Private limited company

What is a private limited company?

A private limited company is the most scalable, advanced and flexible business structure in Singapore. It is the most common type of business structure in Singapore.

When you create a private limited company, you are creating a separate legal entity from yourself. It limits your liabilities as an individual – meaning that if your company has a huge downfall (eg. debts or losses) in your business, it will not impact any personal assets that you own.

A private limited company can be 100% foreign or locally owned. There are no foreign shareholding restrictions. 

Advantages of a private limited company

Owning a private limited company can be worthwhile for one, in terms of tax benefits. Here are a few advantages:

  • Not personally liable for any debts or losses
  • Profits taxed at corporate tax rates (17%)
  • New companies are entitled to tax incentives and tax exemptions
  • The company is a separate legal entity from its shareholders and directors
  • Ownership can be transferred
  • Ease of raising capital
  • Attractive to outside investors

Disadvantages of private limited company

For some, a private limited company might not be the best option. Below we have listed a few disadvantages:

  • More compliance requirements set out by the Companies Act and enforced by ACRA and IRAS
  • Operating costs are higher (administration requirements etc)
  • Directors must disclose their company’s information (interest in company shares, contracts etc)

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