An entrepreneur wishing to start a business in Singapore, first, needs to indulge in company incorporation Singapore. The two main types of companies incorporated in Singapore are:
- Private Limited Companies: These companies are limited by shares, and the shareholders cannot be more than fifty. In Singapore, these are often referred to as Pte Ltd. However, they cannot offer their shares to the public.
- Public Companies: More than fifty shareholders can own shares of these companies. The entity is allowed to offer its shares and debentures to the public for raising capital.
The entrepreneurs prefer to register ‘Pte Ltd’ or private limited companies. These are dynamic business structures and scales according to the needs of the business.
Advantages of Incorporating a Private Limited Company in Singapore
Owner’s Limited Liability
A Pte Ltd is a separate entity from its owners (shareholders). The business owners prefer a Pte Ltd for its ability to limit the owners’ liability to the amount they have invested in its shares. The shareholders personal assets are never used to pay the debts of a Pte Ltd.
The Singapore business firm like a sole proprietorship or a partnership stops existing after its owner passes away or leaves the business. It does not happen with a Pte Ltd. It keeps on going even after its shares were sold or transferred. The Pte Ltd needs to be dissolved or merged properly using prescribed legal means.
Singapore Corporate Tax
A Pte Ltd pays corporate tax on its earning. In no way, it is transferred to its shareholder. Most importantly, the dividend distributed by the Pte Ltd to the shareholders is considered as the capital gain. Singapore does not tax capital gains. It is one of the reasons why company incorporation Singapore is in the demand.
Branding Your Business
When you opt for a Singapore company registration, you automatically brand your business. It gets a name, address and identity. A Singapore Pte Ltd, as a legal person, can really capitalize on this fact. It can attract funds on the basis of its success and raise capital on the strength of its assets.
Shares of the Pte Ltd
The management of a Pte Ltd can decide to give its shares to its board members and employees. This bonds them to the survival and growth of the company. It raises their investment and commitment to the company.
The shareholders of the company are free to transfer their shares whenever they choose to do so. It does not affect the existence of the company in any way. The company is in a position to put some limitations on the transfer of the shares.
Disadvantages of Incorporating a Pte Ltd Company in Singapore
Cost of Registering a Pte Ltd
As compared to the cost of registering a sole proprietorship, the cost of registering a Pte Ltd is a bit stiff. It includes the costs of filing of articles of incorporation, Singapore incorporation services or an accountant.
Ownership of Company
Though shareholders own the company, it is governed by the Board of Directors. In broad terms, no single shareholder has the complete control over the company.
Rules and Regulations
Every company registered in Singapore has to follow rules and regulations put forth by the governing agencies like ACRA, IRAS, etc. It has to follow the practices insisted upon by the officials while discharging its compliance requirements and business activities.
Cost of Statutory Filing
The directors of a Pte Ltd is responsible for its annual filing and declare the financial status of the company to its shareholders. A Pte Ltd also needs to bear the expenses of tax returns, accounting, auditing, etc. The task generates a lot of paperwork that needs to be handled by the specialists.
Cost of Striking off
It is expensive to indulge in company incorporation Singapore, and it is equally expensive to dissolve it. After taking consent of the shareholders, company officials needs to initiate a long and complicated process to strike off a company. The process may take months completely.
Singapore is the right business destination for a proactive entrepreneur with a productive business idea. The country supports a pro start-up environment which attracts hardworking entrepreneurs, corporate, and investors. An entrepreneur must know the advantages and disadvantages of company incorporation in Singapore before he or she fully commits to setting up a business in this country.
About Us: SBS Consulting is one of the leading corporate services provider in Singapore. It specializes in Company Incorporation, accounting services Singapore, Preparation of director’s report, Taxation, GST, Payroll, XBRL Filing, IT software development and maintenance, etc.