Singapore company types and business entities: A full guide (2024)

When starting a business in Singapore, choosing the right company structure is critical. The type of legal business entity you choose has long-term implications for taxation, legal liability, funding, and growth potential.

Whether you're a local entrepreneur or an international company, this guide is for you.

In this guide, you will learn

1. All the various business structures available and their advantages and disadvantages;

2. Real-world exemplary use of each business entity;

3. Options for foreign companies;

4. Suggestions to know which company type is your best choice.

5. The difference between a company and a business as per Singapore law.

1. Overview of Singapore company types

1.1. Private limited company (Pte. ltd)

A Private Limited Company (Pte. Ltd. or PLC) is Singapore's most common business entity. It offers flexibility, scalability, and numerous tax advantages. 

Its key features are limited liability and the ability to raise capital by share transfer or share issuing.

1.2. Public company

Public company limited by shares

A public company is a business entity whose shares are available for purchase by the public through a stock exchange. Its name often ends with “Limited” or “Ltd.”

For example, DBS Group Holdings Ltd. (DBS), is listed on the Singapore Exchange and offers its shares to the public for trading.

Key characteristics of a public company limited by shares are:

1. It can have more than 50 shareholders;
2. It can raise funds through an Initial Public Offering (IPO)
3. The liability of the shareholders is limited to the amount they have invested in the company.
4. Public companies are subject to stringent regulations and disclosures set by the country's regulatory authorities, such as ACRA and SGX.
5. Public companies limited by shares are typically used by large corporations, and holding companies, seeking to expand and raise significant capital by going public.

Public company limited by guarantee

A Public Company Limited by Guarantee is unique because it is most often used by non-profit organizations such as running charities, NGOs, educational institutions, or other national interest projects.

Key characteristics of a public company limited by guarantee are:

1. It does not have share capital. Its main goal is to carry out activities that are aligned with public or national interest, rather than to generate profits.
2. The liability of the members is limited to the amount they have agreed to contribute toward the company's assets. This amount is only called upon in the event the company winds up or incurs significant financial losses.

1.3. Sole Proprietorship

A sole proprietorship is the simplest business structure, where the owner and the business are legally the same entity.

As businesses grow, many sole proprietors choose to transit to a Private Limited Company for greater liability protection and access to funding.

1.4. Partnership

A Partnership is where two or more people (less than 20 partners) share business ownership. The partners can be individuals, companies, or other partnerships.

According to the Singapore Companies Act, you must form a company if you have more than 20 partners. This rule does not apply if you form a professional partnership.

There are 4 types of partnerships in Singapore

1. General Partnership: All partners have unlimited liability;
2. Limited Partnership: The general partner has unlimited liability and limited partners have unlimited liability
3. Limited Liability Partnership: A separate legal entity from the partners, all partners have limited liability.
4. Professional partnership

General partnership (or Partnership)

A General Partnership involves two or more partners who agree to manage and share the profits and losses of a business.

The key characteristics of a general partnership are:

• It is not a separate legal entity from the partners;
• The profits are taxed at the partner's personal income tax rate or corporate tax rate if they are companies
• Partners are liable for all the debts and losses of the partnership.

Limited Partnership (LP)

A Limited partnership (LP) in Singapore is a business structure that involves at least two partners: one general partner and one limited partner. 

While an LP is not a separate legal entity, meaning it is not distinct from its owners. It is unique in how it distributes liability between the partners.

This is a popular choice for real estate (investment) partnerships, where some partners invest money but don't participate in day-to-day management.

The key characteristics of a limited partnership are:

• The general partner assumes unlimited liability. They are personally responsible for the debts and obligations of the partnership. They are also responsible for managing the business.
• The limited partner has limited liability. Their liability is confined to the amount they have invested in the partnership. They do not manage the business.
• The profits are taxed at the partner's personal income tax rate or corporate tax rate if they are companies

If all the general partners in the LP are ordinarily resident outside of Singapore, the LP must appoint a resident manager in Singapore.

If no limited partner exists in the LP, its registration will be suspended, and the general partners will be reclassified under the Business Registration Act. The LP's status will only be restored once a new limited partner is appointed.

Limited Liability Partnership (LLP)

A Limited liability partnership (LLP) in Singapore is a hybrid business structure that offers the benefits of both a partnership and a company.

The key characteristics of a limited liability partnership are:

• An LLP is a separate legal entity from its partners, it can own property, and enter into contracts in its name.
• The partners in an LLP have limited liability. They are not liable for mistakes committed by other partners and only for their personal mistakes
• LLPs are not required to meet certain statutory obligations such as holding annual general meetings, appointing directors or a company secretary, or allocating shares.
• The profits are taxed at the partner's personal income tax rate or corporate tax rate if they are companies

When registering an LLP, there must be at least one ordinarily resident manager in Singapore.

