Starting a new business in Singapore is not an easy task. There are many things to consider while setting up a business. You can establish a company as a proprietorship, partnership, or an LLP. However, it is difficult to determine which business structure is efficient. In this article, we will discuss the sole proprietorship Vs. company, and their benefits in Singapore.
A Sole Proprietorship is a form of business in which an individual manages a business. It is a simple form of business and is easy to set up as long as you have enough capital.
A Sole Proprietorship does not require any form of legal document. An individual willing to start a business as a sole proprietor should be a citizen Singapore.
A company is a business organization which is formed by a group of individuals. The distribution of power is among the group of people. For the incorporation of company, you will need to produce various documents. In a company, the liability of the shareholders is limited to some shares under the Companies Act in Singapore.
Comparison between Sole Proprietorship and Company
Different factors affect decision making in choosing a business structure. Some are as follows:
A business having a sole proprietor structure does not have a unique identity of its own. The debts of the business form isn’t separated from the Personal Debts of the owner. On the other hand, a company has complicated legal liabilities with its own unique identity, debts, and losses of the company, distributed among the shareholders depending upon their investment.
It is difficult for a sole proprietor to raise capital. On the other hand, a company can manage to raise money by selling the company’s share in the market, issuing loans from banks, and through investments in some other business.
The company has the interference of every shareholder in the affairs of the business. A sole proprietorship has a single owner and is solely responsible for the business affairs.
Which Form to Choose?
If you want to start a small business with fewer associated risks, you should choose a sole proprietorship. Unlike that, the company has more requirements to take care of in an organization. In terms of tax and other protection, a sole proprietor is more beneficial than a company with the rights to make alternates in business affairs solely. The company is easy to expand as compared to the sole proprietorship.
3E Accounting Services helps you in deciding which business structure is suitable for your business to grow. You can trust their consultancy services for starting your business. They can provide you with all the requirements to incorporate a company in Singapore with the required authentic documents.