According to statistics research, Singapore is one of the best country in the world for entrepreneurs to start a business due to the politically stable environment, fast and efficient systems, clean and safe environment to live in and most importantly, a company enjoys lower tax rates and exemption benefits for starts-up.
Assuming you have great business ideas and you are ready to kick start your business. What should you do next?
Understand and decide the best business structure is crucial as it will impact the scalability of your business in many ways such as the payment of your taxes, the risks of your exposure to legal liabilities, expansion of your business in looking for investors and partnerships as well as funds raising or borrowing.
To become a new start-up, there are several choices you can look on such as Sole Proprietorship, Limited Liability Partnership and Limited Liability Company.
Most of the start-up choose to incorporate a limited liability company due to the following advantages and features:
1. Legal Liability – A separate legal entity from its members and directors. Every shareholder has limited liability. Shareholders are not personally liable for debts and losses of company. Your personal assets are protected from your company liabilities.
2. Tax Benefits – A limited liability company is entitled to corporate tax benefits and exemptions. New companies that satisfy certain requirements are given full exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next $200,000 of normal chargeable income for the first 3 consecutive years. Also, a company can claim tax reductions for business expenses.
3. Continuity in Law – A company has perpetual succession until wound up or struck off. A company will continue to run despite the shareholder or one of the shareholders passed away.
What happen if you do not incorporate a company from the start?
Limited choices to name your company – Early incorporation helps you to secure the first choice of your company name. By having a secured business name, you can file trademark to legally protect your business brand.
Difficult for scalability and expansion – If you are looking for funding or partnerships or plan to expand your business, it is always better to have limited liability company to have much more transparent and good governance business structure to enhance the credibility and reputation of the company.
Risk of being exposed to personal liabilities – Starting a business idea is exciting but running a business is challenging but rewarding. There are so much legal obligations and liabilities involve when a business transaction is executed. The worst case is end up being sued and appear in the court if the business transaction is not handled diligently with other party. Therefore, it is always safer to have a separate legal entity to protect yourself from unwanted headaches and hassles.
In terms of setting up a company, the procedures and process can be somehow complicated and tedious. To save your time to help you focus on your business, all the daunting tasks and recurring compliance can be outsources to a professional company such as LEGACBLOSSOM. To learn more about the requirements, please feel free to reach us at contact@legacblossom.com
