Setting up a sole proprietorship in Singapore is one way of taking advantage of the country’s rich business ecosystem. And, as it turns, this is quite a popular preference, especially now that entrepreneurs from all corners of the globe are increasingly rushing in to join the Singapore bandwagon.
Some of them say that they enjoy the cheap cost of registering a sole proprietorship in SG. Others praise it for its overall simplicity and convenience, which reportedly sets it apart from the rest of the available corporate structures.
Ok, fair enough.
But then again, there are those who consider sole proprietorships to be the riskiest forms of companies in Singapore.
So, which is which? And how do you even register a Singapore sole proprietorship if you choose to try it out?
Well, that’s precisely what this article is all about. It explores the whole concept of a sole proprietorship company, and then walks you through the process of setting up a sole proprietorship in SG.
Therefore, by the end of it all, you’ll have understood all the documents and qualifications you need to register a sole proprietorship in Singapore. And most importantly, you’ll finally make an informed decision on whether to proceed setting up a sole proprietorship in SG, or drop it altogether for a more suitable corporate structure.
What is a Sole Proprietorship?
Going by the name alone, you can tell right off the bat that sole proprietorship is a game of one player.
And that’s literally what it entails. A sole proprietorship is essentially a type of business that facilitates solo ventures. That means the owner single-handedly manages all the business operations, makes all the business decisions, and runs the company alone.
Quite a sharp contrast compared to both Limited Liability Companies and Partnerships, which legally require more than one stakeholder.
And it doesn’t end there. Sole proprietorships in Singapore are so individualistic that you can’t possibly expand the business to accommodate additional stakeholders.
Introducing other parties is only possible after you’ve restructured everything and transformed the business into a legal partnership, or limited liability company.
That, in short, means you should forget about bringing in investors in the near future. You won’t be able to grow your capital by selling a stake in the business.
Another not-so-encouraging fact about sole proprietorships in Singapore is, they come with unlimited liability. Although you’ll pretty much conduct your operations under a business name, the Accounting and Corporate Regulatory Authority (ACRA) won’t recognize the business as a separate entity from you.
You and the business virtually consolidate into one entity. And, as a result, every single business liability translates into a personal liability. Even the business debts and losses that arise along the way will automatically reflect on your personal assets.
Well, of course, that would place you in an awkward position if the sole proprietorship happens to attract legal disputes from its creditors. The Singapore legal system apparently allows creditors to recover their debts by seizing your personal assets.
Hence, you might not want to register a sole proprietorship in Singapore if you’re dealing with a high-risk business.
And that’s not all. Even small and medium-sized enterprises are strongly advised to keep off this corporate structure. It doesn’t facilitate the level of company growth they need for the long haul.
That said, a sole proprietorship is not all bad news. It also has a completely contrasting good side, which can, understandably, convince you to proceed setting up a sole proprietorship in SG.
And what might that be?
Why Register a Sole Proprietorship?
The best thing about this type of business is the complete autonomy it offers. If you happen to register a sole proprietorship in Singapore, you can be certain that you’ll have absolute control over your company.
Then get this. You also won’t be sharing the business profits. Every single dollar you make off your sole proprietorship company is all yours for the taking.
And while you’re enjoying the spoils, you can forget about filing your business taxes. Singapore doesn’t charge its sole proprietorships taxes on their corporate income.
But, don’t let that fool you. Because, as it turns out, the Inland Revenue Authority of Singapore (IRAS) won’t be letting you off that easy.
You see, instead of charging corporate tax, IRAS prefers to combine the business revenue with your personal income. That leaves you with only one form of income to file.
And speaking of which, corporate income tax is not the only thing you won’t be filing. Setting up a sole proprietorship in SG saves you from a heck of a lot of corporate compliance obligations.
You don’t, for instance, need to record and submit AGM minutes. Even seemingly basic stuff, like the company’s constitution or account audit reports, are not required.
So, you should have an easy time setting up a sole proprietorship in SG, as well as maintaining its compliance standing over the long haul.
Now, all things considered, a sole proprietorship seems like a worthwhile venture for individual beginners in Singapore. You could start off with one and then upgrade with time as your business grows.
