Singapore Limited Liability Company (LLC), the Best Friend an Entrepreneur can Have!
Singapore has territorial and one tier taxation system. That is why individual investors, entrepreneurs, and corporate entities set up their companies in Singapore. However, it does not mean that all the Singapore business gets the benefits of the lower tax rates, schemes, incentives, and benefits.
What is a Limited Liability Company (LLC)?
Sole Proprietorship and Limited Liability Partnerships do not get any of benefits. You need to incorporate a Singapore company in one of the forms of a ‘Limited Liability Company’ to do so.
An LLC is a company limited by shares. It is the most preferred Singapore business structure. This business entity limits the liability of its owners and protects their personal assets. The Sole Proprietorship and the Limited Liability Partnership are inseparable from their owners. The debts incurred by these businesses are the debts of their owners which puts their personal assets at risks.
Types of Limited Liability Company
There are different types of LLC. They are as follows.
Private Limited Company
The majority of business incorporations in Singapore are carried out to establish private limited companies. It is one of the most powerful forms of limited liability company. The number of members or shareholders that can come together to form it ranges from a minimum of one to maximum of 50.
Both, individuals and corporate entities can be its members. However, the shares of private limited companies are not available to the public. A corporate entity can own 100% of shares of a Singapore private limited company.
A private limited company has a separate legal identity. It can trade in its own name and can buy or sell the real estate. It is responsible for its own debts or losses. Therefore, if it suffers losses, its assets are sold to pay its debts.
A private limited company, unless it is dissolved, has perpetual existence. The sale and the transfer of the ownership of its shares do not affect its existence in any way. The tax structure implemented in Singapore supports the new private limited companies that fall under the jurisdiction of Singapore.
Exempt Private Company
The exempt private company is very similar to the private limited company. However, the number of its members cannot be more than 20. This business structure is very useful to the small businesses.
Each Singapore Company must comply with the tax filing and audit requirements imposed by the ACRA (Accounting and Corporate Regulatory Authority) and IRAS (Inland Revenue Authority of Singapore).
A Subsidiary Company is a business structure specially designed for the foreign entities who wants to open company in Singapore. It has all the characteristics of a private limited company.
At present, small to mid-sized foreign corporate companies are favoring incorporation of Subsidiary companies to further their business goals in Singapore. Its parent company owns 100% of its shares.
Like a private limited company, a Subsidiary Company has separate legal existence from its parent company. It is responsible for its own debts and not the parent company. The liability of the parent company is limited to the share capital it has invested in the new company.
Public Limited Company
Another form an LLC may take is that of Public Limited Company. This company must have 50 or more members. This type of Singapore business incorporation is undertaken for large businesses.
Public Company Limited by Guarantee
A public company limited by guarantee is yet, another type of the limited liability company. The company incorporation of this type is to further the non-profit causes that are of public or private interests.
A limited liability company allows the investors, corporate and the entrepreneurs to operate in the market without risking their personal assets. This business structure is a great advance over the Sole Proprietorship and forms of partnerships.