Setting up a sole proprietorship in Singapore is a way of taking part in the rich business ecosystem in the country. Sole proprietorships are among the most popular types of business models, especially now that entrepreneurs from all corners of the globe are rushing in to enter the market.
This article explores the concept of a sole proprietorship company, and walks you through the process of setting up a sole proprietorship in Singapore. You'll find tips on setting up your own company as a sole proprietor, and read on the requirements needed for business registration as the business owner.
What is a Sole Proprietorship?
A sole proprietorship is 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 as the head of the organization. The sole proprietor may employ a number of workers in the company, but the sole proprietor must be the sole business owner.
Quite a sharp contrast compared to both Limited Liability Companies and Partnerships, which legally require more than one stakeholder. 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 can 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.
Responsibilities of the Sole Proprietor
Although you’ll conduct your operations under a business name, the Accounting and Corporate Regulatory Authority (ACRA) won’t recognize the business as a separate legal entity from you. This means you and your company bear the same legal responsibilities, namely your assets and liabilities. The owner alone has unlimited liability with their business entity.
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. Your unlimited liability extends to conduct, and as the business owner, any malicious transactions formed under the business name is also your legal responsibility.
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. Sole proprietorships are some of the simplest business structures, and forming a company of this type is relatively easy compared to the compliance requirements of corporations.
Why Register a Sole Proprietorship?
The best thing about this type of business is the complete autonomy it offers. The owner of a sole proprietorship maintains complete control over their business operations, and is the sole decision-maker, shareholder, and founder of the company. Every single dollar you profit off your sole proprietorship company goes to you as the owner.
Additionally, Singapore doesn’t charge its sole proprietorships taxes on their corporate income. However, the Inland Revenue Authority of Singapore (IRAS) charges corporate tax instead, and the IRAS prefers to combine the business revenue with your personal assets.
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 documents, like the company’s constitution or account audit reports, are not required.
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.
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 Register Sole Proprietorship 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 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.
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.