How to decide type of Company
In Singapore, business vehicle option as follow :
- sole proprietor
- Pte ltd limited by share
- Pte ltd limited by guarantee
- Public company
Among all the above, Pte ltd is the most popular.
Which 1 of the above is your preference ?
Consideration in decide business vehicle :
- risk taken level
- ownership and control level
- Person who running the business
- complexity of business nature ( will there involve different country, currency, trademark, business license)
- Credibility and recognition
- Future need
- Growth potential
- capital amount
Risk taken level
“Separate legal Entity concept ” is the major benefit of Pte Ltd Company .
Separate legal entity means Company can stand alone in the legal status .
As incorporated company, it have right to :
- sue /being sue
- owned property
Being company shareholder, your liabilities is limit to the amount invested in the Company.
Ownership and control level
Shareholder is the business owner of the Pte ltd. They invest their fund and engaged Company director services to run the Company. ‘
If you prefer to have separate ownership with control level, then Pte ltd is your good choice.
Person who running the business
Owner of Sole proprietor, partnership or LLP is the one who run the business, they have to :
- face their customer
- handle the company administrator task
- dealing with supplier, banker, investor
All the above will NOT happen in Pte ltd . There is 2 major basic role: Company director or Company shareholder .
Company director is the one who running the show whereas company shareholder is the one who pump in the fund.
So, if you are NOT intend to get involve with dairy operation matters, Pte ltd is your option to be as shareholder .
Complexity of business nature
If business activities involved with global market ,it will be higher level exposure of risk. So, PTE LTD should be the best choice here
Credibility and recognition
In theory, any form of business vehicle is for the purpose of making profit
But in practice, market may treat you differently based on type of business vehicle.
- bank will offer better loan amount to Pte ltd compare with the sole proprietor or partnership.
- to tender project, Pte ltd company will have better chance
- some government grant will be offer to Pte ltd company only
When you start register company , what is your future plan for the Company other than making profit ?
If you intend to bring in more investor and plan the business to next generation then PTE LTD suit your need.
Beside that, you may transfer to next generation easily if you intent to retire. Just prepare resignation letter as director or shares transfer form.
Formal business structures like Pte Ltd have better chance to growth compare with the rest of business vehicle .
- Public will treat company differently based on type of business vehcile .
- Some of the MNC company will only accept Pte ltd company’s tender in their project.
- Bank will normally offer better loan to pte tld company.