You are wondering which business entity is the best to start in Singapore? You can consider Singapore Private Limited Company because it is one of the major business structures.
Let’s discover what makes it popular and how to register in this article.
1. Outstanding features of Singapore Private Limited Company
A private limited company is actually one common form of Limited Liability Company (LLC) with shares privately held by shareholders, not in the general public. Typically, the company name ends with Private Limited or Pte Ltd.
a. Corporate structure
A private limited company is owned by no greater than 50 shareholders. They are responsible for major decisions in the company. Shareholders can be individuals or business entities.
b. Limited Liability
The company has a separate legal personality from the owners. Thus, shareholders and the company partners are not liable for debts and obligations of the company, and vice versa.
c. Single-tier corporate income taxation
Your company is almost free of dealing with double taxation. Generally, it is because only the company profit is taxable, the dividend paid to shareholders is not subject to tax.
d. Tax-friendly entity type
A private limited company is eligible to apply for tax-exemption schemes to exclude or reduce payable tax.
e. Minimum requirement of share capital
You can start a private limited company with just only 1 dollar as initial capital.
f. Simple and fast incorporation
You can actually register the company in 24 hours. You will know how it’s done in the next section.
A Pte Ltd has so many advantages like mentioned above. However, you should consider more carefully if you start a company with investment calling purposes from the general public. To do this, your company must be a public entity.
2. How to form a Private Limited Company in Singapore
Before starting the formation of a Singapore private limited company, take a look at what you need to prepare beforehand.
a. Understand the Accounting and Corporate Regulatory Authority (ARCA)
This is the official department that is responsible for incorporation management in Singapore. From forming, keeping a company lawfully ongoing to ending a company’s legal existence, ARCA manages and regulates the related requirements and issuance of legal documents.
b. Get a registered office address for your company
ARCA requires your company to have an address registered in Singapore.
c. Have at least one director to be physically present in Singapore
Some of you may find it difficult or impossible to meet this requirement. But don’t worry! You can use nominee services in Singapore to have third-party acting as your company director to sign on certain documents. They are called nominee directors.
d. Appoint local corporate secretary and auditor
A corporate secretary of a Singapore company can’t be absent for 6 consecutive months and must reside at the border. So you must appoint the position after 6 months from the incorporation date at the latest. As a director, you can use nominee services.
You must appoint an auditor within 3 months from the date of incorporation if your company is not exempted from the requirement.
After you meet the requirements, you can start to file the certificate of incorporation. This process will take you 3 main steps.
Step 1: Name your company
Your company must be the only one in the company register. Moreover, it must comply with conditions set out in the Singapore company’s law.
Step 2: File the incorporation certificate
You can find the form on the ARCA website and fill in all required information. Below are main required information:
- Name and local registered address of your company;
- Principal business activities;
- The company’s constitution;
- Details of directors, secretaries, and shareholders.
After completing the filing, you will send the form to ARCA and wait for the result. You can do online filing or physical filing.
Step 3: Get the result
If everything is on track, you can get your company within just 1 day. However, it may take you several days or even weeks if your application needs more examination. ARCA may request additional information and procedures.
3. Other factors to consider while running a private limited company
Certain activities will require you to apply for specific licenses and permits. You must check if your company is subject to any licensing requirements.
»Corporate bank account opening
A bank account is in need to manage all business transactions such as payments from your customer or your company’s payments to suppliers. The Singapore banking system ranks top places in the world, so your company finances will be managed efficiently with a Singapore bank account.
»CorpPass Account registration
A CorpPass account is the only way for your Singapore private limited company to do the transaction on the government platform.
Every year, when the time comes, you must submit annual fees for your company. Such fees can be the maintenance fee of the government, nominee director, local address, and corporate secretary.
You must submit the annual reports to ARCA within 7 months after the financial year-end.
»Annual general meeting
The meeting must be held within 6 months from the financial year-end.
Depending on your company activities, the tax returns will vary. Typically, a Singapore private limited company will have to report Estimated Chargeable Income (ECI), Form C/C-S beside tax return on the company income. Your company submits tax returns to The Inland Revenue Authority of Singapore (IRAS).
4. The bottom line
There is no doubt that a Singapore private limited company has various benefits. You may find your business situation fits in this business entity type. The incorporation process is straightforward. Still, the faults may happen and extend the incorporation process, which can affect your business incorporation plan.