What is Singapore Limited Liability Company
Singapore limited liability partnership is a combination of a partnership with private limited company setup. A LLP gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company. This type is applicable for individuals engaged in professional services such as lawyers, architects, accountants and management consultants. Singapore citizens, residents, and employment pass holders can register a LLP.
The following are the features of a Singapore limited liability partnership:
§It has a separate legal entity
§Partners have limited liability
§Can sue or be sued in its own name
§Can own property
§At least two partners, no maximum limit
§Partners can be individuals or body corporate (company or other LLP)
In addition, these are the advantages of a limited liability partnership:
§It is a body corporate and has legal personality separate from its partners
§It has perpetual succession. Any change in the partners of a LLP does not affect its existence, rights or liabilities
§Compliance requirements are simpler as compared to private limited company
§No annual returns filing required of LLPs, except for income tax
§Partners not personally liable for debts and losses of LLP incurred by other partners
Entrepreneurs should also note the disadvantages of establishing a limited liability partnership:
§Profits taxed at partners’ personal income tax rates, therefore, not eligible for tax incentives or exemptions
Why Singapore Limited Liability Company Is Much Preferred?
It’s a great choice that you have selected Singapore to setting up your business venture. It is truly a safe, easy going and least complicated place to work in. There are different categories in which, you can set up your company and Government of Singapore extends full support in their favor. And if you are into forming a Singapore Limited Liability Company, it is most welcome. And also, you must be wondering about all those rules, policies and needs for setting it up. Take a look of some of it and you would have a clear understanding. Singapore Limited Liability Company can be of two types namely the Private Limited Company or a Public Limited Company. While the former has quite lenient rules, when the company develops and converts into a Public Limited Company, the rules become more stringent as it involves the public at large.
Hence, it becomes the government’s responsibility to safeguard their rights. If the business is new and upcoming it is always better to go for a Private Limited Liability Company. To form a Singapore Limited Liability Company first you need to select a name for it and get it approved. Once that is completed, you can go for registration of the company with the necessary documents. Even if you were abroad, hiring an external agent would suffice, as they can do the filing on your behalf. Registering, provided all the documents are complete, takes only a few hours. For this, the documents required are: a brief detail about the company’s proposed activities, details of the Directors and Shareholders, the supposed Registered Address of the company and the details of the Company Secretary (which is mandatory).
Along with this, to fulfill the KYC norms, Residential Address proof and the passport copies of the Directors and shareholders are to be submitted. In case one shareholder is a company, its registration details also need to be attached. All, except one director can be foreign nationals and it also doesn’t matter if they are staying abroad. But, at least one of them needs to be a Singapore citizen or a permanent resident of Singapore or having a Singapore Work Pass. The company doesn’t require any prior approval or licenses to start a business in Singapore, except for certain areas like Finance, Travel etc. There is single taxation only and all the profits and loss of the company are taken into account, as those of the Directors.
But there is no Income Tax levied on this, for the Directors. But at the same time, the debts of a Singapore Limited Liability Company are limited to the company and the Directors investments only and they are not personally held responsible for it. Apart from this, it is exempted from GST. The IT rate is also kept at the minimum of 9% and the maximum ceiling is fixed at 18%. And also there is no Capital Gain Tax levied. As a Singapore Limited Liability Company is treated to be an independent body, its management and ownership can be shifted to others in a smooth way without hindering the operations, So from every point of view, setting up of a Singapore Limited Liability Company is quite advantageous and a wisely decision.
Key Benefits of Incorporating a Singapore Limited Liability Company (LLC)
In the backdrop of a volatile global economy the relative resilience of the Asian region is gaining a lot of attention from investors, enterprises and entrepreneurs. In order to grab a portion of the growing pie of the Asian markets they are all scouting for a competitive location to establish the hub of their Asian operations. Invariably the tiny red dot of Singapore tops their list of choices for establishing a Limited Liability Company (LLC).
Singapore is strategically located at a geographic spot where east meets west and it serves as a gateway into the whole of Asia and Latin America encompassing the fastest growing economies of the world. The city state itself is a miracle economy which commands global awe and reverence for its economic success, so a business registered in Singapore exudes a world class image and reputation. Singapore has a liberal economic and immigration policy and allows 100% foreign equity. In order to aid entrepreneurs and enterprises it has in place relocation visas known as Entrepass and Employment Pass enabling the key persons of the management to stay in Singapore in order to nurture their new set-up.
