+65 83551210 
Are you considering starting a business in Singapore? Look no further than the Singapore sole proprietorship.
With its simplicity and flexibility, the sole proprietorship is an ideal choice for many entrepreneurs.
In this blog post, you will learn everything there is about this Singapore business structure
- What is a sole proprietorship;
- Its pros and cons;
- How to register and manage your sole proprietorship;
- How to transfer ownership, convert to another structure;
- And all essential insights regarding this entity.
By the end of this post, you'll have all the knowledge you need to confidently register your own sole proprietorship with ACRA.
Let's get started!
1. What is a sole proprietorship?
A sole proprietorship is a business structure owned by one person, the sole proprietor.
The business and the owner are not legally separate in a sole proprietorship, so the owner has complete control over every part of the business.
In this way, a sole proprietorship is considered an “unincorporated business” in the eyes of the government. A sole proprietorship is not a company since a company is a separate legal entity from the business owner
Features and characteristics of a sole proprietorship are:
- The business owner is responsible for all business decisions and manages daily operations;
- The business owner is responsible for all business and personal assets and liabilities;
- The business owner is personally liable for all the debts and losses;
- The business owner is the single owner of this entity
- The earned income is considered personal income and is subject to personal income tax rates.
That is why, if your business flourishes in the future, or you want to bring in more shareholders or you want a more optimal tax rate as your income grows, the best solution is to convert your sole proprietorship to a private limited company or different business structure.
How to convert a sole proprietorship to a private limited company?
To learn more how the conversion process works, read our guide here in: Singapore Pte.Ltd: What it is and why it is the best choice (2024) section How to convert?
A sole proprietorship comes by different names depending on which country you live in. It can called a self-employed or a sole trader.
2. 8 sole proprietorship examples
A sole proprietorship is suitable for entrepreneurs who want to start a very small or small and low-risk business that can generate a steady income, with no needed employees, and little upfront investment.
That is why, the 8 typical examples below are businesses that can operate as sole proprietorships are:
- Freelance writer;
- Photographer;
- Personal trainer;
- Plumber;
- Graphic designer;
- Housekeeper;
- Bakery owner;
- Tutor.
Every business can be a sole proprietorship with a single owner. That leads us to a question.
3. Can a foreigner register a sole proprietorship in Singapore?
Yes, a foreigner can register a sole proprietorship in Singapore. This is eligible by law according to ACRA and Singapore Companies Act.
Suppose you are foreigners living overseas who want to register a sole proprietorship or partnership in Singapore.
In that case, you must appoint at least one local resident as an authorized representative (Singapore citizens, Permanent Residents, or holders of an EntrePass/Employment Pass).
Also, the foreign owner must hire a registered filing agent like Global Link Asia Consulting to submit the application through BizFile+.
If you are foreigners who plan to be in Singapore to manage the operations of your sole proprietorship, you must get approval from the Ministry of Manpower after the business is registered.
In addition, you should use a registered filing agent like Global Link Asia Consulting if you or your proposed partner don’t have a Singpass account.
Now you know if a foreigner can open their own sole proprietorship, we will learn if this structure is worth it or not.
4. Advantages and disadvantages of a Singapore sole proprietorship
There are some pros and cons when incorporating a sole proprietorship in Singapore. Let’s take a look at the table below:
| Advantages | Disadvantages |
|
Easy registration It is easier and cheaper to register this business form than other business structures. |
Missed opportunities for government incentives You miss out on Startup Tax Exemption (SUTE) Scheme, Partial Tax Exemption (PTE) Scheme and other tax incentives applied for corporate tax |
|
Easy compliance You only need to file personal income tax and business returns. |
Impossible to raise fund Investoer are reluctant to invest in non-incorporated entities with no clear shareholding structure |
|
Less tax to pay If your taxable income is less than 160,000 SGD, you pay less tax to the IRAS since the personal tax rate is 15%, which is less than the corporate tax of 17% |
Potential higher tax payment in the future You pay a higher amount of tax when your taxable income increases more than 160,000 SGD |
|
Easy conversion to other business structure You can convert to other business structure such as a Pte.Ltd, a partnership in the future using the same business name. |
Major responsibility for all debts If your business fails, you have to pay back all your debts |
|
No audit requirements A sole-proprietorship is exempted from annual audit |
Unsuitable choice for some industries If you work in high risk industry like finance or deal with a large financial transactions, you need to incorporate a company |
Now we know the upsides and downsides of owning a sole proprietorship in Singapore. So, what is the difference between a sole proprietorship and other business structures?
5. What is the difference between a sole proprietorship, a private limited company, and a partnership?
A sole proprietorship may be your ideal choice at the moment. In the future, you may have to consider a different option to convert your entity.
