It is not a surprise that a number of entrepreneurs may be interested to start their business in Singapore as the famous country is known to be pro-business. Before Singapore company registration, it is important to know and determine the type of business you are going to run. This choice is important as it affects the taxes you will need to pay, the paperwork that will have to complete, personal liability, money-borrowing ability for your company, and the capability of expanding your business in the future.
Mainly there are three local business entity types in Singapore, namely Private Limited Company, Public Limited Company, and Public Company Limited by Guarantee. These three types are concluded as a Limited Liability Company (LLC). LLC are companies that are limited by shares. Also, LLC company owners’ personal assets are protected and liability from their business is limited
Private Limited Company
Many privately incorporated companies in Singapore prefer this type of business entity. A private limited company may have up to 50 shareholders that are allowed for a corporate entity or an individual or even both. However, this type of company is not available to the general public.
The shareholders are exempt from the responsibility of company debt if it is to surpass share capital contributed. A private limited company in Singapore is bound by a very efficient tax entity. For profits up to S$ 300,000 in Singapore companies, the effective corporate tax rate is below 9%. As for profits above the mentioned number, given tax rate is 17% at most. There is no capital gains tax for this LLC. Also, dividends are allowed to be distributed to shareholders free of tax once the income has been taxed at the corporate level.
This type of LLC is generally easy to manage as shares can be transferred with ease and raising capital is not difficult. Furthermore, a private limited company creates a more credible image compared to proprietorship or a partnership firm. It will be easier for this type of company to grow and expand as investors, clients, suppliers, banks, and other necessary affiliations will be more willing to be involved with the business.
Public Limited Company
As opposed to the private limited company, a public limited company is available to the general public. The number of shareholders required for this type is at a minimum of fifty people. There are more rules and regulations for this type of company as it is larger and involving the public. These rules and regulations are made to avoid exploitation and misuse of public funds.
Public Company Limited by Guarantee
This type of company usually is not driven by commercial or monetary purposes. Public company limited businesses do not distribute dividends to its shareholders. Rather, the profits earned by this type of company is reserved for future activities.
Once you have made up your mind regarding what type of business you are willing to build, you may start to look up for the steps of getting your company registered in Singapore via an accounting company like A1 Business.