There are several factors to consider when selecting your entity structure:
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Liability: Only Pte Ltd and Limited Liability Partnership provide a separate legal entity and limit the personal liability of founders and shareholders. The other forms expose you to personal risks.
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Taxes: Only Pte Ltd companies pay corporate tax rates and can apply for tax exemptions. Other company forms will be subject to personal tax instead. Above a certain level of revenue, it is more beneficial to pay corporate tax compared to personal tax.
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Compliance requirements: Pte Ltd requires to appoint a Corporate Secretary and to submit annual reports to ACRA. These duties can however be outsourced to a specialized agency.
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Funding: A separate legal entity is usually required to apply for loans and attract investment.
| Limited Liability Company (Pte Ltd or LLC) | Sole Proprietorship | General Partnership | Limited Partnership | Limited Liability Partnership (LLP) | |
| Owned By | 1-50 Shareholders | 1 Owner | 2-20 Partners | 2+ Partners | 2+ Partners |
| Represented By |
Min. 1 Director Min. 1 Corporate Secretary |
Owner | Min. 2 Partners | Min. 2 Partners | Min. 2 Partners |
| Legal Entity | Yes | No | No | No | Yes |
| Liability | Limited | Unlimited | Unlimited | Unlimited | Limited |
| Tax Rate |
Corporate rate (max 17%) Eligible for exemptions |
Personal tax rate (max 22%) | Personal tax rate (max 22%) | Personal tax rate (max 22%) | Personal tax rate (max 22%) |
| Reporting | Annual Filings to ACRA | Easy | Easy | Easy | Easy |
| External Funding | Easy | Hard | Hard | Hard | Hard |
(Source: Osome )
Disclaimer: The above-mentioned details are not intended to serve as, and should not be deemed as, legal or financial advice from Aspire or any of its affiliates. Please seek professional advice before deciding which structure to adopt and how it may impact your business, operations, and affairs (financial or otherwise).
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