Choosing a business structure in Singapore comes down to four trade-offs: how exposed your personal assets are, how you are taxed, how much you must file each year, and how credible you look to banks, clients and investors. This is the working version of what we tell clients — a plain comparison of the private limited company (Pte Ltd), the limited liability partnership (LLP) and the sole proprietorship, with the current ACRA and IRAS figures.

The three structures at a glance

Singapore offers three common structures for an operating business: a private limited company (Pte Ltd), a limited liability partnership (LLP) and a sole proprietorship. The Pte Ltd is the default for any business with growth ambitions, external investors or meaningful liability exposure. The LLP suits professional partnerships that want shared ownership without entity-level tax. The sole proprietorship is the cheapest and simplest to set up, but the owner is personally on the hook for everything.

The choice is rarely about today’s cost — it is about who bears the risk, how profits are taxed as you scale, and how easily you can bring in partners or capital later.

Side-by-side comparison

The table below summarises the differences that matter most when deciding. Figures are from ACRA and IRAS as at 17 June 2026.

Legal status and liability: who is personally on the hook

Liability is the single biggest reason to incorporate. A Pte Ltd is a separate legal entity, so shareholders have limited liability — their risk is capped at what they put in, and the company exists until it is formally wound up or struck off. The business owns its own debts.

An LLP is also a separate legal entity. Per ACRA: “You are not personally responsible for debts caused by other partners. However, you are liable for debts from your own wrongful actions.” So an LLP partner is shielded from a co-partner’s mistakes but still personally liable for the consequences of their own.

A sole proprietorship is not a separate legal entity. The owner has unlimited liability for all business debts and losses — personal savings, property and other assets are exposed if the business cannot pay. There is also no perpetual succession: the business continues only while the owner is alive and chooses to keep it going.

How each structure is taxed

The three structures sit on three different tax bases: corporate, pass-through and personal.

Pte Ltd — corporate tax, with exemptions

A Pte Ltd is a separate taxable entity taxed at the headline rate of 17% flat on chargeable income. Singapore runs a single-tier system, so dividends paid to shareholders are not taxed again. Two exemptions soften the early years:

• Start-Up Tax Exemption (SUTE): 75% exemption on the first S$100,000 of normal chargeable income plus 50% on the next S$100,000 — up to S$125,000 exempt per YA — for each of the first 3 consecutive YAs. Qualifying conditions apply (incorporated in Singapore, tax resident, no more than 20 shareholders with all individuals or at least one individual holding ≥10% of ordinary shares; investment-holding and property-development companies are excluded).
• Partial Tax Exemption (PTE): from the 4th YA (and for companies not on SUTE) — 75% on the first S$10,000 plus 50% on the next S$190,000, up to S$102,500 exempt per YA.

LLP — pass-through (tax-transparent)

An LLP is not taxed at the entity level. IRAS treats it as a partnership: each partner is taxed on their share of LLP income — individual partners at personal income tax rates, corporate partners at corporate rates. The LLP still files an annual income tax return (Form P) to report income and deductions, but pays no tax itself.

Sole proprietorship — personal income tax

Profits are taxed at the owner’s personal income tax rates. There is no corporate-tax shelter and no SUTE — every dollar of profit is the owner’s assessable income.

Note that GST applies regardless of structure: registration is compulsory once taxable turnover exceeds S$1 million, and the current GST rate is 9% (since 1 January 2024). The registration test wording should be confirmed against IRAS for your specific facts.

Compliance burden: what you must file each year

Compliance scales with the protection you get. The Pte Ltd carries the heaviest annual obligations; the sole proprietorship the lightest.

• Pte Ltd: must appoint a company secretary within 6 months of incorporation (the secretary cannot be the sole director), and have at least one director ordinarily resident in Singapore. A private company must hold its AGM within 6 months after financial year end and send financial statements to members within 5 months of FYE (AGM is exempt if those statements are sent within 5 months). Annual returns are filed with ACRA. An audit may be required unless the company qualifies for the small-company exemption (see below).
• LLP: the manager must lodge an annual declaration of solvency (LLP Act s.30(1)) — the first within 15 months of registration, then once per calendar year and within 15 months of the previous one. The LLP keeps accounting records but need not lodge financial statements or annual returns with ACRA. Add the IRAS Form P, and the burden is real but lighter than a company’s. Late lodgement of the declaration is an offence, with a fine of up to S$5,000 on conviction.
• Sole proprietorship: renew the registration for a 1-year or 3-year period (the 3-year option requires no outstanding CPF MediSave contributions, or an active GIRO plan with a good record). You can renew up to 60 days before expiry; registration may be cancelled 60 days after expiry, and carrying on business after expiry is an offence.

