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[ESTABLISHING A BUSINESS ENTITY IN SINGAPORE]
Education would have to be sought before a business entity can operate a private school. Factors affecting the choice of a business entity type The suitable type of business entity depends on your business needs and goals. The following are some of the factors to be considered in determining the best structure: (1) What is the nature of the business? (2) How much capital are you prepared to invest? (3) How many owners will there be?
(4) What liabilities and responsibilities are you prepared to assume? (5) What risks are you prepared to take? (6) What are the advantages and disadvantages of the different business entities? (7) What are the tax implications? (8) The cost, formalities and requirements to maintain the business entity. Below is a table on the comparison in relation to the main business structures:-
Limited Partnership (LP)
Limited Liability Partnership (LLP)
Company limited by shares
Sole Proprietorship
Partnership
Business is managed by a board of directors but owned by shareholders. A director may not necessarily be a shareholder. Possibility of raising further capital through the issuance and allotment of shares to investors
Partners are professionals such as lawyers, accountants, doctors, engineers and architects who are prepared to be taxed
Two to twenty persons come together to carry on business with a view to making profit
At least one partner is not interested in managing the business and is not ready to bear unlimited risk.
An individual prefers to run the business on his own
Generally suitable where:
at the individual personal tax rate.
Not a separate legal entity
Not a separate legal entity
Legal Status
Not a separate legal entity
Separate legal entity
Separate legal entity
(1) Partners are personally liable for debts and losses resulting from own actions
(1) General partners have unlimited liability
Shareholders enjoy limited liability
Liability
Unlimited liability
Unlimited liability
(2) Partners are not personally liable for debts and losses of LLP incurred by other partners
(2) Limited partners have limited liability
Property Ownership
Cannot own property in firm’s name
Cannot own property in LP’s name (1) Individual partners - personal income tax rate
Can own property in LLP’s name
Can own property in company’s name
In owner’s name
(1) Individual partners - personal income tax rate
Tax Rate
(1) Personal tax rate: 0% to 22% (up to 24% with effect from YA2024)
Personal income tax rate
Personal income tax rate
corporate tax rate
(2) Corporate partners - corporate tax rate
(2) Corporate partners - corporate tax rate
ILN Corporate Group – Establishing a Business Entity Series
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