Types of Business Entities To Know Before Starting a Business in Singapore

If you’re starting a business in Singapore, the first major decision you’ll make is selecting the right business entity. This one choice affects how much control you retain, how you’re taxed, your access to funding, and the overall cost to register company in Singapore.

In this guide, we’ll compare the different business entities, their costs, and what they mean for your long-term success. Whether you’re launching a small side hustle or planning to scale a startup, this guide will help you decide what structure fits best.

TL;DR: Choosing the Right Business Entities in Singapore

Not sure which business structure suits your startup dream in Singapore? Here’s the fast track:

• Sole Proprietorship – Simple and cheap, but all risks are on you.
• Partnerships (General, Limited, LLP) – Share risks and profits with partners, but choose wisely.
• Private Limited Company (Pte Ltd) – Best for scalability, credibility, and tax benefits—ideal for ambitious founders.
• Public Company or Subsidiary – Suitable for big ventures or global expansions.

💰 Cost to register company in Singapore? As low as S$115 for a sole prop, or from S$315 for a Pte Ltd.

📌 Pro Tip: Pte Ltd companies are the most flexible and investor-friendly business entities in Singapore.

👉 Ready to start your journey? Get expert help from Grof now.

Why Understanding Business Entities Matters

Before diving into the different types, let’s explore why business structure matters:

• Risk Exposure: Your personal liability is directly influenced by the structure you choose.
• Taxation: Different business entities come with different tax treatment and benefits.
• Compliance Burden: Some structures require minimal reporting, while others demand strict adherence to legal and financial obligations.
• Growth Potential: Raising capital, onboarding partners, and expanding internationally often depends on having the right entity structure in place.
• Cost to Register Company: Initial and ongoing costs vary depending on your chosen business entity.

Types of Business Structures in Singapore

Let’s look at the three most common business entities you can register in Singapore:

‍The other structures you will encounter are variations based on the main types. For instance, general and limited liability partnerships are just variations of partnerships, and the same goes for private and public limited companies, falling under limited liability companies.

Therefore, it is vital first to understand the major types of business structures to be an informed and knowledgeable business owner. Keep reading below for a detailed analysis of each business structure.

What is Sole Proprietorship?

A sole proprietorship is the easiest and cheapest option for individuals who want to operate alone. This business structure does not incorporate complex aspects like compliance reports, and the corporate income will not be subject to regular business taxes. Instead, you must file your business returns alongside personal income tax, as stated by the Inland Revenue Authority of Singapore, IRAS.

Key Features

• Owned by one person

• No legal separation between owner and business

• Profits are taxed as personal income

Pros

• Lowest cost to register company

• Simple to set up and maintain

• Full control over business operations

Cons

• Unlimited personal liability

• Cannot raise investment capital

• Limited credibility with banks and clients

💡 Tip: Ideal for low-risk activities like freelancing or home-based businesses.

What Is Partnership?

When two or more individuals start a business together, they can register one of the following business entities:

Types of Partnerships

Pros

• Shared responsibilities and decision-making

• Low initial cost to register company (S$115)

• Suitable for short-term or joint ventures

Cons

• Liability can vary depending on the structure

• Conflicts may arise between partners

• LLP still requires some compliance (e.g., annual declarations)

Good For: Professional services like law firms, agencies, and consultants.

What is Private Limited Company?

A Private Limited Company is the most preferred structure among high-growth businesses in Singapore.

Key Features

• Separate legal entity from owners

• Liability is limited to the company’s assets

• Taxed under the corporate tax regime (up to 17%)

Pros

• Personal asset protection

• Easier to secure loans and investments

• Eligible for government grants and tax incentives

• High credibility and professional image

Cons

• Higher cost to register company (S$315)

• Requires a corporate secretary, annual filings, and AGMs

• More complex to set up and manage

👉 Learn more: Check out our guide on how to register a Private Limited Company in Singapore.

Which Business Structure Should I Choose?

Not sure which structure fits you best? Here’s a quick breakdown based on business type:

Conclusion

There are various business structures you can choose from when starting a business in Singapore. Each of these business structures has its unique traits and characteristics. Additionally, they also have certain limitations and requirements.

The best business structure depends on your personal preference, skill set, and the kind of business you want to run.

Contact us today if you want to start a business in Singapore so that we can assist you in all your company administrative tasks.