Type of Business Entities in Singapore in 2021
There are several types of companies that our Clients can set up, the most common ones being the private limited company (LLC), branch office and representative office.
The private limited company (Pte. Ltd.)
- Setting up a private limited company in Singapore is the most common strategy adopted by entrepreneurs, which is abbreviated as “Pte. Ltd.”. This company type is functionally equivalent to the LLC in other jurisdictions, with shareholders’ liability being limited to the amount unpaid on their shares;
- Thanks to the relaxed rules on opening a private limited company, requiring only one shareholder, one resident director, a company secretary, a registered address and no minimum share capital, foreign investors overwhelmingly favour the Pte. Ltd. when entering the Singaporean market. This entity can engage in any type of commercial or industrial activity, and there are no restrictions on foreign investment;
- Singaporean private limited companies may have up to 50 shareholders. If there are likely to be either i) more than 50 shareholders or ii) regular share transfers, then an unlisted public limited company is a better option;
- This entity can be incorporated within one week without the need for our Clients to visit Singapore or contribute any share capital. However, at least one of the company’s directors must be resident in Singapore;
- Local government is welcoming new entrepreneurs to start a business in Singapore. New startups will enjoy significant tax relief at the first 3 years of tax assessment and subsequently can be qualified for a partial tax relief. For the details please refer to IRAS webpage.
General purpose – A private limited company fulfils the needs of almost every application for doing business either within or outside Singapore. These entities have low administrative requirements and can be turned to almost any use as long as share liquidity is not required. These attributes of a Singapore LLC makes it ideally suited for use as a subsidiary or as an entrepreneurial vehicle.
The private limited company’s flexibility also means that it can be used in the following ways:
Special Purpose Vehicle (SPV)
- SPVs can be used to i) hold designated assets on behalf of its investors while insulating the shareholders from liability and ii) raise funds from the market;
- This vehicle is used to hold and manage long-term investments including debt, real estate, and shares in other businesses in a tax-efficient manner;
- Holding companies derive their income primarily from dividends, interest payments and rental fees, depending on the types of assets held;
- Singaporean companies can be used as private wealth vehicles to manage family assets. Visit Healy Consultants Group PLC’s page on family wealth vehicles to learn more and compare different structures that can be used to run a family office.
- Foreign companies may do business in Singapore without setting up a separate legal entity, although they must register with the Accounting and Corporate Regulatory Authority (ACRA) to do so. Doing business in this manner is known as establishing a branch office in Singapore;
- A branch office can conduct business only within the scope set by the parent company. A Singapore-based branch can invoice local customers, sign sales contracts and receive income from customers;
- As an extension of the foreign company without its own legal personality, a branch does not have limited liability. Any liabilities incurred by the branch are therefore attributed to the parent company. Consequently, using a branch introduces greater risks to your business;
- Branch offices may only be registered by foreign corporations, as stipulated by Singapore’s Companies Act;
- Branches are treated as non-resident for tax purposes. This means that they do not benefit from Singapore’s double taxation avoidance treaties, nor the tax incentives for new companies.
Not recommended – Although there are some limited advantages to using branches in other jurisdictions, including: i) being a cost-effective way to incorporate business in Singapore, and ii) the branch profits earned can be repatriated without paying any taxes. However, Healy Consultants Group PLC recommends incorporating a local company rather than establishing a branch in Singapore. Since the company has no minimum capital requirement, limited liability, and allows 100% foreign ownership in all fields, the traditional benefits of a branch do not apply. No time is saved in registering a branch either, as incorporating a Singaporean company can be done under a week.
