When starting a business in Singapore, one of the most crucial considerations to make is what kind of company it will be. Sole proprietorship, partnership, and private limited company are all types of business structures that may be used in the business sector. Following is a side-by-by-side comparison of two popular choices: A private limited corporation and a single proprietorship are both examples of a business with limited liability. Here is the discussion on Private Limited Company vs Sole Proprietorship in Singapore.
Legal system identification and liability
A sole proprietorship is owned and operated by its lone owner and does not have a separate legal identity. Any losses or obligations that the corporation incurs on your behalf are your responsibility. However, unlike a public limited company, a private limited corporation is a separate legal entity from its stockholders and directors. In this case, investors are not individually liable for the company’s obligations, and their liability is limited to the amount of money they have invested in the company.
Legally mandated requirements
A sole proprietorship has fewer reporting obligations than other types of businesses. The sole proprietor’s personal income tax return is used to determine and submit the company’s tax liability. An annual general meeting (AGM) and annual returns (AR) must be submitted to the Accounting and Corporate Regulatory Authority (ACRA) by a private limited company in addition to the usual requirements for a corporation (ACRA). An auditor is necessary for a private limited company that does not fulfil the criteria for being classed as a “small company.” The earnings and losses of a private limited company must be reported to the IRS in corporate tax filings.
Income tax withholding
There is no difference in the tax rates for sole proprietorships and other enterprises. Sole proprietors who are Singapore tax residents will henceforth pay progressive tax rates ranging from 0% to 22% starting in 2017. From 2017 forward, the tariffs will be in effect. Taxes on private limited company profits are calculated at the corporation tax rate, unless otherwise specified.
Financial support is also available
As a general rule, private limited corporations have more financial help alternatives than sole proprietorships. These are Startup SG Equity, startup founder grants, and Market Readiness Assistance (MRA) awards for private limited firms, among other instances Only private limited firms are eligible for the Startup Singapore Equity grant, while applications for the MRA award from single proprietorships are reviewed on an individual basis.
Inalienable Right to Self-Determination
In a single proprietorship, just one person owns the business, making it unique. For a private limited business, the directors are held to a higher standard of care by the firm’s shareholders and the company itself. A private limited company, on the other hand, is able to expand and develop more easily.
Building the framework
A sole proprietorship is simpler to set up, and the government only costs $65 to do so. An extra set of procedures and concerns must be taken into account while incorporating a private limited company, making the process more difficult. The government charges $315 for the formation of a private limited corporation.
Sole proprietorships have a more difficult time obtaining bank loans and outside investment because of the company’s strong connection to the owner’s personal wealth. 7) Bank loans, stock issues, and external investments are all options available to a private limited company that a public limited company may find more difficult to get.