Pte Ltd audit exemption

A private company is exempt from audit if it qualifies as a small company: it must be a private company and meet at least 2 of 3 criteria for the immediate past 2 consecutive FYs — (a) total annual revenue ≤ S$10 million; (b) total assets ≤ S$10 million; (c) ≤ 50 employees. Corporate shareholders no longer disqualify a company from this exemption. See our note on the small company audit exemption.

Setup and ongoing cost: cheapest is not always cheapest

On paper, the sole proprietorship wins on cost. Registration is S$115 for a 1-year term (S$15 name application + S$100 registration). A Pte Ltd costs S$315 to incorporate (S$15 name + S$300 incorporation).

But the headline fee understates the Pte Ltd’s true running cost: a corporate secretary, annual return filing, and often accounting, tax and (if not exempt) audit support. The trade-off is straightforward — you pay more for limited liability, lower effective tax once you scale, and the credibility that opens doors with banks and investors. For a business with any real revenue or risk, the protection usually outweighs the admin.

Raising capital and credibility

Investors and banks strongly prefer a Pte Ltd, because shares give a clean, transferable way to allocate ownership, bring in new investors and grant equity to staff. An LLP can admit new partners but has no share structure for outside equity. A sole proprietorship can only draw on the owner’s own funds and borrowing. If you expect to raise a round, issue an ESOP, or onboard a co-founder with defined equity, the Pte Ltd is the only structure built for it.

When each structure suits which founder

• Pte Ltd — founders building a scalable business, hiring, taking on customer or supplier liability, planning to raise capital, or wanting to ring-fence personal assets. Also the right choice if you intend to sponsor work passes or sign material contracts.
• LLP — professional partnerships (for example consultancies or practices) where two or more principals want shared ownership and protection from each other’s liabilities, with pass-through taxation and lighter filing.
• Sole proprietorship — solo operators testing an idea, freelancers, or low-risk side businesses where simplicity and cost matter most and liability exposure is genuinely small.

If you are a foreigner weighing your options, see our incorporation guide for foreigners for the residency, director and work-pass considerations that shape the choice.

Converting a sole proprietorship into a Pte Ltd

There is no formal “conversion” transaction from a sole proprietorship to a company. The statutory conversion routes into an LLP are open only to a general partnership (firm) or a private company — a sole proprietorship has no statutory conversion route into either an LLP or a company. To move from sole proprietorship to Pte Ltd, you:

1. Incorporate a new private limited company via Bizfile using Singpass (S$15 name application + S$300 incorporation).
2. Transfer the business — assets, contracts and goodwill — across to the new company.
3. Cease or strike off the sole proprietorship once the business has moved.

Appointed officers must endorse their appointments in Bizfile within 60 days. Because contracts, bank accounts, licences and employees all need to move cleanly, this is worth planning with an adviser rather than improvising.

Our recommendation

For most growth-oriented founders, the Pte Ltd is the right structure. It is the only one of the three that combines limited liability, perpetual succession, the 17% corporate rate with start-up exemptions, and a share structure that investors and banks expect. The higher setup fee (S$315) and the annual compliance are a fair price for that protection and optionality.

Start as a sole proprietorship only if you are genuinely testing a low-risk idea and want the lowest cost. Choose an LLP if you are a professional partnership wanting shared ownership with pass-through tax. In every other case — hiring, contracting, raising money, protecting personal assets — incorporate.

How Asprin helps you choose and set up

Asprin is a registered corporate service provider. We help founders pick the right structure for their actual risk and growth plans, then handle the registration end to end — incorporation, the corporate secretary appointment within 6 months, and the ongoing annual filings. A named specialist reviews your case and quotes a fixed fee, with a same-business-day reply. See our incorporation packages and corporate secretary services.

Sources and further reading

• ACRA — Choosing a business structure
• ACRA — Understanding LLPs
• ACRA — LLP annual declarations
• ACRA — Renewing sole proprietorship registration
• ACRA — Appointing directors and company secretary
• ACRA — AGM and annual return due dates
• ACRA — Audit exemptions (small company)
• ACRA — Converting to an LLP
• ACRA — Submitting your incorporation application
• IRAS — Corporate income tax rate and exemption schemes
• IRAS — Tax treatment of partnerships and LLPs
• Asprin — Incorporate a Singapore Pte Ltd
• Asprin — Corporate secretary services