Limited Liability Companies (LLC)

Limited Liability Companies (LLC) is the most common kind of business establishment in Singapore. Based on Department of Statistic Singapore’s report, as at December 2017, there are 315,531 LLCs in Singapore, representing approx 65% of total business establishments.

Advantages of Limited Liability Companies in Singapore

  1. The procedures to setup a limited liability company is fairly straightforward and the process be done individually over online if you have a SingPass
  2. Company is limited by its liability within its balance sheet and on-going contractual liabilities
  3. A Private Company or a Private Exempt Company can be setup with only one single shareholder
  4. Companies in Singapore are able to enjoy a fixed corporate tax rate of 17%.
  5. Tax losses incurred and unutilised capital allowance by LLC during the financial year can be carried forward to offset against future tax profits

Disadvantages of Limited Liability Companies in Singapore

  1. LLC requires more costs to operate and administer in the long run. On-going costs such as secretarial fees, audit fees (if require), related ACRA fees such as annual filing and so on
  2. LLC has more procedures and regulations to comply with such as holding Annual General Meeting, Resolutions to be approved by Directors before certain plans could be executed

Partnerships

Partnership establishments are quite rare within Singapore as partnership formations only represents approx 3% of total business establishments.

Advantages of Partnerships in Singapore

  1. The procedures to setup a Partnership is fairly straightforward, quick and easy
  2. The incorporation cost for Partnership is cheaper as compare to a Company incorporation
  3. There are lesser administrative procedures and statutory requirements to adhere for Partnerships

Disadvantages of Partnerships in Singapore

    1. Only a maximum of 20 partners are allowed to form a partnership in Singapore. Should there be above 20 partners, it is required to form a Company instead
    2. Unlike LLC, a Partnership is not a separate legal entity and their partners have unlimited liabilities except for Limited Liability Partnership (LLP)
    3. Partnership fees paid to ACRA needed to be renew annually instead of one-off payment
        • $115 for one year Partnership registration, or
        • $175 for three years Partnership registration

Sole Proprietorship

Sole Proprietorship is the second most common business entities in Singapore after Companies. It represents roughly 28% of all business establishments. Most self-employed individuals started-off their business careers via sole proprietorship before they transfer their profiles to a Company.

Advantages of Sole Proprietorship in Singapore

  1. The procedures to setup a Sole Proprietorship is fairly straightforward, quick and easy
  2. The incorporation cost for Sole Proprietorship is same as Partnership and is cheaper as compare to a Company incorporation
  3. There are lesser administrative procedures and statutory requirements to adhere for Sole Proprietorship

Disadvantages of Sole Proprietorship in Singapore

    1. Sole Proprietorship is usually suitable for only small businesses with one single owner
    2. Unlike LLC, a Sole Proprietorship is not a separate legal entity and the owner have unlimited liabilities
    3. Sole Proprietorship will cease to exist in the event the owner passed away
    4. Sole Proprietorship fees paid to ACRA needed to be renew annually instead of one-off payment
        • $115 for one year Sole Proprietorship registration, or
        • $175 for three years Sole Proprietorship registration