Knowing Singapore’s Basic Business Structures Before Registering Company
Before registering a company, owners have to familiarise themselves with the various business structures in Singapore as well as each of their differences. A business’ structure determines its legal rights and responsibilities, among them the rights and obligations of ownership, debts and losses, and liabilities.
Registering Company Under Sole Proprietorship, Partnership, And Limited Partnership
The simplest form of any business is the sole proprietorship, owned and managed by just one person. It is the smallest and therefore, has the least requirements in everything a business needs to start. As such, the owner is the only one liable for the proprietorship’s losses, debts, as well as lawsuits.
On the other hand, a partnership is a joint ownership by at least two people (and a maximum of 20 partners) who are individually liable for the partnership’s responsibilities (losses, debts, and lawsuits). A limited partnership holds the same ownership concept as the partnership, but there has to be one general partner and one limited partner (and, subsequently, as many limited partners as there are). The general partner is the one mainly responsible for the partnership’s losses, debts, and lawsuits. The liability of limited partners, meanwhile, goes only as far as the value of their shares or contribution to the partnership.
Registering Company Under Limited Liability Partnership And Company
A Limited Liability Partnership, contrary to the three abovementioned business types, is a separate legal entity that has the additional power to own properties in the partnership’s name, which is not allowed in the three previous types. Each of the partners in an LLP is liable for his or her individual losses but not of the other partners’.
Like the LLP which has the power of property ownership, a company is also recognized as a legal entity by law. There are three kinds of companies: the exempt private company (with 20 members or less), the private company (50 members or less), and the public company (50 members or more). Members in companies are not personally liable for any losses, debts, or lawsuits that the company encounters.