Company Registration: Sole Proprietorship or LLP or LLC

Every entrepreneur’s big dreams are usually accompanied by major decisions. The first: how to set up your business entity in Singapore. It’s easy to get lost in the technicalities of incorporating a business in Singapore, and there are lots of minor details the many guides out there will fill you in on. What we’ve done is to distill the information and focus on the important things to consider as a small business owner.

First, an overview of the common entity options:

A sole proprietorship is owned by only one person, so it cannot be set up as a partner. From a legal perspective, you and the business are the same entity, meaning your personal assets are at risk should you not be able to fulfill your business’s financial obligations. This is the riskiest form of incorporation and is discouraged.

A limited liability partnership (LLP) is the most common partnership business owners opt for. It requires a minimum of two partners (either people or an existing company) and is generally recommended for chartered professions (lawyers and accountants). A major disadvantage of the LLP is that the business is liable to the same extent as the partner for any wrongful commission or omission. Claims for liabilities can also be made on the partner’s personal assets. However, the personal assets of innocent partners cannot be held liable for the wrongful commission or omission for other partners, and is only limited to their investment in the LLP.

A limited liability company (LLC) is more often known as a private limited liability company (Pte Ltd). While more expensive to setup and more complex to maintain, LLCs are the most recommended for small businesses as the structure shields your personal assets from any corporate liability. It also is best set-up to accommodate future expansion plans. A LLC requires at least one shareholder and one director.


Still don’t know what you should choose? Consider these questions:
• What is your business’s exit strategy? Do you want to sell the business, go public, or liquidate and close?Still don’t know what you should choose? Consider these questions:

• How invested will you be in the business? If you’re planning on maintaining your day job, the returns on a side business may not justify the costs of running a LLC.
• Will you require business loans?

If you still aren’t sure what to do, leave a comment and we’ll help you out!

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