In Singapore, the simplest business structure than can be formed is the sole proprietorship. The owner of a sole proprietorship owns all of the company’s assets and profits. However, sole proprietorships are not legally regarded as separate legal entities. A sole proprietorship is not separate from its proprietor or owner. Therefore, the owner of the business will be held responsible for any liabilities incurred through business activities.
When starting a sole proprietorship, it is also important to note that creditors have the right to seek personal assets from the business owner if the owner does not make payments punctually. Owners of start-ups and new entrepreneurs often overlook this fact, and so experience financial troubles that could easily have been avoided.
Sole proprietorships are most suitable for low-risk small businesses because of the possible financial issues that may potentially arise. Any business owners who plan to start one must consider their current financial status and determine if they have the financial means to cover any potential losses.
The final type of business structure to be considered is the partnership. Business owners who are wary of the risks involved in setting up sole proprietorships often consider opening a partnership. As is implied by the name, a partnership is owned by more than one person. Partnerships are generally less risky than sole proprietorships. This is because, should any misfortunes befall the owners of a partnership, the losses suffered can be jointly borne by the multiple owners. Certain problems might even be avoided because a general partnership typically has more corporate influence than a sole proprietorship does.
However, this does not mean that partnerships are completely risk-free. This is because the legal identity of a partnership is intrinsically tied to the status of the owners of the partnership. If at least one of the partners dies, retires, or becomes unable to perform the necessary duties as one of the partnership’s owners, the partnership will cease to exist.
It is also possible for one or more of the partners to apply for dissolution of the partnership at any given time. However, before the partnership can officially be terminated, all partners involved must fulfill all fiduciary duties which they owe each other. Apart from a dissolution via applications to court, dissolution of a partnership may also take place upon the occurrence of certain terminating events or during incidents of misrepresentation or fraud. Before entering into a partnership, business owners ought to be aware of these facts. Once they are better informed about these details, they will be more able to run a partnership in a competent and effective manner.
Reasons to Start a Business in Singapore
Regardless of the type of business selected, there are tremendous benefits that come with owning a business in Singapore.
Owning a business in Singapore allows the business owners to interact with other entrepreneurs from all over the world. This is due to the fact that Singapore is located in an extremely strategic geographical location. This location has helped turn the country into one of the world’s leading financial hubs and corporate powerhouses.
Another advantage of owning a Singapore business is the fact that the corporate tax rate in Singapore is extremely low. This rate is 17%, one of the world’s lowest. In addition, foreign entrepreneurs can also enjoy tax benefits through double taxation agreements with many different countries around the world. Singapore’s presence in these agreements eases the tax burden of foreigners who live there but are tax residents of another country.
Singapore also has some of the world’s most transparent immigration policies. These policies make it convenient for foreign entrepreneurs to visit the country and search for business opportunities in Singapore. Therefore, the country’s economy and corporate atmosphere benefit from the immigration policies, because they encourage foreign entrepreneurial activity, foreign investment, and international business opportunities which develop links to Singapore.
Finally, Singapore’s business environment is extremely conducive to entrepreneurship. According to a survey conducted by students of the National University of Singapore, most graduates of Singaporean universities have a deep penchant for entrepreneurship and are enthusiastic about starting up their own business in the nation. The fact that the country’s youth show such desire to start a business bodes well for the country’s corporate future. The pro-business environment, much like the immigration policies, also attracts a sizeable amount of foreign investment. In addition, certain industries in Singapore currently appear to be extremely open to the entry of more lucrative and sustainable businesses. These industries include the electronics, automotive, chemical, and manufacturing industries.
There are a great many options to choose from when starting a business in Singapore. Therefore, it is important to give due consideration to all options and do the necessary research on the requirements before planning. In general, locals who start a Singapore business will find more success if they select the sole proprietorship as their business structure. If they handle all business liabilities appropriately, their company should be able to go from strength to strength. Locals who are more risk-averse could also select the partnership. This is because, due to the fact that partnerships are owned by multiple people, the impact of any negative circumstances which may arise will be mitigated because more than one person will suffer the consequences. However, foreign conglomerates or businesses which plan to set up one or more offices in Singapore should lean towards opening foreign branches or subsidiaries. This is because foreign branches increase the parent company’s reach, bring the parent company more profits, and aid in the internationalization of the parent company. If the foreign business is an SME, then opening a foreign subsidiary will usually be the preferred option due to the reduced costs incurred during business operations as well as the heightened level of flexibility.