If you are a start-up entrepreneur who has a world-changing creative idea, it is important to find a way to execute and turn that idea into a viable business. For you to unveil and execute your business idea, the most common vehicle is having a corporate entity. The importance of incorporation usually has to do with the advantages that come with incorporating a business. Advantages such as personal asset protection, tax benefits, and opportunities for raising capital.
In Singapore, there are different types of business entities with unique features and each is subject to annual regulatory compliances. Different tax rates are applicable based on their entity structure. As a start-up entrepreneur, you must ensure that your chosen corporate entity is set up properly and in a timely manner by seeking incorporation services to protect yourself from business liabilities.
Incorporating your business
Below are 5 key points explaining why you need to consider incorporation services for your business start-up to thrive in Singapore, including the risks involved in operating an unincorporated business.
Protects Your Business from Liability
Incorporating a business creates a protective bubble around shareholders and directors. This bubble is known as the “corporate veil”. It allows corporations to stomach various risks. Without this bubble, the directors and shareholders would be exposed to personal financial liability beyond their investment in your business.
This personal liability protection does not exist for unincorporated businesses because creditors can use your personal finances and personal property including homes, savings, vehicles, and many others to recover debts. However, if you incorporate, owners of corporations can conduct business without risking their personal property since an incorporated business and its owners are separate entities.
Enjoy Tax Advantages
Corporations are taxed differently than other business structures and individuals in Singapore. Click here to view our article on corporate tax. If you incorporate your business, a number of tax deductions for various operating costs will substantially reduce the overall tax liability of your company. Some of these deductions may take account of:
- Employee salaries;
- Insurance costs;
- Production costs;
- Raw material costs;
- Business travel expenses;
- Retirement plan costs;
- Entertainment expenses, etc.
In Singapore, it’s more cost-effective to pay corporate taxes because wealthy individual taxpayers fall into higher tax brackets compared to a number of corporations.
Improves Your Management Capacities
In addition to the fact that incorporating your business makes it easier to raise the required capital, the setup also gives you an improved management structure. Since decision-making is centralized, with authority vested in the Board of Directors, shareholders find it more attractive because they won’t be held personally liable for any wrongdoing from previous owners.
When it comes to operating an unincorporated business in Singapore, your decision-making authority and power structure is not well defined, and therefore, co-owners or employees might manipulate your decisions. This lack of structure will considerably affect your ability to manage the operations of your business. Incorporation centralizes your management structure and significantly eliminates this risk.
Boosts Business Credibility and Brand Image
Incorporating your business enhances its credibility because people usually view corporations as serious, long-term commitments. The corporate identifiers used to name incorporated companies, such as “Pte. Ltd.” or “Ltd.” can convey a sense of long-term stability, permanence, and trustworthiness. Investors, banks, and other stakeholders are more attracted to corporations when it comes to external financing.
Establishes Long-lasting Existence and Ownership Transfer
Transfer of ownership and shares to other parties is usually effortless for corporations when existing owners leave or pass away. This ease of transfer contributes to the uninterrupted existence of corporations, which avoids legal tussles associated with transfers in other business structures. Conversely, the withdrawal or death of an owner in unincorporated businesses can greatly disrupt the existence of your business and the smooth flow of operations.
Why Choose Tianlong for your Incorporation Services?
Tianlong Services is a local firm in Singapore with highly competent professionals. We have the relevant expertise of company incorporation, corporate secretarial, accounting and payroll services. We strongly believe that expensive start-up fees should not be a deterrent for aspiring entrepreneurs. A shoutout to feedspot’s blog, where we got featured as a top 100 Singapore’s blog. They are doing marketing for bloggers to grow their blog and website.
Thinking of self-incorporating?
You can log in to bizfile to self incorporate your company. There is a government fee of S$315 involved – S$300 for registration of a company and S$15 for application of company name. However, you may need to prepare some documents and information ready before you can incorporate a company. Click on the link below to download our checklist for free.
Most importantly, we are able to help our clients to incorporate their companies hassle-free within a few hours. We are a reliable service provider willing to go the extra mile to help you incorporate your start-up company by offering the best incorporation packages to help kick-start your business. You may want to consult with our tax and legal professionals when you decide to incorporate. This will ensure you are maximizing your advantages.
Our clients appreciate and value us because we are always just one phone call away for an advance appointment to help you.
Click here to contact us for the incorporation of your start-up!