What is a Sole Proprietorship?
A Sole Proprietorship is the simplest form of business structure in Singapore. Usually, it is suitable only for very small single-owner type business that does not carry any risks. This entity is considered a single ownership type of business and the owner will not have limited liability protection, where his assets will not be protected from any business risks.
For example, in Singapore, if you are engaged in any activity that is carried out on a continual basis for the purpose of gain, you must register a business (such as sole proprietorship, private limited company, or limited liability partnership).
Quick Facts
- Sole Proprietorship is not a separate legal entity and there is no distinction between the owner and the proprietor. The business owner will be held accountable for all liabilities of the business.
- MInimum 18 years of age to register a Sole Proprietorship
- At least 1 manager aged at least 21 years and is an ordinary resident in Singapore.
- A local address must be provided.
- Both Singapore Residents or Permanent Residents must have sufficient balance in their Medisave accounts prior to registration.
- Profits from the Sole Proprietorship is treated as an income to the business owner. The respective tax rate will apply to the business owner.
- A Sole Proprietorship is not a separate legal entity, and cannot register another business firm under its name.
- There is no requirement for a Sole Proprietorship to be audited.
- No requirement to file Annual Returns with ACRA.
- Business Registration of the Singapore Sole Proprietorship must be renewed yearly.
What is the difference between a Sole Proprietorship against a Partnership or registered Limited Company?
One of the main difference would be, both the Limited Liability Partnership (LLP) and Private Limited Company are considered as a separate legal entity. Whereas a Sole Proprietorship is not.
Amongst the many differences, this would mean that the business owner of the Sole Proprietorship will have unlimited liability during the course of the business.
For an in-depth comparison, please see our article here.
Advantages of a Sole Proprietorship
Disadvantages of a Sole Proprietorship
Required Documents & Registration Process
- Proposed name of the Sole Proprietorship
- Description of the business activity
- Local address for the business
- Singaporean Identity Card (IC) of the business owner
- Local residential address of the business owner
- Declaration of compliance and Statement of Non Disqualification
The registration procedure consists of 2 main parts:
- The name reseveration and application
- Registration of the Sole Proprietorship.
The registration procedure is computerised and quick. If all required documents are submitted with the respective endorsements, the process should be completed within a single day.
After which, most business owners would then want to open a new Bank Account for their business transactions. These business bank accounts can be opened as separate accounts of various currencies or have the option of opening as a single multi-currency account, depending on the preference of the owner.
