Guide to Registering a Private Limited Company in Singapore

Editor’s Note: Guide to Registering a Private Limited Company is a guest article written by WLP Group.

Singapore is one of the most popular tourist destinations for entrepreneurs to register a company. After all, the country has a low corporate tax of 17% (of chargeable income). For many new entrepreneurs, going through the process of how to register a company in Singapore can be daunting. Going through the process of company incorporation in Singapore is often the priority of most entrepreneurs’ to-do list.

However, company registration in Singapore is an unfamiliar process for many new entrepreneurs. The application has many laws and regulations to take note of, and many entity types to select from. Each entity type has its own unique advantages and disadvantages including different corporate tax brackets.

Singapore has several main entity types to choose from

• Sole proprietorship. An entity type for a small business with one owner.
• Partnership. An entity type for a small business with multiple owners
• Limited liability partnership. An entity type for multiple partners that want limited liability.
• Private Limited Company. The perfect entity type for one or multiple partners with limited liability.

Singaporean entrepreneurs have a selection of business entities to choose from. However, there are different entity types that cater to businesses across all industries and scales. A private limited company is the most common entity type in Singapore. It is also the most preferred by business owners. However, this recommendation varies depending on your business plan and business model. This guide will elaborate on the requirements to register a private limited company in Singapore. By the end of this article, you will be familiar with the advantages and disadvantages of registering a private limited company.

Generally, small business owners opt to set up a sole proprietorship. However, entrepreneurs should go for company registration in Singapore consultation before making a decision. Learning more about the selection of entity types will help you to avoid any mistakes during the company incorporation application. In this article, we hope to provide some insight into how to register a company in Singapore. Alternatively, you could find an experienced service provider that offers a free-of-charge consultation on how to register a company in Singapore.

What is a Private Limited Company in Singapore?

A private limited company can have a minimum of 1 individual and a maximum of 20 shareholders. A private limited company with more than 20 (but less than 50) shareholders has to register as a private company. On the other hand, a company with more than 50 shareholders has to incorporate as a public company. Public companies will have to go through a stricter company incorporation Singapore process.

Key Features of a Private Limited Company in Singapore

A private limited company can sue and be sued in its own legal name.

It is a separate legal entity from its registered officers and shareholders. New entrepreneurs going through the application of company registration in Singapore often worry about their personal finances being at risk. A private limited company provides a significant benefit to shareholders. Registered officers and company shareholders will not be personally liable for the debts and liabilities incurred during the course of business run under the companies.

Registered officers and shareholders of a private limited company in Singapore have limited liability.

However, limited liability is only in effect once they pay the company’s shares; this must carry out after the company incorporation in Singapore process. Company creditors cannot go after shareholders’ personal assets. Therefore, the law protects shareholders from the private limited company’s operations. This provides shareholders with the level-headedness to lead the company without any worry.

The private limited company can own properties in its own name.

In other words, a private limited company can buy, hold and sell a property in its own name. 

A Singapore incorporated company is a tax resident of the country.

The private limited company will be eligible for local tax incentives and exemptions. This benefit holds, regardless of the nationality of the registered officers and shareholders.

A private limited company enjoys perpetual succession.

The private limited company in Singapore will be able to continue operations during unfortunate events to its shareholders. This includes a change in company structure or death of any of its registered members or shareholders.

Advantages and Disadvantages of Registering a Private Limited Company in Singapore

Limited Liability

The main advantage of registering a private limited company in Singapore is limited liability. A separate legal entity is attractive to shareholders who want to protect their family and personal wealth. However, shareholders and directors are liable to their paid-up capital.

Special Tax Incentives and Exemptions

Shareholders of a private limited company usually have a better chance of securing commercial loans from banks and or other financial institutions. This is especially so when compared to sole proprietorships with only one partner. 

A private limited Company in Singapore gets to enjoy special tax incentives and exemptions. For example, all Singapore incorporated companies are exempted from 75% of the first S$100,000 of their taxable income (for the first three years from its company registration in Singapore). In addition, shareholders are not taxed in their personal income tax returns when receiving dividends.

Regulatory Requirements

The disadvantages of registering a private limited company in Singapore are the stringent regulatory requirements. Registering a private limited company in Singapore has many administrative requirements as compared to the incorporation process of other entities.

For example, the company secretary must prepare a Director’s Resolution in the event of a change to the company’s registered address. The Directors Resolution has to reflect the change to the Accounting and Corporate Regulatory Authority (ACRA). Therefore, a private limited company in Singapore will usually incur greater costs due to regulations from the relevant agencies.

Legal Strike-off Requirements

What happens if a private limited company in Singapore decides to cease operations? The strike-off process can be tricky and costly. The shareholders’ of the private limited company has to go through strict instructions and various strike-off applications.

For example, the legal strike-off requirements are expensive and may take months to years to finalise, as stated in the application to register a private limited company in Singapore by ACRA. Unfortunately, this could heavily affect private limited companies that are going through the process of liquidation and closing down.

What’s Next?

After incorporating your new company, the next step is to focus on your product or service and grow your business! Marketing and leading your team is important. However, a crucial part of operations is keeping track of your payroll and paying your staff on time. Talenox is a payroll system that receives automatic Singapore regulatory updates. In addition, Talenox is used nationwide and integrated with great software like Xero.

For more information regarding Talenox’s payroll system, contact us at hello@talenox.com.