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Why Form a Private Limited Company?

A private limited company is defined as a legal entity or structure formed under the authority of Singapore Companies Act, consisting of one or more individuals or corporate entities that become shareholders. The entity's existence is considered separate and distinct from that of its members. Like a real person, a private limited company can enter into contracts, sue and be sued, pay taxes separately from its owners, and do the other things necessary to conduct business.

Company formation can be a somewhat complicated process. You may choose to hire a professional services firm specializing in company formation services. 

Some of the advantages of forming a company include:

• Limited Liability. One of the key reasons for forming a private limited company is the limited liability protection provided to its owners. Because a company is considered a separate legal entity, the shareholders have limited liability for the company's debts. The personal assets of shareholders are not at risk for satisfying corporate debts or liabilities.
• Transfer of Ownership. Shares of a company formed under Singapore Companies Act are freely transferable. The existence of a company is not dependent upon who the owners or investors are at any one time. A company continues to exist as a separate entity, and is not terminated or dissolved even when shareholders die or sell their shares. Shares of companies are freely transferable unless shareholders have specific "buy-sell" agreements containing transfer restrictions.
• Taxes. Since a private limited company is a separate legal entity, its taxation is separate from its owners. Owners of a company only pay taxes on corporate profits paid to them in the form of salaries, bonuses, etc. The company pays taxes, at the corporate rate, on any profits.
• Attractive Investment Structure. The built-in stock structure of a company formation makes it attractive to potential investors. It also allows the company to attract talented and key employees by offering them an ownership interest in the form of stock options.
• Perpetual Existence. A company continues to exist until the shareholders decide to dissolve it or merge with another business.