To incorporate or not to?

[deanloh]

Hello people

This topic has been discussed perhaps a million times, somehow, I couldn't find them when I need the answers so much. If there are already threads in the forums that are relevant to this, please direct me there.

Otherwise, here I go again...

I had been designing websites for people for the past 14 months -- on freelance basis. Can't say it's fantastic, but my total billing has exceeded 20k, helped a great deal in clearing off my credit cards, and paid some bills.

More gigs are coming in lately, and I'm starting to give this a serious thought: about moving to next level.

Let me tell you more. Presently I'm holding a contract job, which expires end of this year. I'm not concerned if it will be extended. Not because I dont like the job (actually its related to what I'm doing anyway - webmaster), more like, I don't fancy holding a job at all. After two retrenchments in the past, I stopped believing in "job for life".

On top of that, my PR status is coming to due soon (Oct 2006), my understand is: in order to extend my PR status, I have to remain "employed", at least during renewal period. So the best job security I can find is the one I give myself.

Question is: should I register my business as a sole proprietor, or should I incorporate it (I also understand that it is possible to start a company in Singapore with one director).

I have talked to several people who help others set up company, their opinions vary -- some recommended me to go inc (ironically, they themselves are sole-prop), and some suggested that sole-prop is good for a start.

Now, I would like to hear this from people who have gone through this path, and tasted the outcome of their decision. If you had been in where I'm at now, please share your thoughts with me. Your time is greatly appreciated.

Cheers.

[Strong Eagle]

I think it depends where you want to go with this.

As a sole proprietor your reporting requirments are easier and you don't have to fool with director's resolutions and such to do things like opening a bank account. A private limited will be more costly to setup and maintain.

As a sole proprietor, you have no legal protection since you and your business are one legal entity. If you have assets, you would want to protect them from being sued. With a private limited, you are separated from the liabilities of your company, a very meaningful thing if you have assets.

If you are thinking of growing your company a private limited is more "professional" with respect to obtaining funding and presenting yourself to the world.

I think you need two directors. However you can rent a director if you can't find anyone. If you do find someone, and they will not be active in your company, make sure they sign a letter of resignation in advance. Directors have a lot of power... you want to let him/her go if things don't go right.

[ringo100]

The size of your business and very low tax in Singapore means it doesn't make much difference. A limited company maybe more expensive. In terms of Limited liability, any bank or creditor would ask for a personal guarantee if you wanted to raise finance anyway.

If you were in the UK I would say go as Ltd but here it is cheaper not to; if you get bigger become ltd. It is not binding. I think the size of your company now just requires one director and one company sec (who must be different).

Good luck.