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Type of Singapore Business Formation

Type of Singapore Business Formation

The landscape of foreign investment in Singapore continues to soar thanks to Singapore perpetually etching its place as one of the best countries in the world for business owners. Singapore prides transparent legal and business frameworks which inevitably results in businesses looking to gain a foothold in the region.

Prior to embarking on private listed companies, it is imperative for an entrepreneur or business owner to consider certain key factors as your choice would contribute significantly to the growth and progress of your business in its entirety. The amount of tax you pay, your future business expansion ventures and the obtaining of loans for business growth is significantly attributed to your choice of business ultimately.

Business Trust

A business owner can choose to operate out of a business trust. What is a business trust? It basically is a trust which has the sole responsibility for any business operations of a company. Both a business trust and the head of the business trust who is the trustee-manager needs to be registered. So, as a business owner, you now have a trustee-manager to take care of the business and steer it towards growth and expansion your business is looking to achieve. There you have it, your trustee-managers to handle the business for the beneficiaries or unitholders of the business. Investors or unit holders would therefore have economic interests in the assets of the business but basically have no rights to the assets themselves. Business trusts would benefit companies who already have a steady stream of income from their existing assets.

Foreign Branch 

So you now have your parent company and looking to form one in Singapore? Singapore gives you two available options; One, the choice of  opening a branch office in Singapore. In Singapore, when you register for a foreign company, it would be akin to it being an extension of the parent company.

Owing to this, you can say that any foreign branch office cannot be considered as a separate incorporated entity and therefore the office in Singapore would bear the same image and prominence alike its parent company. Assets would be under the purview of the parent company. Thus, in a ‘sue or be sued instance’, liabilities would be shouldered by the parent company.

Foreign Subsidiary 

On the flip side, a business owner of foreign companies can also consider the formation of a foreign subsidiary company in Singapore. Foreign subsidiaries are private limited companies. Therefore, private limited companies are incorporated as its own separate legal entity. The main shareholders of the parent company can be a foreign company. However, assets and liabilities are responsibilities of the subsidiary company itself. Hence, ,many organizations in Singapore are seen to have opted for this avenue as it is a highly flexible method of business formation.

Sole Proprietorship 

Sole proprietorship translates to business owners having ownership overall assets in the company and as such, all profits are his. On the other hand, a major drawback would be that sole proprietorships are not legally regarded as separate legal entities. Owing to this, any liabilities encountered by business owners would result in him bearing all risks and losses involved too. In addition, creditors have the right to seek personal assets from the business owner should he fail to make payment. This is an incredible financial risk which potentially plagues business owners who are unaware of this deep implication. Start-ups and budding entrepreneurs often fall prey to this as they are unaware of this when they experience business problems. A business owner should only consider going into sole proprietorship if he has the means to cover his losses as well.


Those who do not want to be grappled by the risks involved in setting up sole proprietorships should highly look to consider opening a business together with someone else in a partnership. Thus, the pitfalls identified for sole proprietors could be borne together or avoided as more influence and interest are etched to the business in a general partnership. However, there is a huge setback to general partnerships as its legal identity rests solely on the two partners. In any event of death or retirement or should a general partner be unable to carry out his duties, it will mark the death of the partnership. The other imminent risk of partnerships lies in the fact that at any one time, a partner could apply for dissolution of the partnership which is why it is imperative before venturing into a partnership that business owners be made aware of this risk. If that doesn’t sound like what you’re expecting out of this, you can opt for a company limited by guarantee or a limited partner.

If you’re in Singapore and engaged in some type of profit-making activities, you will require registering your business as a sole proprietorship, private limited company, or limited liability partnership (LLP) for either your branch office or representative office.

Singapore: World’s BIGGEST Financial Hub

Geographically, Singapore is nestled in an extremely strategic location where many worlds meet. Hence, it comes as no surprise that many entrepreneurs and business owners in the region regard Singapore as one of THE names when it comes to financial hubs around the world and for the most industrialized nation in Asia too.

In addition, foreign entrepreneurs can also enjoy HUGE tax benefits when they start their business in Singapore as they have a provision for double taxation agreements with 60 countries around the world.

The transparent immigration policy also makes it convenient for foreign entrepreneurs to visit the country and source out for the myriad of business opportunities in Singapore.

The students of National University of Singapore carried out a survey, where the result illustrated that most graduates from Singaporean universities have a deep penchant and are enthusiastic about starting up their own business in the nation.

Moreover, there is abundance in the marketplace for your to start-up a lucrative and sustainable business in Singapore, including the likes of industries such as electronic parts and components, transport equipment, chemicals and chemical products, manufacturing goods, etc.

The pro-business environment attracts foreign investments at ease. Not to mention, in terms of use of technology, Singapore is considered to be the top 3 countries in the world.

You also have to follow Singapore cultural protocol wherever you go to have a better footing with the general public in Singapore.


Inadvertently, it is important to weigh all options and research more on the requirements prior to making a decision. As a rule of thumb, locals would do well settling for sole proprietorships, while of course bearing in mind one that sole proprietors are accountable for business liabilities. Going into general partnership with someone else would therefore spread the hazards and provide alternative options in the event problems arise in the business. Contrarily, if a foreign conglomerate or business would like to set up offices in Singapore, opening foreign branches or subsidiaries is definitely a viable option.

Need more information about the types of business formations in Singapore? Feel free to contact us. We will be more than happy to provide a list of our services and fee structure.

Need more professional help?

Paul Hype Page & Co. is an ACRA-certified business adviser. Our team of seasoned professional can help you set up a company in Singapore very quickly and easily following all legal entities, and offer you sound advice on how to make it successful too.

By Eric Eio
Managing Partner of Paul Hype Page & Co.

Eric was awarded an ACCA graduate in 2000 and also graduated from University of Sydney with a Bachelor degree in Computer Science & Accounting. Since graduation, he had worked in Big 4 as an auditor , including a one year overseas stint with Ernst & Young, Shanghai in 2005. He left his last appointment as an Audit Managerial position with PricewaterhouseCoopers, Singapore in 2008 before setting up his own Certified Public Accountant Practice – Paul Hype Page & Co. His firm is being selected to be one of the advisory panel for Singapore top 500 SME.

Chibugwu Nwaogu says:

Dear Paul,
I want to relocate to Singapore with my family and kick-off mass production of a Special Carriage Bag which I will export to Nigeria my home country where I had already sampled the product and recorded good sales. How will I achieve this goal.
Presently, I’m a project/ safety engineer supervising an on going construction of oil & gas project in Nigeria and equally, registered a family business firm in Nigeria..

Best regards

Paul Hype Page says:

Dear Chibugwu,

You can start by starting your company (Pte Ltd) in Singapore.

We will drop you an email with more information of our Incorporation with Employment solution for your better understanding.


[…] another thing you will want to keep in mind is related to the fact that you will have to select the form of organization for your business: Limited Liability Partnership, Sole Proprietorship, Company Limited by Shares, and so on. This is […]

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