All companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and run by the Companies Act, Chapter 50. While there are five various entities to select from, namely sole proprietorship, partnership, company, limited liability partnership, and limited partnership; the greatly common and uncertain choice is to set up a firm in Singapore.
The apparent advantage is that a company in Singapore is limited by shares and is a distinct legal entity from its shareholders. It is recognized as a taxable entity in its liberty. As an outcome, shareholders of a company in Singapore are not responsible for its deficits and casualties beyond their amount of share capital.
Thus, those ready to kick-start their businesses as entrepreneurs must register a company first; the main provisions for which include:-
- At least one shareholder
- One inhabitant director (maybe an inhabitant, permanent resident, EP owner, or Dependent Pass holder)
- As the corporation compels one shareholder and one inhabitant director, it can be the same individual. But it’s constantly advisable to opt for at least two directors as banks and additional financial organizations usually compel two signatories.
- One company secretary or Singapore secretary services
- Introductory paid-up share capital of at least S$1.
- A bodily Singapore office address.
If all the above constraints are fulfilled, a crucial judgment is the number of initial shareholders and the shareholding structure of the firm.
If the corporation has an additional than 20 but less than 50 shareholders, it’s named a private company. If the quantity of shareholders exceeds 50, it comes to be a public company.
Eventually, if the quantity of shareholders is 20 or less, with no company holding any profitable interest in the corporation’s shares, it is recognized as an Exempt Private Company (EPC).
The incorporating process for all three kinds of corporations – private, public, and EPC, is similar.
Advantages of an EPC
EPC is nowadays the most common and preferred kind of business body in Singapore because of the fewer compliance laws, additional independence in financial loan actions, and tax-exemptions consented in the start-up phase.
1. Fewer Compliance Requirements
Greatly, the existing legislation exempts EPCs, with an annual turnover of smaller than S$10 million and is solvent, from annual audit and accounts submission statutes. Instead, they barely have to deliver a solvency declaration approved by the corporation director(s) and Singapore secretary services in the prescribed form. When it comes to compliance, it’s utmost for your business to retain. And that can only be done with an up to date secretarial services like as offered by Timcole.
Another preference that an EPC has is to fulfill its unaudited accounts to the registrar and ACRA.
Importantly, an Exempt Private Company is still required to maintain proper accounting records, formulate and present financial statements in compliance with the Companies Act and the Singapore Financial Reporting Standards (FRS). However, they are not compelled to file financial statements.
2. Higher tax privileges
Apart from saving on the expensive compliance payments, a newly-set up EPC is provided tax exemptions under the Start-up Tax Exemption (SUTE) strategy.
As per this strategy, tax exemption is provided to start-ups on ordinary chargeable earnings of up to S$200,000 for each of the first three successive years of their undertaking.
- For the first S$100,000, after 75% liberty, the released amount is S$75,000
- For the following S$100,000, after 50% exemption, the exempt proportion is S$50,000
- Therefore, the entire exempt proportion for revenue up to S$300,000 is S$125,000
3. Extra Financial Loan Activities Freedom
Furthermore, as regards financial loan actions, EPCs celebrate an enormous grade of sovereignty as compared to other kinds of firms. They have extra flexibility in the directions of handling capital as deemed fit in the ever-changing business sensibilities.