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Sole Proprietorship
A sole-proprietorship is a business firm with only one owner. It is the simplest and most flexible business structure.
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Characteristics
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Single Ownership
A sole proprietorship can be own by one person and one company only.
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Non legal entity
A sole proprietorship is not a legal entity hence cannot sue or be sued in its own name and it cannot own or hold any property.
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Personal income tax rates
Profits are taxed at personal tax rates
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Advantages and Disadvantages
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Quick and easy set up
Because of its simple structure. Sole-proprietorship is easy to setup and maintain. Many low-risk services, such as writer, small retailers and designers begin with Sole proprietorship.
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Easy to administrate and manage
Sole-proprietors do not need to audit their accounts or file annual returns. It's more easier to manage since the owner is the sole decision maker.
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Exclusive use of profits
A sole-proprietorship owner receives all his business profits.
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Unlimited liabilities/risks
Owner of sole-proprietorship is personally accountable for all debts and losses. The owner need to sell off personal assets (e.g. house, car, etc.) to pay off debts and losses. Sole-proprietorship should be avoided when business involves big risks and possibly huge losses.
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No tax exemption
Sole-proprietors cannot enjoy the three years S$100,000 taxable income tax exemption offered to Company.
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Limited funding power
Borrowing powers for sole-proprietors are more limited. The owner has to put up his/her own personal assets as collateral to secure loan. The owner also cannot raise funds by selling a stake in the business.
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Quick and easy set up
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Compliance
Business Name
Business name must be approved before the incorporation of a sole proprietorship may occur and the name must be in English.
Bad names might be rejected by Singapore authority:
- Identical or too similar to another business name/existing tradmarks.
- Contains offensive or vulgar word.
Registered Address
All singapore registered company must provide a local Singapore address as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.
Owner
Any individual above 18 years old or any company can be the ownership of a sole-proprietorship. 100% local or foreign owneship is allowed. However, certain individuals are not allowed to register a sole-proprietorship.
Local Manager
Sole-proprietors must appoint a local manager if he/she is not a "local resident" in Singapore.
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Required Documents
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Proposed business name
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Registered address
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Brief description of business activities
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Business owner's Particulars
Foreigners: Copy of passport, overseas residential address proof.
Singapore local residents: Copy of Singapore NRIC.
Corporate entity: Copy of registration documents, Memorandum & Articles of Association.
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