Setting Up A Company
Setting Up A Company In Singapore
As the world’s number one country to do business, setting up a company in Singapore has its requirements and procedures. Having web presence is mandatory, so incorporators should consider website design, domain and email hosting. The three basic types of businesses are the sole proprietorship, partnership, and corporation. Each type has its pros and cons. But for our purposes, we shall discuss the best type of business for foreigners to set up.
The type of business initially chosen will not necessarily be fixed in time. A company may opt to change its type when the owner(s) so decide. For foreigners, the best type is the private limited corporation. Based on initial finances and capitalization, many foreigners start as sole proprietors or partnerships, and later change them to private limited corporations.
Benefits Of Incorporation When Setting Up A Company
Setting up a company as a corporation has benefits. First, there is the personal liability protection. That means if your company is sued, your liabilities are limited to your company’s assets; your personal assets are spared. Secondly, in Singapore, companies enjoy tax exemptions and attractive tax incentives not experienced elsewhere in the world. Third, a corporate identity gives greater credibility to a business. Fourth, raising additional capital is easier through stocks and securities. Finally, corporations have an unlimited life and can outlive its owners.
Disadvantages Of Incorporation When Setting Up A Company
There are also disadvantages to setting up your company as a corporation. First is the amount of paperwork to be done. Shareholders will have to file two tax returns: one for their own individual income, and the other for their business. Second, startup costs and maintenance are more expensive for corporations, although a limited liability company is a way around this.
Finally, banks insist on personal guarantees from the owners in granting loans. In these cases, limited liability protection is overridden. Pros and cons need thorough evaluation so there will be no surprises later.