Limited Liability Company — Pte Ltd or LLC is an exempt private company limited by shares. It is the most common choice for entrepreneurs in Singapore. A big advantage is it provides a legal entity that is separate from its founders, thus limiting your liability (hence the name). This means that the debts, the risks, and the responsibilities are made in the company’s name, not in yours.
What are the advantages of an LLC?
- Limited Liability is a form of protecting owners from corporate risks. It restricts the financial damages if things go wrong to the size of the investment
- Separate legal entity enables the owner to involve other partners, sell the company, or leave it to his children in a will
- Fundarising becomes easier with both attracting investors and taking bank loans in the company's name
What you need to know about LLC
LLC or Pte Ltd pays corporate tax at 17% rate. It can also be eligible for the tax exemptions.
The StarUp Tax Exemption or SUTE offers tax cuts for 3 years after company formation:
- 4.25% on the first S$100,000 of normal chargeable income
- 8.5% on the next S$100,000
Partial Tax Exemption or PTE is available after the first 3 assessment years. It offers trhe following rates:
- 4.25% on teh first S$10,000
- 8.5% on the next S$190,000
LLC examples in Singapore
LLC in Singapore has certain obligations. You need to hire a Corporate Secretary and file annual returns to ACRA. However, the company regitration is fairly simple and fast, a foreigner can own 100% of the company, there is only one resident director required, and the paid capital can be as low as S$1.
For example, you want to start a cupcake shop. You plan to get a loan from a bank, equip a prep kitchen, hire a few cooks, cater to special events and so on. You choose a name "Cupcakes are Life Pte Ltd", check with ACRA that the name is available, collect necessary documents and register your company.
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