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Pros and Cons of Singapore Private Limited Company
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In Singapore, all companies are incorporated according to the procedures under the Singapore Companies Act. Among various types of company incorporation such as sole-proprietorship, partnership, public limited and private limited companies, Singapore private limited company is one of the most preferred type of company incorporation in Singapore.

Singapore private limited company is a business entity registered under the Companies Act, Chapter 50. It usually has the words 'Pte Ltd' as part of its name. Singapore private limited company has limited liability and the shareholders may not be held responsible for the debts and liabilities incurred by the respective private limited company in Singapore.

While it is indeed one of the most preferred company incorporation options in Singapore, finding out whether it is appropriate for nature, kind and goals of your business is necessary in order to choose the best Singapore company incorporation option as well as avoid any unanticipated situation.

To help you to make an informed decision, let’s discuss the pros and cons of Singapore private limited company so that you can make a choice about whether or not it is appropriate for you and your business in Singapore.

Pros

Easy incorporation procedure

Incorporating Singapore private limited company is easy and can be done with a few simple steps within a matter of hours. Those steps to register a private limited company in Singapore includes the placement of enquiry, reservation of name, followed by the filing and submission of the required forms with supporting documents.

Independent legal identity

Singapore private limited company is an organization that has a separate  legal entity separate and distinct from its shareholders and directors. This means that a Singapore private limited company can own property, sue or be sued, and take on debts in its own name rather directly suing individuals.

In fact, the nature of Singapore private limited company is limited liability. This means that if by any chance a company fails, the shareholders are only liable to pay until the extent of investment done by each one of them individually; thereby the personal assets that they possess remain safeguarded from being liquidated. That is why most entrepreneurs choose private limited company over sole proprietorship company because they know full well the volatile nature of businesses. 

Singapore Branding and the company’s propositions

While being registered as a Singapore private limited company can be global in nature and the brand proposition of a private limited company in Singapore provides greater credibility and reliability to trade not only locally but also internationally. This is because many foreign companies set up subsidiaries in Singapore and many local companies had become well-known globally. Singapore is thus being perceived as a global hub for international trade. Such perception opens up the horizon for start-up entrepreneurs to explore and expand the business as much as they can.

Perpetual succession

A private limited company in Singapore can last in perpetuity. Any changes in the membership of shareholders will not affect the continued existence of the company. The company can continue despite the death, resignation, or insolvency of shareholders. Other types of business entities in Singapore have no perpetual succession. This means that if the sole owner or partner is not alive or has no more desire to continue the business, the company will cease to exist by legal requirement under Singapore’s Company Act.

Tax advantages

Being a business hub, the corporate tax rates in Singapore are lower than individual tax rates. As Singapore private limited has its own legal identity that is distinct from individuals, such companies enjoy corporate tax rates and thereby saving money on tax that they would have required to pay in case of a sole proprietorship. A private limited company in Singapore is a tax efficient entity. It enjoys many benefits in terms of tax rebates, schemes, and policies. The corporate tax rate for companies is capped at 17% for profits exceeding SGD 300,000.

Singapore private limited companies also qualify for additional tax benefits and deductions that are not available to individuals. Moreover, dividends received by shareholders are not taxed.

Transfer of ownership is easy

Transferring ownership is an easy for a private limited company, because all that is required to be done is just transferring the shares to the new owner’s name. This makes it possible for entrepreneurs to not only take an easy exit whenever required, but more importantly, the ability to offer certain percentage of ownership equity to investors in the appropriate projects.

Con

Along with so many pros as listed above, there are several cons of Singapore private limited that must be kept in mind when choosing this as an option of company incorporation in Singapore.

Tighter rules, regulations and administrative requirements

Incorporating and running private limited company in Singapore means abiding by stringent rules and regulations as laid down in Singapore Companies Act which are stricter as compared to that of the sole proprietorship and partnerships. Even the accounts for a private limited company must have more information than that of others.

Also, running a private limited company requires directors to fulfill many statutory requirements such as filing and preparations of annual reports, returns, accounting and so on. This is both difficult and costly to manage.

As you now know all the vital pros and cons of Singapore private limited company, we hope that you are able to make an informed choice on your incorporation decision. Whether you want to register a private limited company in Singapore or you would like to go with a different incorporation option, Precursor has an expertise, experience, and track record to help you in every step of your business. With an award winning team of local expert and global experience of working with various multinational businesses, we are proud to work with you as your local partner.
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