The city state has a vast network of Free Trade Agreements (FTAs) which enables easy and even preferential access to the growing markets or some sectors, concessionary duties, IP protection etc. The FTAs provides Singapore domiciled companies an edge to compete in the international trading arena. For instance post CECA the trade between Singapore an India has grown significantly and India being a key market, enterprises are keen to find their way via Singapore.
Singapore registered LLCs can capitalize on the favorable tax regime the corporate tax is just 17% for incomes over S$300,000 and for incomes less than S$300,000 the effective tax rate is just around 9%. The single tier tax system also profoundly favors the small and medium size business owners. Mr. Darren Leow of SingaporeStartup. com says “the tax regime itself is enough reason to incorporate a LLC in Singapore but other factors such as stable, clean government, proactive economic policies, targeted promotion of certain industries, world class infrastructure and to top it all a competent cosmopolitan workforce are key to the country being the most sought after location. Moreover LLC Incorporation and business registration process and post incorporation formalities are outsourced to efficient professional service partners so it is hassle free, therefore it is business from day one”
Singapore Company Registration Statistics Report For September 2010
Janus Corporation has released its Singapore Company Registration Statistics Report for September 2010. The report concerns the number of companies that have been setup in Singapore. It also deals with statistics on the types of new businesses that have been started. It covers which countries are setting up the most businesses in Singapore, also. Business Registrations by EntityIn total, there were 4561 Singapore company registrations in the month of September. The most popular type of business was limited exempt private business. These businesses totaled 1986 registrations. The next most registered business was the sole proprietorship type with 1795 total new businesses. Private limited companies saw 328 registrations and partnerships totaled 238. Of those, 179 were LLP or limited liability partnerships. The popularity of the limited exempt businesses has been attributed to reduced requirements and the many benefits that this arrangement offers. Company Registrations in Singapore by Share CapitalFive percent of the new businesses claimed share capital in excess of $100,000. The majority of the businesses (seventy four percent) had share capital under the amount of $10,000. The remaining twenty one percent were between $10,000 and $100,000. The amount of share capital for the majority of new companies indicates that there are many small to medium size businesses starting up in Singapore. This is due to the fact that the minimum share capital amount is only $1. This makes it a very attractive venture for many smaller business concerns. Registrations and Shareholder InformationAccording to shareholder information, about one fourth or twenty four percent of the new companies registered in Singapore in September were owned by foreigners. Sixty four percent were all local owners and twelve percent were a combination of both. This shows a large growth in local residents that are forming new businesses. Different Types of BusinessesThere was a wide variety of businesses started in Singapore in September. The largest sector was wholesale trade at twenty one percent and it was followed by financial services with sixteen percent. This strong showing by wholesale trade and financial services shows that Singapore is still a top consideration for world trade and for those seeking matters of finance.
Setting Up A Singapore Subsidiary Company
Foreign companies that are planning to establish a business presence in Singapore may register a subsidiary company which is basically a private limited company with a foreign (or local) corporate entity as a major shareholder. A Singapore subsidiary company, even if 100 percent owned by a foreign entity, is still eligible for tax exemption on its first S$100,000 chargeable income within three years of its incorporation. But to qualify for this exemption, a startup company should have at least one individual shareholder who has a minimum of 10 percent ownership. In addition, this business model is also treated as a local resident which means that it can also enjoy the local tax benefits. With the advantages in taxes, this business model is attracting thousands of foreign companies every year. In addition, foreign companies enjoy limited liability protection in which they are not legally liable for the losses and debts of their subsidiary company which is treated as a separate legal entity. Another advantage is that a subsidiary company is allowed to conduct any business activities, even if not performed by its parent company, as long as these are legal in Singapore. These are the other advantages of setting up a Singapore subsidiary company: no requirement when it comes to the number of staff (both foreign and local residents), no limit on the total business spending, and no need to file the audited accounts of its parent company from abroad. Requirements for Setting Up a Subsidiary CompanyA Singapore subsidiary company is required to have a registered local office where it should keep all its statutory documents. To legally operate in the country, it is a prerequisite to appoint at least one resident director who may be Singaporean citizen, permanent resident, or holder of Employment Pass. Meanwhile, it is important that all the appointed directors are at least 18 years old and have not been convicted with any malpractices. It is also a requirement to appoint a Singapore resident as a qualified secretary within six months of incorporation, and an auditor within three months of company registration. In case that a parent company is planning to relocate its foreign staff to Singapore, it should assist its employees during the application of Employment Pass which is a work visa for professionals and skilled employees with college education. As a separate legal entity from its parent company, a Singapore subsidiary company must exercise its management and control in the country which means that local resident directors can enjoy greater freedom when it comes to making decisions for their business.