- A representative office can be used if a foreign company does not intend to carry on revenue-generating business activities in Singapore. Annual filings are simplified since the lack of revenue means that taxes do not need to be filed or assessed;
- These entities cannot make direct sales. Instead, they may only carry out “auxiliary activities”, such as i) promoting the business of the parent company ii) market research iii) after-sales support or iv) research & development;
- The scale of a representative offices’ operations is limited by a rule requiring fewer than five members of staff;
- Representative offices’ limited scope brings with them a limited lifetime, as they may only operate for up to three years before being required to convert to a branch;
- New foreign businesses may not set up representative offices in Singapore, as the law requires that the foreign entity should i) have an annual sales of more than US$250,000 and ii) have existed for at least three years;
Market research – If your business wishes to send a small delegation of staff to investigate the Singaporean market, a representative office is a good short-term solution with simpler financial reporting than for a company. For other activities or long-term establishments in Singapore, a company is usually preferred due to greater flexibility in the activities it can carry out and more freedom to generate value for the business.
Free Zone Company
- Our Clients also have the option of setting up a free zone company in one of the nine available free zones. For this purpose, we can assist our Clients to incorporate a simple LLC and then help them obtain an operating permit from the free zone authority;
- The free zones provide massive advantages including: i) storage facilities to both local and foreign companies; ii) no permit requirement for the transshipment of non-controlled goods; and iii) no custom duties and GST on products imported in a free zone;
- For more information about this business entity, refer to our Singapore free zones page.
International Trade – A free zone company is generally used by trading companies that need to import products into Singapore for further processing and then export the finished goods to other countries.
Singapore fast solution
- This solution is recommended for our Clients who need an immediate company setup in Singapore. For such Clients, Healy Consultants Group PLC presents its fast turnkey solution which includes i) a company registration number ii) an already approved multicurrency corporate bank account number and iii) a business address;
- For more information, refer to our Singapore shelf company/turnkey solutions page;
The Singapore fast solution is recommended for our Clients who immediately need a local company to close deals or sign contracts in Singapore.
Limited Liability Partnership
- An alternative to the limited liability company is the limited liability partnership (LLP). Like the LLC, this entity offers limited liability benefit to its partners. Furthermore, this entity can issue contracts, lease property and sign legal documents in its own name;
- An LLP can be setup by 2 partners with a minimum capital of US$1. However, the LLP will be required to appoint at least 1 manager who is ordinarily resident in Singapore;
- An LLP will not be subject to annual corporate income tax. However, the income will be taxed in the hands of the partners. Consequently, if the partners are individuals, personal income tax will be payable or if they are corporate entities, corporate income tax will be payable;
- For more information, refer to our webpage on LLPs.
Professional services – An LLP is generally recommended for firms providing professional services including accounting & tax services, consulting services and legal services.
- Some of our Clients may wish to form a general partnership (GP) in Singapore. Unlike an LLP, partners of a GP are personally liable for all losses and debts of the partnership;
- An alternative option to the GP and LLP will be the limited partnership (LP). An LP comprises of at least 1 general partner (who is personally liable for all losses and debts) and 1 limited partner (whose liability is limited to the extent of his capital contribution);
Not recommended – GPs and LPs are not recommended to our Clients as they expose the partners to personal liability for all damages and losses. Instead, our Clients should either choose an LLC or an LLP.
