Singapore offers four main business structures: Private Limited Company (Pte Ltd) – best for most businesses, offers limited liability and 17% tax; Sole Proprietorship – simplest and cheapest (S$100), but unlimited liability; Limited Liability Partnership (LLP) – combines partnership flexibility with limited liability; and Branch Office – for foreign companies expanding to Singapore. Pte Ltd is recommended for most businesses due to liability protection, tax benefits, and credibility.

Quick Comparison Summary

Most Popular: Pte Ltd (90%+ of all registrations)

Cheapest: Sole Proprietorship (S$100 ACRA fee)

Best for Foreigners: Pte Ltd (100% foreign ownership allowed)

Best for Professionals: LLP (flexibility with liability protection)

Best Tax Rate: Pte Ltd (17% flat corporate rate with exemptions)

Table of Contents

1. Overview of Singapore Business Types
2. Pte Ltd: Pros & Cons
3. Sole Proprietor: Pros & Cons
4. LLP: Pros & Cons
5. Branch Office Explained
6. Comprehensive Comparison Table
7. Which Business Type Should You Choose?
8. Frequently Asked Questions

Choosing the right business structure is one of the most important decisions you’ll make when starting a business in Singapore. Your choice affects everything from personal liability and taxation to compliance requirements and how investors perceive your business.

This comprehensive guide compares the four main business types in Singapore, examining the pros and cons of each to help you make an informed decision.

Not Sure Which Structure to Choose?

SOAS offers free consultations to help you choose the right business structure. WhatsApp us at +65 9758 4188 for personalized advice.

Overview of Singapore Business Types

Singapore’s business-friendly environment offers several structures to suit different needs. Here’s a quick overview before we dive into the details:

1. Private Limited Company (Pte Ltd)

A separate legal entity from its owners, offering limited liability protection. This is the most popular business structure in Singapore, accounting for over 90% of all registered companies. Ideal for businesses seeking investment, working with corporates, or planning to scale.

2. Sole Proprietorship

The simplest business structure where the business and owner are legally the same entity. Quick and cheap to set up, but the owner has unlimited personal liability for business debts. Best for small, low-risk businesses and freelancers.

3. Limited Liability Partnership (LLP)

A hybrid structure combining the flexibility of a partnership with limited liability protection. Partners are not personally liable for each other’s actions. Popular among professional service firms like law practices, accounting firms, and consultancies.

4. Branch Office

An extension of a foreign parent company operating in Singapore. Not a separate legal entity – the parent company is liable for all branch debts. Used by foreign companies wanting to test the Singapore market without creating a new entity.

5. Partnership (General)

Similar to sole proprietorship but with 2-20 partners. All partners have unlimited personal liability. Less common today due to the availability of LLP which offers liability protection. We’ll focus primarily on the four main structures above.

Private Limited Company (Pte Ltd): Pros & Cons

The Private Limited Company is Singapore’s most versatile and popular business structure. Here’s a detailed look at its advantages and disadvantages:

📋 Pte Ltd Key Facts

ACRA Fee: S$315

Min. Shareholders: 1 (max 50)

Min. Directors: 1 (at least 1 resident)

Company Secretary: Required within 6 months

Foreign Ownership: 100% allowed

✅ ADVANTAGES

Limited Liability: Personal assets protected from business debts – shareholders only risk their investment

Lower Tax Rate: 17% corporate tax vs up to 24% personal income tax, plus exemptions for new companies

Professional Credibility: “Pte Ltd” signals established business, easier to win corporate clients

Investment Ready: Can issue shares to investors, partners, or employees

Perpetual Succession: Company continues even if owners change or pass away

100% Foreign Ownership: No restrictions on foreign shareholders

Government Grants: Eligible for most business grants and schemes

❌ DISADVANTAGES

Higher Setup Cost: S$315 ACRA fee vs S$100 for sole proprietorship

More Compliance: Annual returns, AGM, audits (for larger companies), company secretary required

Ongoing Costs: Company secretary fees, accounting, potential audit costs

Resident Director Needed: Must have at least one Singapore resident director

💡 SOAS Recommendation: Pte Ltd is the best choice for most businesses. The limited liability protection alone is worth the slightly higher cost, especially as your business grows.

Sole Proprietorship: Pros & Cons

A sole proprietorship is the simplest way to start a business in Singapore. There’s no separation between you and your business – you are the business.

📋 Sole Proprietorship Key Facts

ACRA Fee: S$100 (1 year) or S$160 (3 years)

Owner: 1 person only

Company Secretary: Not required

Audit: Not required

Foreign Ownership: Owner must be SG citizen, PR, or EntrePass holder

✅ ADVANTAGES

Lowest Setup Cost: Just S$100 ACRA fee for 1 year registration

Simple to Set Up: Can register yourself online in minutes

Minimal Compliance: No company secretary, no AGM, no audit required

Full Control: You make all decisions without board approval

Easy Withdrawal: Take money from the business anytime without formalities

Tax Simplicity: Business income taxed as personal income – one tax return

❌ DISADVANTAGES

Unlimited Liability: Personal assets at risk for business debts – can lose your home, savings, etc.

