A Guide to Setting Up a Sole Proprietorship in Singapore

Singapore is an attractive destination for entrepreneurs. The straightforward and efficient company formation process makes it an ideal choice for starting a business. Before you dive into setting up a sole proprietorship in Singapore, here are the essential things to know:

1. What is Sole Proprietorship?

A sole proprietorship is the simplest business structure in Singapore. It involves only one owner who can be an individual, a company, or a limited liability partnership. In this structure, the business and the owner are considered one entity. This means that the owner has unlimited liability and is fully responsible for all the debts and liabilities of the business. The sole proprietorship cannot register another legal entity, and it can sue or be sued in the owner’s name.

2. Pros & Cons of Registering a Sole Proprietorship

Pros:

  • Simple Setup Process: The sole proprietorship has minimal requirements, including a minimum paid-up capital of $1, a company secretary, a resident director, a shareholder, and a registered office address in Singapore. Additionally, sole proprietors are not required to audit their accounts or file annual returns with the Accounting and Corporate Regulatory Authority (ACRA). The termination process is also hassle-free and inexpensive.
  • Control Over the Company: As the sole owner, you have complete control and decision-making power over all business affairs without external interference.

Cons:

  • Unlimited Liability: The owner’s personal assets are not protected from the business’s liabilities. If the business incurs debts or losses, creditors can claim the owner’s personal assets.
  • Challenging to Raise Capital: Sole proprietors often rely on personal funds and business profits for capital, making it difficult to attract investors or secure external funding.
  • Lacks Perpetuity: The registration must be renewed annually, and the business will be terminated upon the owner’s death or disqualification.
  • Taxation: The business’s profits are taxed at the owner’s personal income tax rate, meaning sole proprietorships are not eligible for corporate tax incentives.

3. Who Can Set Up a Sole Proprietorship in Singapore?

Individuals must be at least 18 years old and either a Singapore citizen, Singapore Permanent Resident, or an EntrePass/Employment Pass holder to register a sole proprietorship. Singapore citizens and permanent residents must also register for CPF and have sufficient funds in their Medisave account. Foreigners residing overseas cannot register a sole proprietorship but can appoint a resident director and engage a registered filing agent to submit the application via BizFile+.

4. Procedures to Register a Sole Proprietorship

Documents Required:

  • Approved business name
  • Description of principal activities
  • Local office address
  • Copy of Singapore ID for the owner
  • Local residential address of the sole proprietor
  • Statement of non-disqualification and declaration of compliance with regulations

Once the sole proprietorship is incorporated, ACRA will email a business report with the details.

Reservation of Business Name:

A business name must be registered with ACRA via the BizFile+ portal. The name must not infringe on existing trademarks or duplicate an existing business name. Name application costs $15 and takes approximately an hour for approval. The name can be reserved for up to 120 days.

Business Address:

A local Singapore address is required. P.O. Box addresses are not permitted. Under the Home Office Scheme, residential addresses can be used with the necessary approvals from the Housing Development Board (HDB) or the Urban Redevelopment Authority (URA).

5. Corporate Bank Account Opening

After registering your sole proprietorship, it’s crucial to open a corporate bank account for business transactions, asset protection, and meeting annual accounting and tax filing requirements. Reputable banks in Singapore for this purpose include DBS, OCBC, UOB, Standard Chartered, HSBC, and Citibank.

Conclusion

Registering a sole proprietorship in Singapore is straightforward if you are familiar with the incorporation process. With the right knowledge and preparation, you can navigate the registration process smoothly and set your business up for success in one of the world’s most business-friendly environments.

Learn : How to set up LLC in Singapore