1. Private Limited Company (Pte Ltd)
   A Private Limited Company is the most popular choice for businesses in Singapore. It operates as a separate legal entity, offering significant advantages in liability protection and scalability

• Key Features:

• • Separate legal entity from owners.
  • Limited liability for shareholders.
  • Can raise funds by issuing shares.
  • Subject to corporate tax rates.

• Ideal For:

• • SMEs and startup aiming for growth.
  • Businesses seeking external investors.
  • Entrepreneurs wanting limited liability protection.

2. Sole Proprietorships
   A Sole Proprietorships is the simplest business structure, ideal for individuals starting small scale operations. However, it does not provide liability protection.

• Key Features:

• • Owned and operated by one individual.
  • No legal distinction between the owner and the business.
  • Subject to personal income tax rates.

• Ideal For:

• • Freelancers and consultants.
  • Small businesses with minimal risks.
  • Entrepreneurs looking for low setup costs.

3. Limited Liability Partnership (LLP)
   An LLP combines the flexibility of a partnership with the limited liability of a company. It’s a preferred choice for professionals working together.

• Key Features:

• • Separate legal entity from partners.
  • Partners are liable only for their actions.
  • Business profits are taxed at personal income tax rates.

• Ideal For:

• • Professional services (e.g., law or accounting firms).
  • Joint ventures between individuals or companies.
  • Business requires flexible operational structures.

1. Liability Protection
   • Private Limited Company: Full liability protection for shareholders, personal assets are safeguarded.
   • Sole Proprietorship: No liability protection, the owner is personally liable for business debts.
   • LLP: Limited liability for partners, personal assets are generally protected unless misconduct is proven.
2. Taxation
   • Private Limited Company: Eligible for corporate tax rates (17%) and startup tax exemptions.
   • Sole Proprietorship: Taxed at personal income tax rates, which can be higher for high earners.Taxation
   • LLP: Profits taxed at partners’ personal income tax rates, providing flexibility based on income levels.
3. Compliance Requirements
   • Private Limited Company: Requires filing annual returns, appointing a corporate secretary, and conducting AGMs.
   • Sole Proprietorship: Minimal compliance; requires renewal of business registration annually.
   • LLP: Moderate compliance; requires filing annual declarations of solvency and maintaining partnership agreements.
4. Scalability and Fundraising
   • Private Limited Company: Highly scalable; can raise capital through equity and attract investors.
   • Sole Proprietorship: Limited scalability; dependent on owner’s resources.
   • LLP: Moderate scalability; limited options for raising capital compared to Pte Ltd.
5. Cost of Setup and Maintenance
   • Private Limited Company: Higher initial setup and maintenance costs due to compliance requirements.
   • Sole Proprietorship: Low setup and operational costs; ideal for small scale businesses.
   • LLP: Moderate costs, depending on the complexity of partnership agreements.

Private Limited Company (Pte Ltd):

• You need liability protection.
• You plan to scale and attract investors.
• You want to benefit from corporate tax incentives.

Sole Proprietorship:

• You are starting a low-risk business.
• You prefer minimal compliance and setup costs.
• You do not need liability protection.

Limited Liability Partnership (LLP):

• You are forming a professional partnership.
• You need operational flexibility.
• You want liability protection without corporate tax obligations.

Private Limited Company (Pte Ltd):

Advantages:

• Liability protection.
• Access to funding.
• Corporate tax benefits.

Disadvantages:

• Higher setup and maintenance costs.
• Stricter compliance requirements.

Sole Proprietorship:

Advantages:

• Simple and cost-effective.
• Minimal compliance requirements.

Disadvantages:

• No liability protection.
• Limited growth potential.

Limited Liability Partnership (LLP):

Advantages:

• Liability protection for partners.
• Flexible operational structure.

Disadvantages:

• Limited access to funding.
• Compliance requirements can be complex.

Selecting the right business structure depends on your business objectives, risk tolerance, and long-term goals. Private Limited Companies offer scalability and liability protection, while Sole Proprietorships are ideal for simplicity and low costs. LLPs strike a balance, providing flexibility and limited liability for partnerships.

By understanding these structures, local entrepreneurs in Singapore can make informed decisions and set their businesses up for success.

Need help deciding on the right business structure?  Contact Lett for expert guidance and tailored solutions.