Going Private
Unlimited liability, reduced amount of capital available for investment, and no continuity of business in case of demise are just some of the several reasons that can prompt a sole proprietor or a partnership to convert into a private limited company, abbreviated as “Pte Ltd Company”.
If you are in search for a team of qualified company secretarial service professionals who are capable of leading your way through a hassle-free conversion – We are just the people you need.
What are the benefits?
In most cases, for converting partnership or sole proprietor to Pte Ltd has many advantages.
1. Separate legal entity – Under the Singapore Companies Act, Chapter 50, a “Pte Ltd Company” has a separate legal entity, and its member has limited liabilities.
As a sole proprietor, since your business has no separate legal identity, you are financially and legally responsible for all losses and debts incurred.
In the case of a limited liability company (i.e. Pte Ltd), you can limit your liabilities and can protect your assets.
2. Tax benefits – As a Private Limited company, you enjoy tax incentives, tax exemptions and tax deductions.
There are many tax schemes available to assist your business.
3. Tax-exempt dividend – As a Pte Ltd, the company pays tax to IRAS, and the shareholders receive tax-free dividends.
4. Firm reputation – It helps improve your firm’s public image and ensures that your company continues to exist upon your demise.
5. Recruitment – You can attract and recruit high-quality talents to your company.
6. Raise capital – You can raise capital sources from investors to expand the business and fund the operations.
All in all, converting your sole proprietorship into a private limited company allows your business to adopt a more flexible, expansive and acceptable business structure in Singapore.
How a Local Accounting Firm assists the company
While the exact detailed procedure of converting a sole proprietorship or limited liability partnership to a Pte Ltd Company may differ depending on the specifics of your business.
Below are the fundamental steps for conversion in Singapore.
1. Register Your “Pte Ltd Company” via ACRA
To begin the conversion process, the owner must first and foremost register a new entity name with ACRA.
In case you wish to retain your previous name, a No Objection Certificate must be submitted to ACRA.
You also need to provide the details of the existing business and the date of termination of the old business.
2. Transfer of assets and liabilities, and all contractual agreements
The most time consuming and complicated areas are the transfer of all assets and liabilities of the partnership or sole proprietor to the newly registered entity.
These are inclusive of all bank accounts, office licenses, contract agreements, permits, etc. Lease agreements for rented premises, machinery, tools, etc. must be re-signed.
After the closure of the previous bank account, a new corporate account for the Pte Ltd Company must be opened.
3. Termination of Sole Proprietorship or Partnership
Within three (3) months of registration, owner of the old sole proprietorship or partnership must terminate all activities and issue a Notice of Cessation to ACRA, confirming the cessation of all work of the sole proprietorship or partnership.
Our Advice
The structure of a Pte Ltd Company is more complicated than a Partnership or a Sole Proprietorship.
The conversion is not straightforward and requires careful planning and professional guidance (on issues associated with transferring business matters) from a local accounting firm in Singapore.
It is highly recommended to seek professional assistance on this conversion.
Should you need assistance or would like to find out more about Company Conversion services in Singapore, please send an email to Contact@AccountingSolutionsSingapore.com, and our business advisor will contact you.