26.11.13

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


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