Higher Tax Potential: Personal income tax up to 24% vs 17% corporate tax

Limited Credibility: Some corporate clients won’t work with sole proprietors

No Investors: Cannot issue shares or bring in equity investors

No Perpetual Succession: Business ends when owner dies or becomes incapacitated

Renewal Required: Must renew registration every 1-3 years

Foreigners Excluded: Only Singapore citizens, PRs, or EntrePass holders can register

⚠️ Important: The unlimited liability is the biggest risk. If your business is sued or goes into debt, creditors can come after your personal assets including your home, car, and savings.

Limited Liability Partnership (LLP): Pros & Cons

An LLP combines the operational flexibility of a partnership with the liability protection of a company. Partners are not personally liable for other partners’ negligence or misconduct.

📋 LLP Key Facts

ACRA Fee: S$115

Min. Partners: 2 (no maximum)

Manager Required: At least 1 Singapore resident manager

Company Secretary: Not required

Audit: Not required

✅ ADVANTAGES

Limited Liability: Partners protected from each other’s negligence and LLP debts

Lower Cost Than Pte Ltd: S$115 vs S$315 registration fee

Flexible Structure: Partners can agree on profit-sharing without fixed share ratios

Less Compliance: No company secretary, no AGM, no audit required

Separate Legal Entity: Can own property, sue, and be sued in its own name

Perpetual Succession: LLP continues even if partners change

❌ DISADVANTAGES

Minimum 2 Partners: Cannot be used by solo entrepreneurs

Personal Income Tax: Profits taxed at partners’ personal rates (up to 24%)

Less Familiar: Some clients and banks less familiar with LLP structure

Cannot Issue Shares: Harder to bring in equity investors

Limited for Certain Professions: Some professional bodies have specific rules

Resident Manager Required: At least one manager must be Singapore resident

💡 Best For: LLPs are particularly popular among professional service firms – lawyers, accountants, architects, consultants – where partners want liability protection while maintaining partnership flexibility.

Branch Office Explained

A branch office is not a separate legal entity but an extension of a foreign parent company. The parent company is fully responsible for all branch activities and liabilities.

📋 Branch Office Key Facts

ACRA Fee: S$300

Requirement: Must have existing foreign parent company

Local Agent: At least 1 Singapore resident required

Activities: Must be same as parent company

Tax Rate: 17% corporate tax on Singapore-sourced income

✅ ADVANTAGES

Easy Market Entry: Test Singapore market without creating new company

Parent Company Reputation: Leverage established brand recognition

Simpler Wind-Down: Easier to close than subsidiary if market test fails

No Share Capital: No minimum capital requirement

❌ DISADVANTAGES

Parent Company Liable: Full liability for all branch debts and obligations

Limited Activities: Can only conduct activities of the parent company

Double Compliance: Must file audited accounts of both branch AND parent company

Perception Issues: Some customers prefer dealing with local entities

Tax Complications: May have tax implications in parent company’s country

No New Tax Incentives: Not eligible for Singapore startup tax exemptions

⚠️ Note: Most foreign companies choose to set up a Singapore subsidiary (Pte Ltd) instead of a branch office. A subsidiary is a separate legal entity that protects the parent company from liability and qualifies for Singapore’s tax incentives.

Comprehensive Comparison Table

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Use this table to compare all key features at a glance:

*Branch office: Parent company has full liability for branch debts

Which Business Type Should You Choose?

The right choice depends on your specific situation. Here’s a decision guide:

Choose Pte Ltd if…

• You want personal asset protection from business liabilities
• You plan to seek investment or bring in partners with shares
• You want to work with corporate clients who require “Pte Ltd”
• You expect revenue above S$100,000 (tax efficiency kicks in)
• You’re a foreigner wanting to own a Singapore company
• You want to build a business that can be sold

Choose Sole Proprietorship if…

• You’re a Singapore citizen/PR testing a small business idea
• Your business has very low liability risk
• You expect low revenue (under S$30,000-S$50,000)
• You want the simplest possible setup
• You’re a freelancer with low overhead

Choose LLP if…

• You’re starting a professional partnership (lawyers, accountants, consultants)
• You have 2+ partners who want liability protection from each other
• You want flexibility in profit-sharing arrangements
• Your professional body allows or prefers LLP structure

Choose Branch Office if…

• You’re a foreign company testing the Singapore market
• You want to leverage parent company’s reputation
• You might close down quickly if the market test fails
• Note: Most foreign companies prefer Pte Ltd subsidiary for liability protection

💡 SOAS Recommendation: When in doubt, choose Pte Ltd. The limited liability protection is worth the extra cost, and you can always convert from Pte Ltd to other structures later (but converting TO Pte Ltd requires forming a new company).

Need Help Deciding?

SOAS offers free consultations to help you choose the right business structure. We can also help you register any of these entity types. Contact us at +65 9758 4188.

Ready to Register Your Business?

SOAS can help you register any business type in Singapore. Most popular: Pte Ltd incorporation from S$350 (including S$315 government fees).

• Phone: +65 6684 9199
• WhatsApp: +65 9758 4188
• Website: www.soas.com.sg