COMPARISON BETWEEN SOLE-PROPRIETORSHIP, PARTNERSHIP AND COMPANY

SOLE-PROPRIETORSHIP

DEFINITION
A business owned by one person.

OWNED BY
One person

LEGAL STATUS

• Not a separate legal entity
• Owner has unlimited liability
• Can sue or be sued in individual’s own name
• Can also be sued in business name
• Can own property in individual’s name
• Owner personally liable for debts and losses of business

REGISTRATION REQUIREMENT

• Age 18 years or above. Singapore citizen/ Singapore permanent resident/ Employment Pass/ Dependent Pass holder.
• If owner not resident in Singapore, he must appoint a local manager who is ordinarily resident in Singapore
• Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration
• Undischarged bankrupts cannot manage business without court or Official Assignee’s approval

FORMALITIES AND EXPENSES

• Quick and easy to set up
• Easy to administer and manage
• Registration cost is minimal
• Less administrative duties to adhere to
• Must renew registration annually

TAXES

• Profits taxed at owner’s personal income tax rates

CONTINUITY IN LAW

• Exists as long as the owner is alive and desires to continue the business

CLOSING THE BUSINESS

• By Owner – Cessation of business
• Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct

PARTNERSHIP

DEFINITION

An association of two or more persons carrying on business in common with a view to profit

OWNED BY

Generally between 2 and 20 partners. A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships)

LEGAL STATUS

• Not a separate legal entity
• Partners have unlimited liability
• Can sue or be sued in firm’s name
• Cannot own property in firm’s name
• Partners personally liable for partnership’s debts and losses incurred by other partners

REGISTRATION REQUIREMENT

• Age 18 years or above. Singapore citizen/ Singapore permanent resident/ Employment Pass/
• Dependent Pass holder.
• If owners not resident in Singapore, they must appoint a local manager who is ordinarily resident in Singapore
• Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration
• Undischarged bankrupts cannot manage business without court or Official Assignee’s approval

FORMALITIES AND EXPANSES

• Quick and easy to set up
• Easy to administer and manage
• Registration cost is minimal
• Less administrative duties to adhere to
• Must renew registration annually

TAXES

Profits taxed at partners’ personal income tax rates

CONTINUITY IN LAW

Exists subject to partnership agreement

CLOSING THE BUSINESS

• By the partners – Cessation of business or dissolution of partnership
• Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct

 COMPANY

DEFINITION

A business form which is a legal entity separate and distinct from its shareholders and directors

OWNED BY

• Exempt Private Company –20 members or less and no corporation holds beneficial interest in the company’s shares
• Private Company – 50 members or less
• Public Company – can have more than 50 members

LEGAL STATUS

• A separate legal entity from its members and directors
• Members have limited liability
• Can sue or be sued in company’s name
• Can own property in company’s name
• Members not personally liable for debts and losses of company

REGISTRATION REQUIREMENT

• At least one shareholder
• At least one director ordinarily resident in Singapore, at least 18 years old
• If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower
• Undischarged bankrupts cannot be a director and cannot manage a company without court or Official Assignee’s approval

FORMALITIES AND EXPANSES

• More costly to set up and maintain
• More formalities and procedures to comply with
• Must appoint a company secretary within 6 months of incorporation
• Must appoint an auditor within 3 months after incorporation unless the company is exempt from audit requirements
• Annual Returns must be filed
• Statutory requirements for general meetings, directors, company secretary, share allotments, etc.

TAXES

Profits taxed at corporate tax rates

CONTINUITY IN LAW

A company has perpetual succession until wound up or struck off

CLOSING THE BUSINESS

• Winding Up – Voluntarily by members or creditors, compulsorily by the High Court
• Striking off