I was recently reading some newspaper articles on business. One section talked about the popularity of Singapore as a business destination. Singapore is considered to be the most favourable place in Asia for incorporating a business. The Singapore government has employed tax exemptions for new firms, in order to help the process of starting and growing a business from scrape. In my experience, the most important point to decide is which legal form of company you are going to incorporate. Because it heavily depends on factors like asset liability, tax responsibility, ease of formation and business asset approval. It can have crucial impact on your personal risk in the business as well as your future prospect. It is always advisable to learn the basics of legal forms of business for you consider starting one. When I look at Singapore, I find that there are mainly three ways a business can operate. They either operate as companies, sole proprietorship and partnerships.
A Limited liability company (LLC) is a company whose liabilities are limited by the amount of share capital. A Singapore LLC can be of the following types. First is the Private Limited Company. Its shares are held by less than 50 people and are not available for the public. Most of the privately owned companies in Singapore fall under this category. The shareholder of such a company can either be a company entity or an individual. It is the most advanced and preferred type of business by new entrepreneurs. A public limited company is a LLC which offers its shares to the general public for purchase. Generally this kind of company has more than 50 share holders. These kinds of companies are listed in stock exchange. They are normally meant for big business and are subject to more strict rules and regulations.
A sole proprietorship is the simplest form of business. There is only one owner of the business. The owner is the sole possessor of all the company assets and liabilities. It somewhat makes it the riskiest type of business. There are no protections of personal assets from business failures. In case of any form of big loss, the creditor may come after the company owner's assets. Because of this factor many entrepreneurs prefer not to invest in this form of business. In a partnership type of business, the business is owned by two or more people. It is midway between, Limited Liability Company and sole liability company. A partnership firm has no legal existence and it comes to an end with either the death of a partner, incapability or retirement. If at any point of time a partner wants to end their deal, the business assets are dissolved and divided. Partnerships in Singapore can be either general partnership or limited partnership. In general partnership each partner can be held responsible for the actions of the other partner. In limited partnership the liabilities of partners are limited to their investments in the partnership. If you have followed everything closely, then you will find that a limited liability company is the best legal form to start a new company.