One of the most vital concerns in setting up a business is deciding on the appropriate type of business entity. Entrepreneurs should be able to choose the right business structure because it is considered as an essential tool for a companys success. For those who are considering Singapore as their new business location, read on this article as we are going to provide you the basic information of the common types of business found in Singapore.

Sole Proprietorship is suitable for small businesses that have negligible or no risks. Sole proprietors are the decisive authority and owner of all assets and liabilities belonging to the business.

Limited Partnership requires a minimum of two partners and maximum of 20. The business must have a minimum of at least one active (general) partner and one dormant (limited) partner. This is suitable for low risk, low profile businesses. The partners are responsible for all liability and the earnings are taxed according to the partners personal tax rate.

Limited Liability Partnership or LLP is a perfect blend of partnership setup and private limited company. This type of entity has been allowed in Singapore since 2005, following a widespread recognition of this entity type in other developed economies around the world.

Private Limited Company is a locally incorporated company in Singapore. The name of the business includes the term Private Limited or Pte Ltd. The number of shareholders cannot exceed 50. 100% foreign ownership is allowed, but must have a citizen or a resident or an employment pass holder as the local director.

Singapore Representative Office - A foreign company interested in establishing operations in Singapore may explore the prospects first by establishing a Representative Office (RO). It is an ideal way to assess opportunities prior to making any long term or large-scale commitment. RO are not allowed to engage in commercial revenue-generating activities.

Singapore Branch Office - A foreign company that is registered outside of Singapore but have substantial operations in Singapore, which generates income on a continual basis, must register as a Branch Office in Singapore as per Singapore Companies Act. The Branch Office is an extension of the foreign company without a distinct legal identity.