Table of comparison for Singapore entities
Summary Fast Solution PLC Branch Office Trust Best use of company? Close a customer
SGX listing Consolidate
Tax planning How soon can you invoice Clients/sign sales contracts? 1 day 1 week 1 week Cannot trade How soon can you hire staff? 1 day 1 week 1 week Cannot hire How soon can you sign a lease agreement? 1 day 1 week 1 week 1 week How long to supply company registration numbers? 1 day 1 week 1 week 2 weeks How long to supply corporate bank account numbers? 4 weeks 6 weeks 6 weeks 6 weeks Corporate tax rate on annual net profits? 17% 17% 17% 0% Effective tax rate on US$500,000? 10% 10% 10% 0% Limited liability entity? Yes Yes No Yes Resident director/partner/manager required? Yes Yes Yes No Minimum paid up share capital? US$1 US$1 None None Corporate bank account location? DBS OCBC UOB OCBC Can secure trade finance? Yes Yes Yes No VAT payable on sales to local customers? 7% 7% 7% None Average total engagement costs? US$16,610 US$15,080 US$12,300 US$25,000 Average total engagement period? 1 month 2 months 2 months 2 months Accounting and tax considerations Fast Solution PLC Branch Office Trust Statutory corporate tax payable? 17% 17% 17% 0% Legally tax exempt if properly structured? No No No Yes Must file an annual company tax return? Yes Yes Yes No Must file annual financial statements? Yes Yes Yes No Access to double taxation treaties? Yes Yes Yes No Government grants available? Yes Yes Yes No Group HQ tax incentives? Yes Yes Yes No Company Registration Fast Solution PLC Branch Office Trust Minimum number of directors/managers? 1 1 1 None Minimum number of shareholders/partners? 1 1 Parent company 1 settlor Minimum statutory paid up share capital? US$1 US$1 None None Shelf companies available? Yes Yes No No Time to incorporate a new entity? 1 week 1 week 1 week 2 weeks Can easily convert to a PLC? Yes Yes No No Public register of shareholders and directors? Yes Yes Yes No Can have preference shareholders? Yes Yes No No This entity will likely be regulated by? ACRA ACRA ACRA None Business Considerations Fast Solution PLC Branch Office Trust Good entity for trademark registration? Yes Yes Yes No Can secure an import and export license? Yes Yes Yes No Can bid for Government contracts? Yes Yes Yes No Can secure residence visa for business owner? Yes Yes Yes No Monthly GST reporting to the Government? No Maximum number of staff allowed? None Our Client must travel for Singapore business set up? No Can be wholly foreign owned? Yes Maximum shareholding for foreigners? None Government approval required for foreign owners? No Temporary physical office solutions available? Yes You need a local resident as bank signatory? No Withholding tax on payments to shareholders? 0% Must appoint an auditor? No Dividends received are legally tax exempt? Yes Security deposit to be kept with Government? No Must sign an office lease agreement? No Shareholders and directors documents to be attested? No Foreign non-resident director needs a work permit? No Shareholders and directors documents to be translated? No Expatriate to local staff ratio? None Other useful information What will be included in my customer sales invoice? Read more This country has signed free trade agreements? Yes This country is a member of WIPO/TRIPS? Yes This country is a member of the ICSID? Yes Average customs duties suffered? 0.50% Average monthly office rental? (US$ per sq m) 37 Minimum statutory annual salary? None Average monthly US$ salary for local skilled employees? US$3,800 US$ deposit interest rate? (1 year average) 0.40% S$ deposit interest rate? (1 year average) 0.10% Overseas remittance currency controls? None Banking considerations Multi-currency bank accounts available? Yes Corporate visa debit cards available? No Quality of e-banking platform? Excellent Crowd funding available in this country? Yes
An investment company will allow our Clients to pool their investors’ capital and invest this money on their behalf. However, this business activity will require the owners of the company to file an application with the Monetary Authority of Singapore (MAS). For fund management, the application will take one of the two forms: either as i) an application for a registered fund management company or ii) an application for a Capital Markets Services license.
Registered fund management companies are limited to 30 accredited or institutional investors, up to 15 of whom may be other funds invested in by accredited individuals. Investors qualify as “accredited” under Singapore’s Securities and Futures Act if they have either i) net assets of more than S$2,000,000 or ii) annual income greater than S$300,000. There is a cap of S$250,000,000 on assets under management for this kind of fund manager.
Capital markets services (CMS) licences, on the other hand, are much more flexible. Although further accreditation is required from the MAS to offer services to retail investors, CMS-licensed fund managers have no limits on the assets under management or number of investors;
CMS-licensed fund managers must maintain core capital levels of at least S$250,000, of which at least S$100,000 must be deposited with the MAS. Annual audits are required to ensure that this and other compliance requirements are met.
All registered and licensed fund management companies must have two directors resident in Singapore with at least 5 years’ experience in financial services to establish a track record. They also require two local employees, one of whom must be the CEO and the other an Executive Director, with each of these staff having at least 5 years’ experience. If the CMS-licensed manager has authorization to work with retail investors, a third staff member is needed and the CEO requires 10 years of experience.
