Singapore has remained one of the top economies in the world. This is because it houses almost all the biggest corporations from every industry. Aside from these big corporations, it is also welcoming of small and start-up businesses. The Singaporean economy is so diverse that you can find any kind of business here. That is also the reason why there are different types of businesses that you can build in Singapore.
When you set up company in Singapore, one of the steps is to determine the type of your business. When you want to incorporate company in Singapore, the business types to choose from are sole proprietorships, partnership, and limited liability partnership. However, one of the types that are more convenient when you set up company in Singapore is the exempt private company.
What is an exempt private company?
An exempt private company is a type of business that needs reduced requirements when you set up company in Singapore. It also offers more financial loan activities and sometimes tax exemptions. The current Singaporean government allows you to incorporate company in Singapore as an exempt private company even with less than S$10 million annual turnovers. A company would just have to submit a solvency declaration signed by the company directors and secretary to be able to incorporate company in Singapore.
An exempt private company in Singapore only allows up to 20 shareholders in the company. These shareholders are also prohibited to be fulfilled by corporations. Once you incorporate a company in Singapore that is under the EPC category, it would be exempt from statutory audit requirements from the government to protect shareholders. However, the government is allowed to own an EPC. EPCs are still required to maintain proper accounting records and prepare financial statements as per government requirements. In this article, let us talk about the 5 benefits when you set up company in Singapore that is categorized under EPC.
Benefits
#1 Liability of shareholders
When you incorporate company in Singapore, you are required to have shareholders. In an EPC, shareholders are only liable to their investment shares. This means that if the company is driven to liquidation, the assets of these shareholders will be safe from being seized for paying necessary debts. Other types of businesses hold their shareholders accountable and will also be at risk of losing their assets when the company is forced to liquidate.
#2 Loan extensions to directors
Exempt private companies also have more autonomy and freedom when it comes to loans. They can offer loan extensions to their directors. While non-EPCs are not allowed to do this unless requirements are met and settled.
These kinds of loans are important especially for startups as they would be able to provide continuity to business operations. It cost a lot to incorporate company in Singapore that is why a huge amount of financial resources is needed.
#3 Exemption to corporate tax
Under the Start-Up Tax Exemption Scheme, newly built EPCs are exempted from corporate taxes. This is given to help the entrepreneurship spirit and support the growth of local companies in Singapore. This benefit would encourage more individuals to set up company in Singapore. From the year 2020, EPCs will get a 75% tax exemption on the first SGD 100,000 which will play a great part in helping companies.
#4 Filming of simplifies annual returns
The Singaporean government has also simplified the process of filing annual returns of EPCs. This move is still to encourage and provide a helping hand to interested individuals to incorporate company in Singapore. They must be able to meet the requirements below:
- FYE falls on or after August 31, 2018;
- the company should not be preparing audited financial statements and should not be obliged to file them;
- no changes in the past information submitted to ACRA.
#5 Potential audit exemption
There are many types of EPCs and some are categorized as small businesses. These kinds of businesses are potentially qualified for an audit exemption. They must be able to satisfy the following criteria:
- Private company in the fiscal year in question
- Meet two of these requirements: has an annual profit of not more than SGD 10 million, has a total asset of not more than SGD 10 million, and employees not more than fifty personnel
Need help?
It is relatively easy to incorporate company in Singapore, however, first-timers might find it confusing. There are many third-party firms in Singapore that can help you with your needs from the incorporation process up to the operations. WLP Group is one of the most efficient and reliable service providers in Singapore. Visit us today and book our services for more convenient business operations.
