Whats the difference between SP, LLP and Pte Ltd - Singapore's business systems are very similar to that of the British system. Most of the company's act came from the UK and with it most of the systems of business.
To start of there are basically 3 main forms of business/company structures that an entrepreneur could consider when he or she wants to start off their business here in Singapore.
Singapore is one of the best places to do business and we are ranked number 1 on the ease of doing business and this makes us a great place to start a company. Many may be confused as to what makes a difference in the 3 main forms. Let us discuss it here today.
Before we start, definitions, "SP" are what we term as sole proprietorship. "LLPs" are limited liability partnerships. "Pte Ltds" are private limited companies.
Let us start with sole proprietorship, when it comes to starting of a business, SPs are a good choice of business type because you can get it registered by yourself on the ACRA website in a few minutes time. How it functions is basically, you still trading as yourself but in another name. What does that mean? You are able to trade in a certain name, maybe "ABC Business Advisory", but technically you are signing off contracts in your own name.
Advantages of such a Sole Proprietorship business:
Easy to set upEasy to maintainClear cut submission (Revenue - Expenses = Profit) , you just need to submit your profit or loss figure
Disadvantages of setting up a Sole Proprietorship business
Business Liabilities are tagged to personal assets Difficulty raising funds because you can't give shares to anyoneBusiness cannot own property, you own it under own name
LLPs are a new type of business created in 2014, termed limited liability partnerships, it is a hybrid type that is between what is an SP and what is a Pte Ltd company.
LLPs are easy to register and serves many of the benefits that Pte Ltd companies offers without the extra cost of compliance that most Pte Ltd companies would incur. LLPs are partnerships in basic so you can't register it alone which is an issue for persons wanting to start their own business
Advantages of a Limited liability partnership:
Limited liability for partners involved
Cheap to set up
Cheap to maintain
Is a body corporate, therefore able to own property in business name and able to enter contracts
Disadvantages of a Limited liability partnership
Need two person to register
Difficult to raise funds, cant issue shares
Pte Ltd Companies are the most popular form of business in Singapore, when you incorporate a company, it is a separate legal person that you could trade with and own property with. Cost is might higher but you do have the freedom to run it independent of your personal assets and liabilities.
Advantages of a Private Limited company:
Limited liability for shareholders
Directors can be appointed and fired based on shareholders decisions
Easy to raise funds with issuance of new shares and easy to transfer shares
Clear accounting to keep shareholders informed of the financial health of the company
Disadvantages of a Private Limited company:
High Cost to set up High Cost to maintain Accounting needs to be done with full details and submission
If you are a young entrepreneur and not too sure of which path to take on, you could contact us to find out more or visit our young entrepreneurs page.
Whats the difference between SP, LLP and Pte Ltd