What’s more, this approach gives you the chance to learn how the entire corporate scene in Singapore operates, before ultimately upgrading to the big boys club of partnerships and LLCs.
Sole Proprietorship Overview
Pros of a Sole Proprietorship Company in Singapore
- The registration process is pleasantly simple, economical, and straightforward.
- IRAS doesn’t levy corporate income taxes. Instead, it allows you to file the business returns along with your personal income.
- You become the sole beneficiary of the business profits.
- Doesn’t come with numerous corporate compliance obligations.
- The company owner retains absolute control over the business.
- You can easily convert it into a partnership or limited liability company.
- You don’t need to audit the company’s accounts.
Cons of a Sole Proprietorship Company in Singapore
- It doesn’t protect you from the accompanying business liabilities.
- You cannot purchase properties using the company name.
- It misses out on the corporate tax perks in Singapore.
- You cannot possibly grow your business capital by trading a stake in the company.
- The business can potentially die with its original owner.
- It can overwhelm you with administrative tasks.
Read our full article on the Advantages and Disadvantages of Sole Proprietorships here.
How to Set Up a Sole Proprietorship Company in Singapore
To register a sole proprietorship in Singapore, you’ll need the following documents;
- A Statement of Non-Disqualification.
- A declaration of compliance.
- Proof of your local residential address.
- A copy of your Singapore ID.
- A description of your local business address.
- A statement detailing the principal business activities.
- An approved business name
Once you meet all these basic requirements, you can proceed with the registration process.
And to help you with that, here’s a well-detailed step-by-step procedure on how to register a Singapore sole proprietorship...
Step-by-Step Guide to a Sole Proprietorship Singapore
1. Pick a Unique Business Name
The first step entails picking a unique name for your sole proprietorship business. This will eventually be the brand name that your company will trade under. So, you should approach the whole thing with a lot of creativity and finesse. Pick a name that best resonates with your business and its corresponding activities, without infringing copyrighted names.
2. Specify Your Sole Proprietorship Address
Every single type of company in Singapore, including sole proprietorships, should have a valid local address. So, go ahead and specify the official location that the business will be operating from.
A word of caution though. Don’t mix this up with your residential address. ACRA only allows you to use your personal address after applying for the HDB Home Office Scheme.
3. Nominate a Local Authorized Representative (Only Under Specific Circumstances)
This is not for you if you currently reside in Singapore. But, if that’s not the case, the law requires non-residents to appoint an authorized representative based in Singapore. The individual should have full legal capacity and be at least 18 years of age.
4. Complete The Registration Process Online Via BizFile+
The final step is accessing BizFile+- the business filing portal of ACRA- and registering the sole proprietorship using the details you’ve compiled.
Please note, however, that this service comes with a price. The name application part alone will cost you $15, while one year’s registration goes for $100. Alternatively, you could pay $175 to extend the registration period to three years.
Whichever you pick, the whole process of setting up a sole proprietorship in SG should take about 15 minutes. Then once you’re done, you can give ACRA 14-60 days to review and approve your application.
What is Next After Registering a Sole Proprietorship in Singapore?
If the registration and approval process sails through without any delays or difficulties, then you deserve a hearty applause for successfully registering a sole proprietorship.
But, don’t get lost in the moment. The registration process is, in all honesty, only the first and possibly the easiest step in the long journey of getting a business up and running in Singapore.
You still need to worry about annual renewals, the accompanying compliance obligations (such as tax filing), as well as essential business operations (like accounting and payroll management). And if you’re lucky enough to get a hang of all that, don’t expect things to get easier. The tasks will continue to pile up with time, as you get busier managing the business.
Now, that’s exactly where we come in.
WealthBridge is an accredited network of corporate experts who specialize in not only company incorporation, but also compliance filing, accounting, payroll management, customer service, general administration, and bookkeeping. We also offer company secretarial services, personal assistants, digital media managers, and cold-call sales staff.
So, feel free to get in touch if you need to take the edge off the cumbersome processes of setting up and running a sole proprietorship company in Singapore.