Some popular choices for conversion are a partnership or a private limited company (link ở đây). The table below will highlight the differences so you know which to choose in the future.
| Sole-Proprietorship or SP | Partnership | Private Limited by Share or Pte.Ltd | |
| Definition | A business owned by one person | An association of two or more persons carrying on business |
A legal entity separate and distinct from its shareholders and directors Name usually ends with "Pte.Ltd" |
| Legal Status |
|
|
|
| Continuity in Law | This structure exists as long as the owner is alive and desires to continue the business | This structure exists subject to partnership agreement | A company has perpetual succession until wound up or struck off |
| Taxes | Profits taxed at the owner’s income tax rates | Profits are taxed at the owner’s income tax rates | Profits taxed at corporate tax rates |
| Compliance |
|
|
|
6. How to register a sole proprietorship in Singapore?
6.1. Who can set up a sole proprietorship in Singapore?
Anyone must be at least 18 years old and must be also one of the following:
- ASingapore citizen.
- A permanent resident.
- An Employment Pass or Dependant's Pass.
- Foreigners residing overseas with the help of a registered filing agent
6.2. What are the required documents?
Certain documents you need to prepare to register a sole proprietorship in Singapore: These include:
- Proposed name for the business;
- Brief description of the company activities
- Business address
- Valid proof of identity (passport, identity card, bill showing your personal information)
- Proof of residence (bill showing your residential address)
6.3. Registration process for Singapore sole proprietorship
In this section, you will learn the proven registration process to open your sole proprietorship. It is important to follow step-by-step.
If you are an international founder, you must have a registered agent or local authorized representative in Singapore who help you set up your company.
If you are a Singapore resident or citizen, you do not need to have a registered agent.
However, support from a registered agent such as Global Link Asia Consulting is invaluable in the long run since we can help with annual filing, tax accounting, company management, and post-registration compliance
That is why, if your business flourishes in the future, or you want to bring in more shareholders or you want a more optimal tax rate as your income grows, the best solution is to convert your sole proprietorship to a private limited company or different business structure.
Who is a local authorised representative?
A local authorised representative is a Singapore citizen, permanent resident, or Employment Pass holder who are of full legal capacity and reside in Singapore to serve as the local point of contact for official correspondence.
You need this person to form your sole proprietorship if you are a foreigner.
Remember to have at least 3 company names of your choice (To avoid being identical to an existing name) so that you can register the company name with ACRA.
Your business name is a part of your brand, so choose a name that reflects your value and offerings.
The name application may be referred to other government agencies for review and approval.
Once you register your business name for 15 SGD successfully, it will be valid for 120 days. You can file for an extension to surpass the time frame.
Providing a local address is a requirement for your sole proprietorship registration process.
If you are a foreigner, the registered agent or local authorized representative can offer a registered address service.
If you are a Singapore local, you can use your home address, which needs approval from the Home Office Scheme before submitting to ACRA.
To use your house as an office, you need permission from the Urban Redevelopment Authority (URA) or the Housing & Development Board (HDB).
Remember that ACRA will list your addresses on its website.
That is why, if your business flourishes in the future, or you want to bring in more shareholders or you want a more optimal tax rate as your income grows, the best solution is to convert your sole proprietorship to a private limited company or different business structure.
What to do to protect your residental address data?
To protect personal data, business owners can register an Alternate Address for a fee of $40 SGD. This Alternate Address will appear in ACRA’s public records instead of your residential address.
However, all official communications from ACRA will still be sent to your residential address, which you must provide for record-keeping purposes.
Once you gather all the required information, the registered agent will submit your application on behalf of you (if any).
You can register your sole proprietorship online via BizFile+ under the condition you have a SingPass or use your local authorized representative’s SingPass.
You can complete the registration process in 15 minutes assuming there are no errors or referrals.
Once your registration is approved, you will receive a Unique Entity Number (UEN) (link ở đây) to use with government agencies.
7. What to do after registering a sole proprietorship?
Congratulations on successfully registering your Singapore sole proprietorship!
Now that you have taken this important step toward starting your own business, it's time to focus on what comes next.
Here are the essential next steps to ensure a smooth transition into operating your sole proprietorship:
Business operations
- Open a business bank account;
- Open your PayPal, and Stripe accounts;
- Get your business phone number;
- Get your office lease;
- Start your business right away;
- Register your GST (If any).
Annual compliance
- File your annual business name renewals
- File your annual returns and personal tax income returns
- Pay your CBF contributions
- Renew your registration every year or every 3 years with ACRA;
- Keep proper accounting records and receipts for at least 5 years, for inspection with IRAS, ACRA if needed;
8. What to do if you transfer your sole proprietorship ownership to another person?
Suppose you no longer need your sore proprietorship, you have 3 options to choose
- Close down;
- Convert to another business structure or;
- Transfer ownership.
