There is a very substantial reason for committing to a company incorporation Singapore. When entrepreneurs stumble upon dazzling business ideas, they respond in different ways. Some of them reveal it to their friends to discuss its viability and some mull over their find until it grows stale on them. If you are one of the former types of individual, why not indulge in a Singapore company incorporation and cash in your business idea.
What are Your Options for a Company Incorporation in Singapore
Company incorporation Singapore is not a great hassle for the entrepreneurs. They can incorporate their business in the form of a,
- Sole Proprietorship (SP)
- Limited Liability Partnership (LLP)
- Limited Liability Company (LLC)
However, they need to grasp the differences between these business vehicles. The business structure chosen for the Singapore company registration may affect following aspects of the newly incorporated business entity,
- Limited liability
- Tax structure applied to the business
- Time and the cost of incorporation
- Number of documents required for the incorporation
- Image and the branding of the business
- Incentive schemes that a business can qualify for
- An entrepreneur’s ability to raise the capital to start and to expand the business
- Statutory compliance
Limited Liability Company (LLC)
The limited liability company is a flexible and powerful business structure. The LLC is a scalable structure that provides for the need of an expanding business. Determined entrepreneurs go for a company incorporation Singapore to establish an LLC. That is why most of the incorporation in Singapore are of this type. The debts and the losses of an LLC are its own. Its assets, not its members’, are used to repay them.
Types of LLCs
The Singapore citizens, the permanent residents, and foreign entrepreneurs have two choices when it comes to incorporating an LLC. They can choose to incorporate it in the following forms.
Private Limited Company: A private limited company can have as many as 50 members or the shareholders. Both, individuals and corporate can purchase its shares. The corporate can even buy 100% of its shares.
Exempt Private Company: An Exempt Private Company (EPC) cannot have more than 20 members or shareholders. The Singapore Company Law exempts an EPC having the chargeable income of less than S$5 million from the audit compliance. It still has to prepare its accounts.
Foreign corporate entities have three choices when it comes to committing to a Singapore company incorporation. However, Subsidiary Company, which is a limited liability company, proves to be more conducive for them to start trading in Singapore.
Subsidiary Company: A Subsidiary Company is the most suitable business vehicle for the foreign corporate wanting to open a company in Singapore. As a true LLC, the subsidiary company has a separate legal identity from its parent company. It comes under the Singapore jurisdiction and qualifies for its tax incentives, benefits, and rebates.
Important LLC Facts
- Limited Liability: The business structure supporting the LLC reduces the liability of its members or owners. It limits the liability to the amount of capital they have invested in the purchase of the LLC’s shares.
- Tax Benefits: For the first three years, the initial chargeable income of up to S$100,000 of a startup company setup in Singapore (LLC) is tax-free. Next, S$200,000, is taxed at the rate of 8.5% of corporate income tax. The tax rate applicable to the income above S$300,000 is 17%.
- Perpetual Existence: An LLC has a separate legal existence from its owners. They may die or sell their shares, but the LLC’s continues to exist. It stops existing after the management has successfully concluded the striking off process to dissolve it.
- Brand: A company incorporation Singapore in the form of an LLC helps the business owners in protecting their business idea as it is a legal person. A company has a great chance of establishing itself as a brand. An LLC has the rights of a natural person. It can trade, buy and sell real estate in its name. It has a separate image in the eyes of the investors, creditors, suppliers, and employees of the company.
Benefits of the Singapore Company Registration
Singapore presents the entrepreneurs with a stable and pro-business environment, lower tax rates, territorial-based taxation system, and the state-of-the-art infrastructure. Singapore does not levy the wealth or inheritance tax, the capital gains are tax-free, and most importantly, it implements the one-tier corporate income tax.
- Singapore has a vast pool of English-speaking workers that are motivated. This workforce is rated as the best labor force in the world.
- Singapore ranks #1 in the Ease of Doing Business indicator, for the best investment environment, most open economy for international trade, and for the investment potential.
- Among the largest economies, Singapore is the 3rd most globalized economy and ranks 3rd among the wealthiest of nations.
- Since 1 July 2015, Singapore private companies fulfilling certain criterion are exempted from audit filing. Such a qualified company is tagged as a Small Company. These companies need to fulfill at least 2 of the following conditions:
a) Their total annual revenue should not exceed S$10 million
b) Their total assets should not exceed $10 million
c) The number of their employees should not exceed 50
In the majority of the regional economies, the investors and the entrepreneurs are plagued with the bureaucratic delays, corruption, complicated incorporation procedures, poor infrastructure, and political instability. That is why the entrepreneurs and the investors are preferring Singapore company incorporation and extend their business reach.