Overview of a Sole Proprietorship
A Sole Proprietorship is the simplest form of business entity with only one owner who is the decisive authority and responsible for all assets and liabilities belonging to the business. Singapore citizens or permanent residents; holders of Employment Pass or EntrePass may register a Sole Proprietorship. Foreign individuals and companies may also register a Sole Proprietorship but must appoint a Singapore resident manager.
Features of a Sole Proprietorship
- It does not have a separate legal entity
- The owner has unlimited liability
- It cannot own property
Advantages of being a Sole Proprietor
- Quick, easy and least expensive to set up.
- Easy to administer and manage because of undivided authority and control.
- Less administrative duties, on going compliance requirements.
- All the profi ts generated by the business will be taxed at personal income tax level.
- Easy to close.
Disadvantages of being a Sole Proprietor
- The owner’s assets are at risk since owner is responsible for all debts and losses.
- Earnings are charged at personal income tax rates and is deprived of incentives offered to companies.
- Lack of continuity; the business is identified with the owner therefore not perpetual and it ceases with the death of owner and is not transferable by part.
- Raising capital through loans from instituions or investors is difficult due to inferior image and dependency on sole owner.
- Must renew business registraion annually and top up CPF account.
- Sole proprietors do not enjoy tax exemptions and rebates available to corporations.
Summary of Setup Requirements for a Sole Proprietorship
- Minimum one owner
- A Singapore registered office address
- For foreign individuals and companies only: minimum one manager who must be a Singapore resident
Taxation of Singapore Sole Proprietorship
Singapore Sole Proprietorship, though a tax resident, is not considered as a company entity; therefore its profit is taxed at personal income rate.
If you are a Singapore resident and you want to set up a Sole Proprietorship, you will need to do the following:
- Visit our office with your identification papers. Sole Proprietorship business registration can be done within 10 minutes.