Starting a business in Singapore requires a clear understanding of the different types of business entities available. Whether you're a local entrepreneur or a foreign investor, choosing the right structure is critical for compliance, liability, taxation, and long-term growth.
In this article, we explore the four main types of companies and business entities in Singapore, their key features, and how to choose the right one for your needs.
Why Start a Business in Singapore?
Singapore ranks #2 globally in ease of doing business, with company registration often completed within 1 to 2 business days via ACRA. The city-state offers 100% foreign ownership, no restrictions on capital repatriation, and a corporate tax rate capped at 17%. Startups enjoy attractive tax exemptions of up to 75% on the first SGD 100,000 of chargeable income for the first three years, and benefit from over 100 double taxation treaties globally.
Beyond its efficient regulatory framework, Singapore offers world-class infrastructure, a stable political environment, and a pro-innovation ecosystem. The government actively supports high-growth industries through the Economic Development Board (EDB), offering grants and R&D incentives, especially in fintech, biomedical sciences, and advanced manufacturing.
With strong IP protection, alignment with international data laws, and a strategic location in Asia, Singapore serves as an ideal launchpad for regional and global business expansion.
4 Types of Business Entities in Singapore
1. Sole Proprietorship
A sole proprietorship is the simplest and most common form of business structure in Singapore. It is owned and operated by a single individual, with no legal distinction between the owner and the business.
This entity type is easy and inexpensive to register, making it ideal for freelancers, self-employed professionals, and small business owners testing the market. However, the owner bears unlimited liability, meaning personal assets are at risk in the event of business losses or debts. Sole proprietors are taxed at personal income tax rates, cannot raise capital by issuing shares, and may face challenges gaining business credibility.
2. Partnership
A partnership involves two or more individuals or entities coming together to run a business with shared responsibilities and profits. There are three main types of partnerships in Singapore:
a) General Partnership
A general partnership functions similarly to a sole proprietorship but with two or more partners. It is not a separate legal entity, and each partner is jointly and severally liable for the debts and obligations of the business. Profits are taxed at personal income tax rates. This model is best suited for professionals or small teams with mutual trust and shared expertise.
b) Limited Partnership (LP)
In a limited partnership, there are both general and limited partners. General partners manage the business and have unlimited liability, while limited partners contribute capital and have liability limited to their investment. LPs are not separate legal entities and must include at least one general partner and one limited partner at all times. This model is ideal when investors want to fund a business without participating in daily operations.
c) Limited Liability Partnership (LLP)
LLP combines elements of partnerships and private companies. LLP is a separate legal entity, offering the flexibility of a partnership with the advantage of limited liability for each partner. Each partner is liable only for their own actions and not those of others. LLPs are popular among lawyers, architects, and consultants who want to operate under a shared brand but maintain individual accountability.
3. Private Limited Company (Pte Ltd)
A private limited company (Pte Ltd) is the most preferred business structure in Singapore for both local and foreign entrepreneurs. It is a separate legal entity from its shareholders and directors, meaning the company can own assets, incur liabilities, and sue or be sued in its own name.
Shareholders enjoy limited liability, and the company pays corporate tax instead of personal income tax. Pte Ltd companies can raise capital through share issuance, have perpetual succession, and offer better branding and trust. Although this structure requires more regulatory compliance, such as maintaining a registered office, appointing a company secretary, filing annual returns, and undergoing audits if annual revenue exceeds S$10 million — it provides strong legal protection and scalability. At least one shareholder and one locally resident director are required.
4. Company Limited by Guarantee (CLG)
A Company Limited by Guarantee is typically used for non-profit organizations, charities, and clubs. Instead of shareholders, the CLG has members who agree to contribute a nominal amount in the event the company is wound up.
It is a separate legal entity and does not have share capital. CLGs must have at least two members and are governed under specific regulations of the Companies Act. They do not distribute profits to members and often register with the Commissioner of Charities when pursuing charitable objectives.
This structure is ideal for entities focusing on social causes or public benefit rather than commercial gain.
Key Differences Between The Business Entity Types
| Business Type | Legal Status | Liability | Taxation | Suitable For |
|---|---|---|---|---|
| Sole Proprietorship | Not a separate entity | Unlimited | Personal tax | Individuals, freelancers |
| General Partnership | Not a separate entity | Unlimited | Personal tax | Small teams with mutual trust |
| Limited Partnership | Not a separate entity | Limited for some | Personal tax | Investors and business managers |
| Limited Liability Partnership | Separate legal entity | Limited | Personal tax | Professionals, consultants |
| Private Limited Company | Separate legal entity | Limited | Corporate tax | SMEs, startups, scalable ventures |
| Company Limited by Guarantee | Separate legal entity | Limited | May be tax-exempt | Charities, non-profits |
For Foreign Companies Expanding to Singapore
Singapore is a strategic hub for global expansion, and foreign companies have several entity options:
1. Subsidiary Company
A subsidiary company is a locally incorporated private limited company owned by a foreign parent. It is considered a separate legal entity, meaning the liabilities of the subsidiary do not extend to the parent company.
It is treated as a Singapore resident for tax purposes and enjoys local tax benefits. It operates independently of the parent company. This is the most flexible and scalable structure for foreign companies looking to establish full operations in Singapore.
2. Branch Office
A branch office is an extension of the foreign parent company and not a separate legal entity. The parent company is fully liable for its obligations. While it can conduct commercial activities, it is considered a non-resident for tax purposes and is not eligible for local tax incentives.
3. Representative Office
A representative office is a temporary, non-commercial setup used for market research or liaison purposes. It cannot conduct revenue-generating activities and is not a legal entity. This option is ideal for foreign companies evaluating the Singapore market before committing to full incorporation.
Choosing the Right Business Structure
When deciding on the best business entity in Singapore, consider these key factors:
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Nature of business activities
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Level of liability protection needed
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Taxation and regulatory requirements
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Plans for growth and fundraising
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Number of owners or partners involved
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Brand perception and credibility needs
For most startups and SMEs, incorporating a private limited company offers the best balance of protection, scalability, and credibility. Freelancers or small business owners might opt for sole proprietorship or LLP depending on their risk tolerance and operational needs.
Foreign businesses should evaluate whether to set up a subsidiary for full operations or start with a representative office to test the waters.
Incorporate Your Company With Margin Wheeler!
Understanding the different types of companies and business entities in Singapore is essential for setting your business up for success. From simple sole proprietorships to scalable private limited companies, each structure has its own advantages and limitations. By assessing your goals, resources, and operational scope, you can choose a business entity that aligns with your strategy and ensures long-term growth in Singapore’s dynamic economy.
Not sure which business structure suits you best? Get in touch with our team at Margin Wheeler. As one of the top-rated corporate service providers on Google, we specialize in guiding businesses through company incorporation in Singapore. Reach out to us today and let’s get started!
