Establishing a business in Singapore is a strategic decision, forming a Limited Liability Company (LLC) is an especially great choice! Singapore’s business-friendly environment, coupled with the numerous advantages of an LLC offers a great choice for those who are looking to safeguard their assets while enjoying various benefits as an entrepreneur.
What is an LLC?
A Limited Liability Company abbreviatedly known as LLC is one of the most sought-after business structures in Singapore. It combines the flexibility of a partnership with the liability protection typically associated with the corporation. An LLC allows business owners to protect their assets from the company’s liability, such as debts or lawsuits.
This ability brings peace of mind and financial security to any entrepreneur who would like to establish a business in Singapore. Additionally, LLCs in Singapore also enjoy favorable tax treatment, making it an efficient choice for business operations.
What Is the Difference Between LLC and LLP in Singapore?
LLC and LLP (Limited Liability Partnership) are two of the most common company incorporation types in Singapore, below are the key differences between each of them.
What Are the Advantages of LLC?
Limited Liability Protection
The first advantage of an LLC is its limited liability protection. This advantage helps to provide separation between personal and business assets to ensure that personal wealth is safeguarded in case the business faces financial difficulties. For example, if the business incurs debts or is sued —the owner's finances will be protected as they don't have a personal obligation to pay the business debt
Easier Access to Capital
LLCs often find it easier to raise capital, especially when it’s being compared to sole proprietorships or partnerships. This is because an LLC can offer ownership shares to investors, making it an appealing structure for those looking to attract funding. Additionally, the credibility of an LLC will also make securing loans or other forms of financing much easier.
Tax Benefits
In the Singapore business landscape, LLCs favor more tax policies for entrepreneurs. For example, LLCs are subject to corporate tax rates —which are often lower than individual tax rates. Moreover, Singapore offers various tax incentives and expenses for businesses, further enhancing the attractiveness of this business structure. Last but not least, LLC can also help avoid double taxation, as profits are only taxed at the corporate level and not at the individual level when distributed as dividends.
Elevate Professional Image
Operating as an LLC can elevate a company's professional image. This structure is often perceived as more established and credible compared to sole proprietorships or partnerships. For businesses looking to build trust with clients, suppliers, and partners, the LLC designation can be a significant advantage.
Simple and Cost-Effective to Establish
Forming an LLC is a relatively simple and cost-effective process. The registration process is streamlined, with clear guidelines provided by Singapore’s regulatory authority.
Types of Limited Liability Company
- Private Limited Company (Pte Ltd): Ideal for small to medium-sized businesses with up to 50 shareholders.
- Public Limited Company (Ltd): Can issue shares to the public and have more than 50 shareholders.
- Public Company Limited by Guarantee: Mainly used for non-profits without share capital.
What Are the Requirements for LLC Establishment in Singapore?
The primary requirement for anyone who wants to establish an LLC in Singapore is that they should be at least 18 years old and currently not in a state of bankruptcy. But they also have other important requirements, as follows!
Minimum Share Capital
To register a company in Singapore, you need a minimum share capital of S$1. Yes, that’s right—just one Singapore dollar is enough to get started! However, while this minimal amount meets the legal requirement, it's wise to consider a higher share capital. Doing so can signal to potential investors and clients that your business is serious and committed
Registered Office Address
Every LLC in Singapore must have a registered office address. This is where your official mail and legal documents will be sent. It needs to be a physical location, not a PO box.
Company Secretary
Every LLC in Singapore is required to have a company secretary. This person ensures that your company remains compliant with legal regulations. The chosen secretary will act as a vital support in maintaining your business's lawful standing. However, do keep in mind that the role of a company secretary can only be held by a Singaporean resident who has the appropriate qualifications and experience.
Resident Director
Every LLC in Singapore must have at least one resident director. This individual is responsible for overseeing the company’s daily operations. The resident director must be a Singapore citizen, permanent resident, or hold a valid work pass.
How to Setup an LLC in Singapore?
Step 1: Choose a Company Name
The company name should be unique and not already in use by another business. You can check the availability of a business name beforehand on the ACRA website.
Once you’ve done your research and decided on a name, you’ll need to reserve it with ACRA. This will ensure no one can take your chosen name while you complete the process of registering your LLC.
Step 2: Prepare Required Documents
Next, you’ll need to gather all the necessary documents for your LLC registration. To register for an LLC, you must prepare these documents beforehand:
- Identification Documents
- Proof of Residential Address
- Company Name Approval Application
- ACRA’s Consent for Use of Address
- Company Constitution
- Declaration of Compliance
You want to make sure that you have all the required documents on hand before starting the process. This is important, to make sure that there won't be any issues that can disrupt your LLC set-up process.
Step 3: Submit Application
Once everything is clear, you can submit the applications online through the BizFile+ portal.
Step 4: Pay Registration Fees
After submitting, you can proceed by paying a registration fee of S$315 to ACRA by following the provided process.
Step 5: Obtain a Certificate of Incorporation
After your application is approved and fees are paid, you will receive your Certificate of Incorporation. This document serves as your company’s birth certificate or more like proof that shows your LLC is officially registered and recognized by the Singapore government.
Want to Form an LLC in Singapore? Contact Wealthbridge!
Forming an LLC in Singapore can be a strategic move for businesses looking to expand or start a new venture. Considering forming an LLC in Singapore? Now is the right time for you! Leverage Singapore’s advantageous business environment, tax benefits, and strategic location. Contact us today for expert guidance and assistance in establishing your Singapore LLC.