legal entity |
Not a separate legal entity
|
No legal status |
|
Liabilities
|
Parent company is not liable
|
Parent company is liable
|
Parent company is liable
|
|
Name
|
Can be the same or different from the parent's name
|
Must
be the same as parent's name |
Must
be the same as parent's name
and must include the phrase 'Representative Office' in it
|
|
Taxation
|
Taxed as a Singapore resident entity
|
Taxed
as a non-resident entity |
Since no income can be generated, no
taxes are applicable
|
|
Valid for
|
Valid until closed |
Valid until closed
|
Must be renewed each year with maximum 3 years |
|
Registration time (in general)
|
1-2 business days |
1-2 business days
|
3-4 business days |
Generally, the structure of a business determines its legal, financial reporting and tax status. Choosing the most appropriate business structure to meet your business needs requires careful consideration. Some of the factors you should consider carefully before deciding on the best suited structure:
• Your commercial objectives of setting up the business
• Amount of capital that you are prepared to invest
• The level of control you desire to have in the business
• Number of owners in the business
• To what extent are you prepared to shoulder liabilities and responsibilities in the business
• The extent of risks you are prepared to take
• Tax implications
• To consider the annual administrative and compliance cost of running the business
• The pros and cons of the different business structures
• How easily can the business can be closed
The operating structure determines a business’s legal, financial reporting, auditing and taxation status. To assist with the future growth and development of the business while meeting the various needs of its owner(s), the operating structure requires careful selection to avoid the need to amend it at a later date that may be difficult and expensive to implement due to legal costs and taxation implications.
Majority of companies we have registered for clients fall
within the following timeframe:
|
Application for approval and reservation of name
with Accounting and Corporate Regulatory Authority
(ACRA) |
Usually 1 working day (upon
submission to ACRA) *1
|
|
Preparation and execution of the incorporation documents in Singapore
and submission of registration with ACRA (if all the directors / subscribers
are present in Singapore to sign the documents) |
2 to 3 working days *2
|
|
ACRA confirmation of incorporation of company |
|
Footnotes:
* 1 The above is applicable provided no further
referral to other government authority is involved. Also, dependent on the return
of the duly completed incorporation questionnaire and due diligence documents
listed in the verification list.
* 2 The
time frame for actual incorporation is usually
around 2 to 3 working days, subject to all requested information made available
and due diligence completed. However, if the documents have to be sent overseas
for execution, the timeframe mainly depends on how fast the duly executed
documents are returned for lodgement with ACRA.
Below is a list of referral authorities who review selected business name registration applications before they can be approved. There may be other referrals required by statutory or government authorities that are not listed below. The referral authority’s approval may be required for your application, based on your proposed business name or selected SSIC code. If referral is required, it can take between 14 to 60 days for the applied name to be approved.
Board of Architects, Singapore
Council for Estate Agencies
Ministry of Culture, Community and Youth – Charities Unit
Ministry of Defense – Defense Industry & Systems Office
Ministry of Education – Private Schools Section
Ministry of Law – Legal Services Regulatory Authority
Monetary Authority of Singapore
Professional Engineers Board
Singapore Tourism Board
Institute of Singapore Chartered Accountants
Ministry of Health
A.
Generally, most banks have the following requirements for opening a
corporate bank account for Singapore companies:
Documents required
for opening of corporate bank account:
§
account opening forms which will be provided by the respective banks (to
be signed by authorized signatories)
§
Directors’ resolution for the opening of the account indicating the authorized
signatories for the account (most of the banks have their own format for you to
sign)
§
Company’ profile from the ACRA
§
Company’s Constitution
§
Passport / Identity Card of directors / authorized signatories for
verification by bank
§
Proof of residential address of Directors (i.e. latest Utility bill,
phone bill etc. – not older than 3 months)
§
The banks may require additional documents on a case by case basis which
they will inform during enquiry stage
(Note: For single director
company, banks will also require the company secretary to be present for
verification purpose)
Signing of
documents requirements
Most banks
will require the authorized signatories and at least 2 directors to be
physically present in Singapore for the signing of forms and completion of
formalities relating to the opening of the corporate bank account(s).
However,
some banks will accept the signing of these forms and documents at one of their
overseas branches or in front of a Notary Public or before a Singapore Embassy official
in the country where you reside. With the worldwide pandemic, some banks have
also turned to video conference / video calls for due diligence verification
processes.
Sole-proprietor
(self-employed)
|
Advantages |
Disadvantages |
Income tax rate |
|
·
Simple to set up,
and at minimal cost ·
Financial
statements are not required but accounts are needed to calculate assessable
income ·
Any tax losses can
be carried forward indefinitely |
·
Unlimited
liability. The individual will be personally liable for all debts if the
business fails ·
Not a separate
legal entity ·
Often difficult
separating personal from business ·
Can only sell
business through sale of assets - GST and income tax consequences |
Profits taxed
at
owner’s personal income tax rates Currently 0% to 22%
|
Partnership
|
Advantages |
Disadvantages |
Income tax rate |
|
·
Sharing of
knowledge, skills and resources ·
Can draw upon
greater financial resources from partners ·
Opportunity for
income sharing |
·
All partners have
joint and several liability for any debts ·
Not a separate
legal entity ·
Can only sell
business through sale of assets – GST and income tax consequences |
Profits taxed
at
owner’s personal income tax rates Currently 0% to 22% |
Company
|
Advantages |
Disadvantages |
Income tax rate |
|
·
Liability is
limited to amount payable on shares (although personal guarantees may extend
this liability) ·
Can raise finance
by selling shares ·
Can sell
investment by selling shares |
·
Administrative
requirements ·
Directors may be
held personally responsible ·
Legal requirements
– Companies Act ·
Tax losses
retained by company, need to comply with certain Tax Act ·
Increased level of
taxation /compliance requirements ·
Tax exemption
scheme for new startup is not extended to investment holding company and
company’s engaged in property development activities |
Currently 17% (with some partial exemption) |
§
100% shares can be held by foreign or local corporation or one individual
shareholder
§
Minimum initial paid-up share capital is S$1.00
§
Minimum 1 shareholder, 1 director and 1 company secretary
§
Sole shareholder can also act as sole director
§
Sole director cannot act as company secretary
§
Company secretary must be Singapore Resident
§
At least one director must be a resident of Singapore (i.e. Singapore
Citizen, Singapore Permanent Resident, Employment Pass holder)
§
Directors must be a natural person of “full age” and capacity (must be
18 years old and above)
§
Directors cannot be an undischarged bankrupt or convicted of any offence
involving fraud or dishonesty whether in Singapore or elsewhere.