Professional partnership

According to ACRA, a professional partnership is a partnership formed to practice a profession that requires specific legal qualifications.

. The limit on the number of partners does not apply to these professional partnerships, allowing them to have more than 20 partners.

Professional partnerships are typically formed by individuals who are licensed to practice professions regulated by specific Singapore laws. These include:

1. Engineers registered under the Professional Engineers Act;
2. Lawyers registered under the Legal Profession Act;
3. Architects registered under the Architects Act.

Professional firms also have the option to register their partnerships as Limited Liability Partnerships (LLPs) under the Limited Liability Partnerships Act. 

By doing so, they can combine the benefits of both a partnership and a company.

2. Options for foreign companies

Foreign companies aiming to set foot in Singapore have three primary options for registration: Subsidiary Company, Branch Office, and Representative Office.

Remember that you need a registered agent like Global Link Asia Consulting to help you register your company in Singapore

3. How to choose the right Singapore company types for your business?

To help you better choose the right company structure, below is our summary of suggestions for each type.

3.1. For startups, small and medium or very small companies, solo entrepreneurs

• Sole proprietorship: You work on your own (tutor, plumber, designer), make little profit every year, or want to test business ideas;
• General partnership: You have less than 20 partners, and you work in the same professional field such as a lawyer, doctor, architect, accountant, or real estate consultant;
• Limited partnership: You want a clear management structure with a general partner controlling the operation and raising funds via limited partners;
• Limited liability partnership: You want a clear management structure, limited liability;
• Private limited: You want to have a clear business structure, limited liability,  better branding, and the ability to raise funds and enjoy tax incentives. This is the easy choice for both local and foreign entrepreneurs

3.2. For large companies, major international corporations, holding companies

• Public company limited by shares: You want to raise funds via public offerings;
• Public company limited by guarantee: You want to engage in sustainable activities for the public interest such as charities;
• Subsidiary: You want to open a local company like a private limited in Singapore with the parent company as the ultimate beneficial owner;
• Branch office: You want to have a physical presence in Singapore offering the same services as the parent company without a separate legal entity;
• Representative office: You want to explore the Singapore market, gather market intelligence, build relationships without the need to create sales and revenue.

 In addition to this table, preparing an answer for each of the questions below can help you make a more informed decision

• How much is the investment capital? Do you plan to take on bank loans, or investor funding?
• How many owners do you have? 
• What is your expected profit? (If you have less than 160,000 SGD in profit, the personal income tax rate may be best for you.)
• Do you want fewer or additional filing obligations to qualify for government support?
• Is it easy to wind up the company?

4. What is the difference between a business and a company under Singapore law?

In Singapore, the terms "business" and "company" are often used interchangeably, but they have distinct legal meanings and implications under Singapore law.

4.1. Business

A business refers to any activity that is carried out to make a profit. This includes sole proprietorships, partnerships, and other unincorporated entities.

A business is not a separate legal entity from its owner(s), meaning the individual(s) behind the business are personally responsible for its debts, liabilities, and obligations.

In the eyes of the law, the business and the individual are considered the same.

There are 4 key characteristics of a business in Singapore:

1. Types of business structures include sole proprietorships general partnerships, limited partnerships;
2. The owners or general partners have unlimited liability.;
3. Profits from the business are taxed at the owner’s income tax rate from 0 to 24% for individuals or 17% for companies
4. Businesses must be registered with ACRA.

4.2. Company

A company is a separate legal entity from its owners (shareholders). This means that a company can own assets, enter into contracts, and sue or be sued in its name.

Shareholders are not personally liable for the company’s debts, and their risk is limited to their investment in the company.

There are 4 key characteristics of a company in Singapore:

1. Types of company structures can be private limited companies, public companies limited by shares or by guarantee, limited liability partnerships;
2. Shareholders have limited liability, and their assets are protected;
3. A company is subject to corporate tax (a flat rate of 17% in Singapore);
4. Companies must also be registered with ACRA.

5. How can we help you incorporate and manage your company in Singapore with success?

Global Link Asia Consulting, as your trusted one-stop corporate service provider helping hundred of business owners start their business overseas and manage their company with success, we can help you

• Register a company in Singapore;
• Open a corporate bank account in Singapore with a 99% success rate;
• Choose the right company types for tax optimization in Singapore;
• Apply for Singapore business licenses;
• Get an affordable, professional registered office address for business;
• Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
• Handle all your tax accounting needs, timely annual filings, auditing, and more.

6. FAQs about Singapore company types

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