A sole proprietorship is a business that is individually owned and controlled. There are no partners in the business; income and expenses are earned and recognised in the name of the individual i.e. all expenses incurred in the process of earning that income can be recognised.
Facts about a sole proprietorship
- Can sue and be sued in its own name
- Unlimited liability from the business owner
- Not a separate legal entity from the business owner
The income of a sole proprietor is typically recorded in the name of an individual.
Limited Liability Partnership
An LLP is a vehicle for doing business in Singapore. An LLP allows for partners to work on a business together while maintaining a separate legal entity away from the business.
Facts about an LLP:
- Sue and be sued in its name
- Acquire and hold property in its name
- Have a common seal in its name
- Doing other acts and things in its name, as bodies corporate may lawfully do and suffer
Partners will not be held liable for any debts incurred by the LLP. An LLP is required to keep accounting records including profit and loss and balance sheet accounts.
Private Limited Company
A private limited company is one of the most popular vehicles for doing business in Singapore:
- Separate legal entity
- Limited liability
- Perpetual succession
- Ease of raising capital
- Ease of transferring ownership
A private limited company is able to go into contracts, own assets, sue and be sued in its own name. It is also easy to “spin-off” businesses through a private company.
Which type of business entity is suitable for you?