To transfer ownership, you must notify the Accounting and Corporate Regulatory Authority (ACRA) within 14 days of the ownership change through BizFile+ in the section “Change in Business Information including Appointment/Cessation of Business Owner/Authorised Representative”.
The process must be authenticated with SingPass or CorpPass (via a registered agent support or on your own).
Additionally, both the previous and new owners must manage their respective tax obligations.
The former owner must account for any balancing allowance or charge resulting from the sale of fixed assets, while the new owner can claim capital allowances on the assets they acquire
9. How to close down your sole proprietorship in Singapore?
Terminating your sole proprietorship involves all the steps below.
Remember that to have a successful closure, careful preparation is a must as the business will be ceased immediately after submitting a cessation application.
Step 1: Deregister your GST
If the sole proprietorship is GST registered, the business owner has to apply for cancellation of GST registration with IRAS.
Step 2: Clear out all the debts and liabilities
The business owners have to make sure all debts, taxes, and obligations are settled with relevant creditors and government agencies.
- File your tax returns,
- Handle employment leave and insurance
- Pay all taxes to the IRAS
- Pay back all your debts
- Dispose of all your assets such as equipment or inventory
Step 3: Close your bank accounts
You need to close the business bank account associated with the sole proprietorship.
We advise you to close the bank account as the last step if you have a remaining tax credit from the IRAS. This way, you don’t lose the tax credit that IRAS sends back to your bank account.
Step 4: Submit your cessation application
Once you have done every step above, you can fill out the "Cessation of Business" online via BizFile+.
10. How can we help you set up your sole proprietorship in Singapore?
Are you considering starting your own business in Singapore? Look no further than Global Link Asia Consulting, your trusted partner in setting up a Singapore sole proprietorship.
With our expertise and experience, we provide comprehensive support throughout the registration process, ensuring a smooth and hassle-free experience for aspiring entrepreneurs like you.
- Choose an appropriate business name for your Singapore sole proprietorship.
- Prepare the necessary documents for registration
- Submit documents to the Accounting and Corporate Regulatory Authority (ACRA) on your behalf
- Support in opening your business bank accounts
- Open a corporate bank account in Singapore with a 99% success rate;
- Get an affordable, professional registered office address for business;
- Support to open, authenticate, and manage Stripe, PayPal Business in Singapore, Hong Kong, and the U.S;
- Handle all your tax accounting needs, timely annual filings, auditing, and more.
11. FAQ about Singapore sole proprietorship
No, a sole proprietorship is a single, distinct type of business structure.
For a sole proprietorship, you need to track your personal income, maintain accurate records of all income and expenses, track assets and liabilities, and prepare financial statements regularly.
Yes, if the annual turnover exceeds the threshold set by the tax authority (e.g., S$1 million in Singapore). Or, you can register GST voluntarily.
There is no limit to the number of employees a sole proprietorship can have.
The licenses or permits required for operating a sole proprietorship depend on the nature of your business activities.
Certain industries, such as food and beverage, require specific licenses.
You can check on GoBusiness Singapore for your sector via this link
Yes, foreigners are allowed to register a sole proprietorship in Singapore.
However, they must appoint a local resident or a local company as their authorized representative.
Yes, a sole proprietorship can be converted into other business structures such as a partnership or a private limited company if needed.
Please consult with professionals at Global Link Asia Consulting for guidance on the conversion process.
We offer a comprehensive range of accounting and tax services for Singaporean companies. Our services include:
- Tax Consulting including corporate income tax, GST tax, contractor tax, and more.
- Monthly/Annual Tax Accounting services in accordance with Singapore accounting standards (SFRS).
- QuickBooks Consulting and Licensing.
- Corporate Income Tax Return Preparation
- GST Tax Return Preparation.
5.0 / 5.0 Reviews
Global Link Asia Consulting Pte. Ltd. is pleased to announce the publication of the above insightful and informative article on our official website, Global Link Asia Consulting on 23rd August 2024. The copyright for this article is exclusively held by Global Link Asia Consulting Pte. Ltd. Any unauthorized reproduction or distribution of this content without our express written permission is strictly prohibited. We value the protection of our intellectual property and appreciate your cooperation in adhering to these guidelines. Thank you for your continued support of Global Link Asia Consulting Pte. Ltd.
470 North Bridge Road, #05-12, Bugis Cube, Singapore (188735).
Unit 2302, 23/F, New World Tower 1, 18 Queen's Road Central, Hong Kong.
12th, Felix Alley Building, 151/1-2 Nguyen Van Troi, Phu Nhuan District, Ho Chi Minh City, Vietnam.
