Private Limited (Pte Ltd) vs Sole Proprietorship vs Unregistered: A 2024 Update
It’s a common question often asked by many in Singapore, not just by those who are just starting out, but even by those who are already running a successful business. Here’s an updated guide for 2024.
Costs and Considerations
Besides different risk variants, the cost of registration is a significant factor, especially for those with limited capital. Here are the current registration costs:
- Private Limited: $300
- Sole Proprietorship: $100
- Unregistered: Free
Assessing Your Business Needs
The key question to ask yourself is: How big do you want to go today?
If you’re starting with a new product or service, alone or with a partner, it’s often best to begin as a Sole Proprietor. This allows you to reserve a business name and operate in a business manner without high initial costs. Remember, every dollar earned must be declared in your annual income tax, even if your business is unregistered.
Realities of Business Registration
Registering your company and announcing yourself as a business owner is just the beginning. The real challenge lies in gaining sales, servicing clients, and ensuring timely payments. Successfully converting prospects into paying clients is a significant milestone.
Payment and Risk Management
- Upfront Payments: Asking for 100% upfront might seem ideal, but it’s often unrealistic.
Many challenges can arise in managing sales and payments. What if things don’t go as planned?
Simplifying Risk
Pte Ltd: A Private Limited company is a limited liability entity, meaning you and the company are separate entities. If the business fails, you can dissolve the company without personal bankruptcy.
Sole Proprietorship: As a sole proprietor, you are the business. If the business fails, you are personally liable for all risks.
Conclusion
Reflect on your business model:
- How will you generate revenue?
- Who is your target market?
- What risks are you willing to take?
If undecided, start as a Sole Proprietor while you strategize. Many successful entrepreneurs began this way, and it’s better to start and evolve than to delay.
Subscribe to stay updated on risk vs reward strategies. Share your stories with me. Let’s strive for excellence for ourselves, our families, and our community.