There are different structure types for business ownership in Singapore. These have different advantages and disadvantages. These structure types include the following:
These involve a one-person business which means that the business is not a limited liability company or corporation. There are no papers or anything special to set-up this kind of ownership, this only involves the person to create the business themselves. This type of ownership is inseparable to its owner since the owner and the business is the same. Become a sole proprietor of a business means that the owner is liable for any debts or court judgments they might face and they should report their losses and income to their own personal tax return.
This involves a partnership for a business that is usually owned by two or more people who is not a limited liability company or a corporation. Like the sole proprietorship, they don’t need to file any paperwork from the partnership and the arrangement starts when the owners start a business with another person. In the partnership, owners pay the taxes on their share of the business’s income on their personal tax returns, each of them are also personally liable for the total amount of the business’s debts and claims.
This type of ownership is also complicated and costly to set up and run and it is not recommended for small average business owners. This is because this type of ownership is often created by one company or person, also called the general partner; that will ask for the investments from their limited partners. The general partner controls the day-to-day operations of the limited partners and they are also liable for any debts unless the general partner is a limited liability company or corporation. The limited partners have limited or minimal control on the decisions and operations of the business; however they are not liable for any debts or claims of the business.
Corporations and Limited Liability Companies (LLCs)
In forming this type of ownership, this can become more costly and complicated; however for some small businesses that can handle it can become worth the trouble. These structures help in limiting the personal liabilities in the business debts and court judgments against the business; this is the main benefit of the LLCs and corporations. This is also an independent legal and tax entity that separates the people who own, manage, and control the business. The owners of this corporation don’t use their personal tax return in paying the tax on corporate profits; the corporation pays the taxes itself. The owners only pay the personal income tax with the money they draw from the corporation through bonuses, salaries, and others.
These types of ownership are usually formed to carry out any charitable, religious, literary, scientific, or educational purpose. They raise their funds through solicitations in public and private money grants and donations from companies and other people.