Selecting the right company structure is a critical first step when starting a business in Singapore. Your choice will determine how the company is managed, how taxes are assessed, how profits are distributed, and what obligations you have under Singapore law.
The Accounting and Corporate Regulatory Authority (ACRA) recognises several forms of business entities. While all allow you to conduct business legally, each structure carries different levels of liability, compliance requirements, and flexibility. Understanding these distinctions will help you choose a business type that aligns with your goals, resources, and growth plans.
1. Private Limited Company (Pte. Ltd.)
A Private Limited Company is the most common and preferred structure for both local and foreign entrepreneurs in Singapore. It is registered as a separate legal entity under the Companies Act and is distinct from its shareholders and directors.
Key features:
- Must have at least one shareholder and one director, with at least one director being a Singapore resident.
- Shareholders can be individuals or corporate entities.
- Liability is limited to the amount of share capital contributed.
- Must file annual returns and maintain proper accounting records.
- Tax rate generally starts at 17%, with partial tax exemptions for the first S$200,000 of chargeable income.
Ideal for: Entrepreneurs seeking scalability, credibility, and limited personal liability. It is also the only structure eligible for most government grants and corporate tax incentives.
2. Public Company Limited by Shares (Ltd.)
A Public Company Limited by Shares can have more than 50 shareholders and may offer shares to the public, often through a stock exchange listing. It is subject to stricter disclosure and reporting requirements.
Key features:
- Must have at least two directors residing in Singapore.
- Required to hold annual general meetings (AGMs) and file audited financial statements.
- Can raise capital from the public through share issuance.
- Regulated more stringently under the Companies Act.
Ideal for: Larger enterprises or corporations planning to raise capital publicly or list on the Singapore Exchange (SGX).
3. Public Company Limited by Guarantee
A Public Company Limited by Guarantee (CLG) is typically established for non-profit or charitable purposes, such as societies, trade associations, or educational and professional bodies. It does not have share capital or shareholders. Instead, it has members who guarantee to contribute a specified amount (often S$1 or S$10) in case the company is wound up.
Key features:
- Members’ liability is limited to the guaranteed amount.
- Must have at least two directors and one company secretary.
- Cannot distribute profits to members.
- Commonly used for NGOs, charities, and professional associations.
Ideal for: Non-profit organisations, charities, or community initiatives focusing on social, educational, or environmental objectives.
4. Limited Liability Partnership (LLP)
An LLP combines the flexibility of a traditional partnership with the limited liability feature of a company. It is suitable for professionals such as lawyers, architects, or accountants who wish to operate under a shared partnership name.
Key features:
- Requires at least two partners (individuals or corporate entities).
- Each partner’s liability is limited to their own negligence or misconduct.
- Must appoint a manager who is ordinarily resident in Singapore.
- Profits are taxed at the partners’ personal or corporate income tax rates, depending on their ownership type.
Ideal for: Professional firms or service partnerships that want flexibility and reduced personal liability.
5. Limited Partnership (LP)
A Limited Partnership is made up of at least one general partner and one limited partner. Unlike an LLP, an LP is not a separate legal entity and offers limited liability only to the limited partner.
Key features:
- General partner bears unlimited liability and manages the business.
- Limited partner contributes capital but does not participate in management.
- Not required to file annual returns unless registered under other laws.
- Registration lapses if there are no general partners.
Ideal for: Investment and venture capital projects where one party manages the business while other investors remain passive.
6. Sole Proprietorship
A Sole Proprietorship is the simplest business form in Singapore. It is owned and controlled by one individual or a single corporate entity. The business and the owner are legally the same, meaning the owner is personally liable for all debts and obligations.
Key features:
- Requires only one owner who must be a Singapore Citizen, Permanent Resident, or EntrePass holder.
- Profits are taxed as personal income.
- Minimal compliance requirements but no separate legal identity.
- Cannot register separate shareholders or directors.
Ideal for: Freelancers, small traders, or professionals starting a business on a small scale with minimal regulatory obligations.
7. Partnership
A Partnership consists of two or more individuals (up to 20) carrying on business together. It is not a separate legal entity, and all partners share profits, losses, and legal liabilities jointly.
Key features:
- No limited liability protection for partners.
- All partners are personally responsible for business debts.
- Profits are taxed as personal income.
- If there are more than 20 partners, the entity must register as a company.
Ideal for: Small professional groups or family-run businesses that rely on mutual trust and direct management.
How to Choose the Right Company Type
When choosing a business structure, consider the following factors:
- Liability protection: If you wish to separate personal assets from business risks, a Private Limited Company or LLP is recommended.
- Tax treatment: Sole proprietorships and partnerships are taxed at personal income rates, while companies benefit from corporate tax exemptions.
- Scalability: If you plan to attract investors or expand internationally, a Pte. Ltd. is the most flexible and credible structure.
- Compliance burden: Smaller entities like sole proprietorships require less paperwork, while incorporated companies have higher reporting standards.
- Nature of business: Non-profits and associations should register as Companies Limited by Guarantee.
A well-considered choice of company structure ensures that your business is not only compliant but also well-positioned for growth and investment in Singapore’s dynamic economic environment.