Choose Your Business Structure

How you want your business to operate - there's no exact "right" or "wrong" approaches. Choosing the best one depends largely on your needs and preferences, so before you set up your company, it's probably best for you to understand all the business structure options available to you.

You should understand each and every business structure, their advantages and disadvantages of each business formation; pay emphasis to their tax implications and government administrative formalities and requirements.

We will look at four main business ownership and structures:

  1. Sole Proprietorships
  2. Partnerships
  3. Limited Liability Corporations (LLC)
  4. Private Limited Corporations (Pte Ltd)

Sole Proprietorships

As the name implies, sole proprietorships refer to you as the main proprietor, the main trader. This formation is the easiest to setup, with the most flexibility and mobility as trade or business can have.

Paperwork is very minimal, as for your own references. Taxation is the same with personal taxes, as with this business formation, you and the business are synonymous in the eyes of the law.

That being said, the liability is also full-on in your life, meaning if anything really bad happens, the creditors and banks and whomsoever can lay hands on your personal assets to reclaim their costs.


(I highly DO NOT RECOMMEND partnerships, due to the high personal risk)

Partnerships are similar to sole proprietorships - they are extremely easy to setup and maintain, requiring minimal annual fees or paperwork.

The flipside is that you and your partner(s) are held FULLY responsible to maintain and manage all the company's debts. This means that if your partners screw up on a company loan, creditors can go after YOUR personal bank accounts, property and other assets to get back their loans.

Partnerships are also a disadvantage when it comes to raising capital or funds - private investors would not be comfortable investing knowing their liabilities are not covered.

Limited liability Companies (LLC)

This is an "upgraded" version of partnerships, in which personal liabilities are protected.

The LLP company is considered am independent corporation, unlike the partnership/sole proprietor model which the company and the founders are synonymous.

In an LLP company, properties, assets etc can be purchased under the ownership of the company. Creditors have to access to owners/founders personal assets and properties too.

LLCs require less paperwork and formalities as compared to corporations and companies, and still have liability protection.

Private Limited Corporations (Pte Ltd or PL)

Private limited companies and corporations are the standard of many businesses in today's marketplace.

Why this is so is because being private limited has a lot of benefits:

  1. There is no personal liabilities;
  2. significant tax savings and tax benefits from the government (check to confirm, each country has their own practices);
  3. more business flexibility;
  4. company name protection;
  5. easier to raise funds from financial institutes or private investors.

It also requires more ongoing paperwork and governmental formalities as compared to LLCs. This is suitable for more serious business owners that wants to capitalize on tax breaks and benefits, business flexibility and liability protection.

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