Before you register anything, you have to pick a business structure — and it shapes your taxes, your personal risk, and how serious your business looks to banks and clients. In Singapore, three options cover almost everyone: Sole Proprietorship, Limited Liability Partnership (LLP), and Private Limited Company (Pte Ltd). Here's how they actually differ, and how to choose.
The quick comparison
| Sole Proprietorship | LLP | Private Limited (Pte Ltd) | |
|---|---|---|---|
| Separate legal entity? | No | Yes | Yes |
| Personal liability | Unlimited — your assets are exposed | Limited (protected from partners' actions) | Limited to what you invest |
| Taxed at | Your personal income rate (0–24%) | Partners' personal income rates | Corporate tax, flat 17% (with exemptions) |
| Owners | 1 owner | 2+ partners | 1–50 shareholders |
| ACRA cost to set up | ~S$115 | ~S$115 | ~S$315 |
| Ongoing compliance | Light | Moderate | Heavier (secretary, annual return, AGM) |
| Eligible for most grants? | No | Limited | Yes |
| Best for | Freelancers, low-risk solo work | Professional partnerships | Most real, growing businesses |
Sole Proprietorship — simplest, but you carry all the risk
A sole proprietorship is the cheapest and fastest to set up, with the lightest ongoing admin. For a freelancer, consultant, or very small side operation with low financial risk, it's often a sensible starting point.
The catch is the big one: it is not a separate legal entity, so you are personally liable for every business debt. If the business owes money or is sued, your personal savings, home, and assets are on the line. You're also taxed on the profits at your personal income tax rate (which climbs to 24% at higher incomes), and you generally can't access most government grants, which require an incorporated company.
Registration costs around S$115 and must be renewed (about S$30/year) to stay active.
LLP — a partnership with a liability shield
An LLP is a hybrid: it works like a traditional partnership (two or more people running a business together) but is a separate legal entity, so partners get limited liability — you're generally not personally on the hook for another partner's negligence or the LLP's debts.
Profits are taxed at each partner's personal income tax rate, not the corporate rate. Compliance sits between a sole proprietorship and a Pte Ltd. In practice, LLPs suit professional partnerships — law firms, accounting practices, architecture and consultancy setups — where several principals want to share a business but ring-fence personal risk. Setup is around S$115.
Private Limited Company (Pte Ltd) — the default for real businesses
A Pte Ltd is a separate legal entity with limited liability: creditors can pursue the company's assets, but not your personal ones (barring fraud or personal guarantees). It's the structure most Singapore businesses choose, for three reasons:
- Tax efficiency. Companies pay a flat 17% corporate tax — but new companies can claim the Start-Up Tax Exemption (SUTE): for the first three years, 75% of the first S$100,000 of chargeable income and 50% of the next S$100,000 are exempt. On meaningful profits, that can save tens of thousands versus being taxed at personal rates.
- Credibility. Banks, investors, and larger clients take a Pte Ltd more seriously — and most grants (PSG, EDG, Startup SG) require an incorporated company.
- Continuity and ownership. Shares can be transferred, investors brought in, and the company outlives any one owner.
The trade-off is more compliance: you need a company secretary, must file an Annual Return each year, and have corporate tax filings. Setup is around S$315, and ongoing costs are higher — but for most businesses with growth ambitions, the protection and tax treatment are worth it.
How to decide
A rough rule of thumb:
- Testing an idea, freelancing, low risk, want minimal admin? A sole proprietorship gets you started cheaply — just understand the unlimited personal liability.
- Going into business with partners in a professional field? An LLP gives you partnership flexibility with a liability shield.
- Building something you want to grow, protect, fund, or make credible — or that carries real financial risk? A Pte Ltd is almost always the right call, and it's what most founders land on.
And you're not locked in forever: many people start as a sole proprietor and incorporate a Pte Ltd later once the business proves itself. If you're leaning towards incorporating, our company registration guide walks through the full process.
The honest caveat
Tax rates, exemptions, and fees change, and the right structure depends on your specific situation — risk, income, partners, and plans. The figures above are current as of the verified date below, but confirm with ACRA and IRAS (links below), and consider professional advice for anything material. This is a plain-English overview, not tax or legal advice.