Form A Singapore Company: What Are The Advantages?
A business structure determines the relationship of an entrepreneur to his business
. For example, a shareholder and his company are two separate entities which means that the former enjoys limited liability, while a sole proprietor is legally liable for all the debts and losses of his business.
While there are several business structures, most bona fide entrepreneurs believe that a Singapore company (also called as corporation in other countries) provides the most advantages especially in terms of asset protection, developmental and tax incentives, and limited liability.
Meanwhile, businessmen planning to form a Singapore company will enjoy these advantages:
Perpetual succession of the business
Since the ownership is transferable and tradable, through sales or gift of shares, a company can enjoy perpetual succession regardless if there is a change in management or a shareholder resigns or dies.
The only time a company will cease its operation is when the shareholders and directors decide among themselves to merge with another company or liquidate their business asset.
Limited liability (or asset protection)
In the event of bankruptcy, shareholders will not lose their personal assets such as houses and cars since they have a limited liability on debts, financial losses, claims, and lawsuits related to their businessunless they have given personal guaranties to the creditors.
Tax benefits
In Singapore, private limited companywhich is a type of Singapore company prohibited to sell its shares to the publicenjoys tax exemptions during the first three years of its incorporation.
Tax exemptions include Zero Tax and 50 percent tax break on a companys first S$100,000 and S$200,000 chargeable incomes, respectively.
Easy to raise capital and funds
Most banks and financial institutions see the private limited company as a more professional and stable structure, making it easier for shareholders to raise funds needed for business expansion.
Meanwhile, a public limited companywhich is a type of Singapore company that is allowed to sell its shares and debentures to the publicfinds it easier to raise funds for business expansion without having to apply for bank loans which may involve high interest rates.
Treated as a separate legal entity
A Singapore company is treated as a separate legal entity, meaning, it can file a lawsuit or be sued, acquire properties, and purchase supplies under its name. With this, it would be hardif not impossiblefor any shareholders and directors to unscrupulously use the business properties for their own means.
by: Diane Enriquez
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