14 steps to register a company in Singapore
By requesting Healy Consultants Group PLC to register their Singapore company, our Clients do not have to travel to Singapore to start their company. Our Firm will indeed complete all procedures for incorporation on their behalf. Please refer to the section below for further details on the steps to setting up a company in Singapore.
- Consultation phase:
Prior to starting the Singapore company incorporation process, we discuss our Client’s business goals and requirements for their new entity and plan the optimal structure for the entity to be setup i) fees payable for the engagement; ii) potential licensing requirements and iii) desirable amendments to the model articles and memorandum of association at this stage. Thereafter, Our Client settles Healy Consultants Group PLC’s engagement fee; iv) signs and returns our Client Engagement Letter; v) provides us all the due diligence documents, required by our Compliance Team;
- Name reservation: Thereafter, we help our Clients to choose three unique names for the company, listed in their order of preference. The name must be sufficiently dissimilar from other companies already registered in Singapore. As Singaporean law only allows residents to file company names, our Firm makes the name submission on behalf of our Clients. Check the availability of your ideal Singapore company name now;
- Ownership structure: Healy Consultants Group PLC advises our Client to keep the Singapore corporate structure simple with one resident director and one foreign director/shareholder. The Client confirms i) details of up to 50 shareholders for the company, including the issued share capital. The minimum required share capital is S$1. Companies and individuals may be shareholders, but companies with corporate shareholders require an annual audit; ii) the share allocation to each shareholder, and the price of each share. Our Clients are required to select their company’s directors, at least one of whom must be resident in Singapore. Corporate directors are not permitted in Singapore. Our Consultants will prepare Form 45 for the signature by our Clients’ preferred directors. Most of our Clients request Mr. Aidan Healy to be the passive, professional resident director;
- Company secretary: Our Client must appoint a company secretary to manage their company’s statutory administration and annual returns. The company secretary must be in Singapore and may be an individual or a company. Before the appointment is formalized, the preferred company secretary has to sign Form 45B in compliance with Section 173(4A) of the Companies Act. Healy Consultants includes company secretarial services in our standard Singapore incorporation package;
- Registered office: In accordance to the Singapore law, our Client is required to file an address with the companies’ registry to which official correspondences can be sent and statutory records can be inspected. The Client may use their own physical space in Singapore or request Healy Consultants Group PLC to provide a virtual office space; this service is also included in our standard service offering;
- Company constitution: In January 2016, following the changes to the Companies Act the company constitution replaced the memorandum and articles of association. Our legal team helps our Client draft changes to fit their specific requirements. This document must refer to the company’s i) share capital; ii) registered address; iii) directors; and iv) limited liability. You can find Singapore’s model constitution for private companies online;
- Planning phase: Healy Consultants Group PLC takes all the information provided to draft a detailed project plan, mapping out the process in detail from beginning till the end of the engagement, including i) Singapore business incorporation; ii) tax registration; iii) corporate bank account opening; and iv) obtaining applicable licenses, thereby increasing transparency as well as setting Client expectations and minimizing disruption to project completion;
- Document preparation: Next, our Singapore Incorporation Team gathers all the documents required to complete the incorporation, assisting our Clients to complete and authenticate all necessary papers and submit them in a timely manner.
- Consultation phase:
- Document submission: Upon completion and due receipt of the required documentations, including signed Form 45, Form 45B and Form 29, our Singapore Incorporation Team submits the incorporation package to the Accounting and Corporate Regulatory Authority (ACRA) via the online portal Bizfile;
- Incorporation approval: Within 3 days of submission, the business entity will be incorporated. Following Singapore company registration, our Firm immediately emails our Client with the certificate of incorporation and company extract (view sample of a business profile).
Additionally, view here for a sample of the constitution. Typically, the first page is the Client’s information.
- Bank account opening: Once incorporated, the Client can apply for a corporate bank account for his business. Our Team helps our Client to prepare a quality business plan for the bank to optimize the probability of corporate bank account approval;
- Additional registrations: The company can now register for GST, apply for employee visas and obtain government grants and incentives;
- Licensing: Good governance demands that certain business activities require licenses in Singapore. We regularly assist our Clients with navigating the Singaporean regulatory environment and obtaining the necessary licenses;
- Registration completion: Following the receipt of all necessary approvals and documents, Healy Consultants Group PLC couriers a full company kit to our Client, including original corporate documents, unopened bank correspondences, and lastly a Client feedback survey to make sure that all the Client expectations were met during the entire engagement period.
