Pte Ltd vs Sole Proprietorship
Popularity of Pte Ltd is always ahead of sole proprietor .
TAX RATE ON COMPANY VS PERSONAL
Company will be tax at a flat rate of 17% of its chargeable income.
Click here for basic guide in Corporate tax
Whereas all profit from sole proprietor will be tax on personal level. The higher income earners will be pay proportionately higher tax ( highest personal income tax rate is 22%)
Click here for the basic guide in Personal Tax
COMPANY DIRECTOR CAN TREATED AS COMPANY EMPLOYEE
Company carry ” separate legal entity ” concept which means that Company can stand alone in the legal eyes . If you are appointed director then you can be treated as employee .
If you are Singaporean / Singapore PR, company is required to pay you CPF
And CPF deduction will be treated as Company expense and this will help in reduce payable tax amount.
Whereas all the above does not applicable in Sole proprietorship.
SUCCESSION PERPETUAL CONCEPT
Sole proprietor business must be cease operation if the business owner no longer or not able to operate.
Wheres Pte Ltd business is transferable .
Example : If you not intend to carry on the business, you may just sell the company to interested parties .
Proper documentation for resignation of director and share transfer is required to prepare and lodge in with ACRA and IRAS .
RISK TAKEN LEVEL
Being owner of Pte Ltd company, liabilities level is up to your invested fund only.
Whereas for sole proprietor owner, your liabilities is unlimited and personal asset is touchable .
WITHDRAWAL MONEY METHOD FROM THE COMPANY
As pte ltd is carry separate legal entity concept, any withdrawal money is subject to company constitution regulation . Resolution will needed to be passed and signed before withdrawal process .
As director, you may getting director fees / director remuneration. Whereas as shareholder dividend payment is the popular return method for your investment .
As for sole proprietor, since you are the only owner in the company, all the profit will be categories as your personal income and you can withdraw it at of your preference time .