Sole proprietorships are the simplest form of business entities with only one owner who acts as the decisive authority, is responsible for all assets, and is liable to all obligations regarding the business.
Sole Proprietorships may be registered by Singapore citizens or permanent residents, and individuals with employment pass or entrepass. Foreign individuals and companies may also register a sole proprietorship but they must appoint a Singapore resident manager.
Characteristics of a Sole Proprietorship
- Sole proprietorships are not a separate legal entity, therefore its profit is taxed at personal income rate.
- Business owner has unlimited liability
- Sole proprietorships cannot own property
|– Easy and cheapest to set up and close – Owner has undivided authority and control – Easy to manage as there are fewer compliance requirements – All profits generated by the business will be taxed at personal income level||– Owner’s assets are risk due to nature of unlimited liability – Do not receive same incentives as companies as earnings are charged at personal income rates – Business is identified by the owner only (no continuity after death of owner and not transferable) – Due to dependency on sole owner, it is more difficult to raise funds through loans from institutions or investors – Do not enjoy the same tax exemptions and rebates that corporations enjoy|
What you need to set-up
Some necessary documents and information:
- Proposed business name
- Description of principal activities
- Singapore registered office address
- Local residential address of sole proprietor and their
- Declaration of compliance and statement of non disqualification
Registration procedure involves a) reserving the name; and b) registration of the business. The registration procedure is computerised and quick. If the name or the nature of business requires referral to another authority, it may take up to a few weeks. Otherwise, registration of sole proprietorship can be completed within 1 day, provided all the documents are lodged properly with due endorsements.
Once business registration for the sole proprietorship has been done, an email confirming the registration will be sent by ACRA along with the registration number. Thereafter, you can retrieve your business profile for the new Sole Proprietorship which contains important registration information.