After our Client’s Singapore business is setup, there are annual statutory compliance requirements which must be timely completed. These compliances include:
- Appointing a resident company secretary within 6 months (if not already provided by Healy Consultants);
- Fixing the company’s financial year end (FYE);
- Appointment of auditors within 3 months- companies requiring compulsory audit are those with annual revenue above S$10m, assets above S$10m or over the number of employees is 50 and above;
- Providing the company secretary with up to date accounting records to enable filing of the Annual Return with ACRA within 6 months of the FYE and the Annual Tax Return by November of the next year;
- Notifying the company secretary of any changes in the corporate structure (directors, shareholders) and beneficial ownership.
Refer to the Singapore accounting & tax, legal and compliance considerations page for more information.
Business setup in Singapore for foreigners
Almost all industries in Singapore are fully open to foreign investors, without them being subject to higher paid-up capital amounts, licensing obligations or other extra requirements compared to locals. Foreign businessmen can also manage their Singapore company from overseas: while Singapore authorities require all locally incorporated companies to have a resident director, they allow foreigners to appoint a professional passive nominee to comply with this requirement. Other directors can live overseas and Board meetings do not need to take place in Singapore.
However, foreigners starting a company or a corporate bank account in Singapore are required by the Government to abide by slightly different requirements than Singapore residents. Refer to the table below for additional details:
|Item required for||Singapore citizens and residents?||Foreigners living outside of Singapore?||Why is it requested for foreigners?|
|ID documents of corporate/individual shareholders and directors||Copy can be certified by Healy Consultants Group PLC and other corporate service providers||Must be certified by a Notary or alternatively legalized||To confirm the ID proof is a valid one and prevent identity theft|
|Appointment of a company secretary||Not required||Always required||To ensure that foreigners benefit from the assistance of a Singapore Company Law expert|
|Resident director||Not required||Always required until at least one of the foreign directors has Singapore a work permit||Ensure that somebody in Singapore is always accountable to prevent company misuse|
Frequently asked questions
How to set up a company in Singapore?
To set up a company in Singapore, the process is as follows:
- After setting our fees, our Client returns us scans of the KYC documents required from each shareholder, director and beneficial owner;
- Thereafter, our Firm will email pre-filled incorporation forms to our Client for signature;
- Upon receipt of the documents, our Firm registers the company, usually within three business days or less. Our Client mails us hard copies of all KYC documents and signed forms over the following month.
I want to set up a small business in Singapore. Should I use a sole proprietorship or private limited company?We recommend that our Clients set up a company rather than a sole proprietorship, as all qualifying start-up LLCs enjoy tax rebates on profits in the first three years. A 100% tax exemption is possible on the first SG$100,000 and 50% tax exemption on the next SG$200,000. The LLC also limits the owner’s losses in the event that the business fails, since the company’s debts are not attributable to the shareholders. Incorporating a company also simplifies international growth in the event that the business succeeds.
How can a foreigner register a company in Singapore?
A foreigner can register a company in Singapore by following the below checklist for company registration:
- Submit a list of three names, in the order of preference, through a Singapore resident to reserve the preferred one;
- Determine the company structure, including the share allotment;
- Appoint the directors, where at least one director is resident;
- Appoint a resident company secretary;
- Provide a local address for registration;
- Draft and sign the company constitution and incorporation forms;
- Submit the documents above to ACRA for their review and company registration approval;
- Secure the official company registration documents, including Certificate of Incorporation and the company extract, Bizfile;
- Order a company stamp;
- Apply for bank account opening;
- Apply for GST registration and government grants, if required;
- Apply for specific business licenses, if required.
The rules might vary for different entities; however the basic incorporation steps apply.
Why incorporate a company in Singapore?
