Many individuals don’t want to work in a partnership nor do they want to work for some company. Sole Proprietorship allows such individuals to have complete access to their business from all ends.
If you are looking to start a Sole Proprietorship in Singapore, then ask yourself the below basic questions:
- Are you looking to take sole control & responsibility of the business or do you want to share with someone in the form of a partnership?
- Are you ready to bear the entire risk of the business?
- How much capital do you have to invest depending on the business type you want to go for?
- Do you want to run your business for a short-term or long-term period?
What is a Sole Proprietorship in Singapore?
In Sole Proprietorship, an individual will be investing the entire capital for setting up the business, procuring & managing all the assets, solely responsible for the future growth of the business, and having a complete share over all the benefits, gains, and profits of the business.
With a complete share of gains, sole proprietorship also comes with the risk of losses. If an individual is looking to enjoy a complete share of gains, they should bear the risk of losses too, which the personal capital of the individual might cover.
In Sole Proprietorship, an individual has to pay personal income tax and has to bear entire accountability & liability for any lawful misconduct.
What is the legal status of a Sole Proprietorship in Singapore?
The legal status of a Sole Proprietorship in Singapore is:
- An individual (business owner) has unlimited liability, unlike a partnership or a limited company, where you will have limited liability.
- A Sole Proprietorship is not a separate legal entity from its business owner, unlike a limited company, which is a separate legal entity.
- In case of unlawful practice, Sole Proprietorship can sue or can be sued under the individual (business owner’s) name.
Who is eligible for setting up a Sole Proprietorship in Singapore?
An individual needs to fulfill the requirements below:
- Must be a legal citizen of Singapore and at least 18 years of age
- Should be a Permanent Resident of Singapore (Residential address of Singapore)
- Must be an EntrePass Holder
What are the advantages of a Sole Proprietorship in Singapore?
1. Straightforward & Affordable
Compared to other legal entities, a Sole Proprietorship is the simplest, most cost-effective & most affordable business structure in terms of set-up costs. It requires less paperwork than other entities and you must undergo major formalities to set it up in Singapore.
2. Complete control over gains
An individual has the luxury of enjoying all gains, benefits & profits of the business without sharing them with another person.
3. Operating Flexibility
An individual can change the structure of the business quickly whenever the need arises to support the business requirements and meet the business goals without impacting the cost or process of the business.
4. Complete Authority
An individual has complete authority & autonomy in the decision-making of the business & affairs of the business.
Having full power & authority ensures that there is no conflict of interest or biasedness of another person in the decision-making.
An individual can make quick decisions to boost future growth and meet the short-term goals of the business.
5. Ease of termination
Terminating a sole proprietorship requires less time, is inexpensive, and requires less effort than other business entities.
In Singapore, you need to notify the government that your business has wound up operations and undergo a series of procedures to terminate the sole proprietorship business.
How to register a Sole Proprietorship in Singapore?
1. Registering a company name
Two start a Sole Proprietorship in Singaporeyou have to first select & register your business name adhering to below guidelines:
- The name must not be objectionable or derogatory
- The name must not be the same or similar to that of a registered business
- Another business entity should not have reserved the name
- Make sure the Ministry of Finance does not prohibit the name
Once you have decided on the name, register it on Biz Singapore for a $15 fee.
2. Registering your business address
Once your business name is approved, you must register within 120 days and incorporate your business with a $100 registration fee.
You need to inform ACRA regarding your business primary address.
You will need to submit the following documents:
- Local Business Address
- Photocopy of the business owner’s (sole proprietor) identity card
- Singapore Residential Address of the business owner
- A description of your business activities
Once you pay the $100 registration fee along with the above documents, it takes 15 minutes for your application to get approved unless the approval needs to be approved by a top-level government agent in scenarios of a special case.
3. Opening the bank account of your business
Once your Sole Proprietorship is registered, the next step is to open a bank account for your business.
It is advisable to keep your business & personal account different for conducting transactions. Keeping a separate bank account solely for business transactions ensures transparency in financial transactions & books of accounts.
At Bestar, we help new entrepreneurs register their business in Singapore. We provide all assistance from starting the business in Singapore to incorporation of the business and even in consultation for tax advisory & compliance.
We are one of the leading Incorporation & Accounting Consultants in Singapore.
Contact us today to start & register your business in Singapore or any other consulting services. You can reach out to us via call at +65 62994730 or email at [email protected].