Sole proprietorship vs LLP vs Pte Ltd — Documents required and templates

Sole proprietorship vs LLP vs Pte Ltd is the first structural decision most Singapore founders face. A sole proprietorship is the simplest but offers no separate legal personality; a limited liability partnership (LLP) gives partners limited liability with pass-through flexibility; and a private limited company (Pte Ltd) is a separate legal entity with the strongest liability protection and the widest access to tax incentives.

Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.

Sole proprietorship vs LLP vs Pte Ltd at a glance

A sole proprietorship is owned by one person (or one company) and is registered under the Business Names Registration Act 2014. It is not a separate legal entity, so the owner is personally liable for all debts and is taxed at personal income-tax rates. An LLP, governed by the Limited Liability Partnerships Act 2005, is a body corporate with perpetual succession in which partners are generally not personally liable for the wrongful acts of other partners. A Pte Ltd is incorporated under the Companies Act 1967 as a separate legal person that can own property, sue and be sued in its own name, and whose shareholders’ liability is limited to their unpaid share capital.

Choice of structure also affects how you hire and bring in overseas talent; see our note on S Pass approval tips for employers. Families layering investment vehicles above an operating company should read family office MAS approval, annual review and audit.

Who each structure is for

A sole proprietorship suits a low-risk solo trade with modest turnover where simplicity matters more than protection. An LLP suits professional partnerships — law, accounting, consultancy — that want internal flexibility with limited liability. A Pte Ltd suits almost any business that intends to raise capital, take on meaningful liability, hire foreign staff, or benefit from corporate tax exemptions and incentives.

Liability, tax and requirements

Section 19 of the Companies Act 1967 establishes that on incorporation a company becomes a body corporate with the powers of a natural person, which is the source of a Pte Ltd’s separate legal personality and limited liability. A Pte Ltd is taxed at the flat corporate rate of 17% and may claim the start-up tax exemption and partial exemption; a sole proprietor’s profits are taxed at personal rates up to 24%. An LLP is tax-transparent — each partner is taxed on their share. Every Pte Ltd must appoint at least one director ordinarily resident in Singapore and a qualified company secretary within six months.

Cost and timeline

ACRA fees are modest: a sole proprietorship name application costs S$15 and registration S$100 per year; an LLP registration costs S$100 plus a S$15 name fee; a Pte Ltd incorporation costs S$300 plus the S$15 name application. Registration is usually approved within 15 minutes to a day once names and documents are in order, though cases referred to another authority take longer. Professional set-up fees for a Pte Ltd, including nominee-director and secretary arrangements where needed, commonly run S$800 to S$2,500 in the first year. For a related walkthrough, see our structure eligibility checklist.

Documents required and templates

For a sole proprietorship or LLP you need the owner’s or partners’ identification, a local business address, and a description of activities. For a Pte Ltd you need the company constitution, particulars of directors, shareholders and the company secretary, the registered office address, share-capital details and beneficial-ownership information for the register of registrable controllers. We maintain templates for the constitution, first board resolutions, share certificates and registers.

Common mistakes and gotchas

Founders often pick a sole proprietorship for cheapness and later discover they cannot sponsor an Employment Pass efficiently, cannot ring-fence liability, and pay more personal tax as profits grow. Converting later to a Pte Ltd is possible but means novating contracts, reopening bank accounts and re-registering for GST. Choosing correctly at the outset is almost always cheaper.

Authority sources

Confirm registration requirements with the Accounting and Corporate Regulatory Authority, tax treatment with the Inland Revenue Authority of Singapore, and employment obligations with the Ministry of Manpower.

FAQs

Which structure has the lowest tax?
A Pte Ltd is usually most efficient once profits grow, thanks to the 17% flat rate and start-up exemptions; a sole proprietor is taxed at personal rates up to 24%.

Can a foreigner own a Pte Ltd?
Yes, 100% foreign ownership is allowed, but the company needs at least one locally resident director.

Is an LLP the same as an ordinary partnership?
No. An LLP is a body corporate with limited liability; an ordinary partnership exposes partners to unlimited joint liability.

Can I convert a sole proprietorship to a Pte Ltd later?
Yes, but it requires a fresh incorporation and transfer of the business, contracts and accounts.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.