Singapore is a low-tax jurisdiction with government incentives to benefit foreign entrepreneurs.
Furthermore, it is possible to engage in offshore company incorporation in Singapore, which can be legally 100% tax-exempt.
Am I required to travel to incorporate a Singapore company?No. Our Clients will not be required to travel to complete the incorporation process.
What is the cost to register a company in Singapore with a corporate bank account without travel?
To register a company in Singapore for a foreigner, according to the ACRA guidelines, the costs of name application and company registration amount to around SG$315. To this you need to add the costs of ordering the Certificate of Incorporation and the company stamp, which will amount to an additional fee of approximate SG$80. Once the company is registered and depending on the business activity, there will be several banks that will be ready to onboard the company. However, each bank has different deposit and maintenance requirements.
A standard package is offered by Healy Consultants Group PLC for Singapore company registration services without travel. The package is inclusive of everything from company formation, multi-currency corporate bank account opening, resident director services, corporate secretary and local registration address and the government fees.
Can a foreigner set up a private limited company in Singapore?
Yes, a foreigner can set up a private limited company in Singapore easily. In fact, Singapore laws allow 100% foreign ownership of a private limited company. However, there are a few mandatory requirements to fulfil:
- One resident director in Singapore (the foreign owners can apply for an Entre Pass if they want to be the resident director);
- A Singapore-based company secretary;
- A valid local address.
More information on the procedure and required documents from a foreigner setting up a business in Singapore can be found on our website.
Can a foreigner set up a sole proprietorship in Singapore?Yes, foreigners can register a sole proprietorship in Singapore, if there is an authorized resident representative of the business. The foreign owner can either appoint a Singapore citizen to be the resident representative, or they can become a resident in Singapore by becoming an Entre Pass holder.
What are the advantages and disadvantages of a limited private company in Singapore?
Below is a list of advantages and disadvantages of a limited private company in Singapore.
- Tax incentives and exemptions are available to newly incorporated companies;
- Profits are taxed at corporate tax rates;
- Separate legal status of the companies means that the owners are not personally liable for the debts and losses of the company;
- There is no explicit lifetime of a Pte Ltd and the company does not cease to exist if one or more shareholders die;
- Ownership of the company is transferrable;
- Additional owners can be included up to a total of 50 shareholders;
- Higher likelihood of availing loans from banks.
- i) Resident director and ii) company secretary and iii) local address requirement;
- Directors need to disclose their interests in the company’s shares, contracts, and debentures;
- High costs of starting and running a new business;
- Stringent regulations to hire foreign workers;
- Mandatory compliance with ACRA and IRAS;
What are the options for foreign companies to register in Singapore?
There are four options for foreign companies to register in Singapore: they can set up a branch office, a subsidiary, a representative office and re-domiciliate.
Subsidiaries are locally incorporated and privately limited companies set up under the umbrella of a parent company. Subsidiaries are legally separate from the parent company and can enjoy tax exemptions like local tax-residents.
- Branch office
A branch office is an ideal option for companies aiming at shorter-term market expansion. The parent company is responsible for the activities of the branch office. Please note that a branch office is not a resident entity and cannot avail any tax exemptions. The registration can be done online by the parent company.
- Representative office
Representative offices are suitable for companies which want to test the market. The only activities that Representative Offices can conduct is market research and marketing activities, before taking on a full-fledged market presence in Singapore. They cannot enter into contracts or trading activities; and are not taxed as they cannot and do not earn profits.
The last option is to change the existing jurisdiction of your business and relocate to Singapore to become a local company instead, as per this relocation guide from ACRA.
How to set up a branch of a foreign company in Singapore?
The parent company can set up a branch in if it has at least one authorized representative ordinarily resident in Singapore.
- The first step is to apply for the name of the office – which must be the same as the parent company. The applicable fee is $15;
- After the name is approved, the next step is to register with ACRA and paying the registration fee of $300;
- The branch can start operations once it is approved by ACRA.
Are there any additional requirements for some foreign nationals to start a business in Singapore?No, the requirements to register a company in Singapore for a foreigner do not differ from nationality to nationality.