The simplest form of business structure, a sole proprietorship is a business owned by an individual or company. The sole-proprietor has absolute ownership and authority in the management of the business.
The key characteristic of a sole proprietorship is that the business does not have a separate entity from its owner. This means that under the law, the business and the proprietor are one and the same. It also means that the owner has unlimited liability: while he owns all the assets and profits of the business, he is also personally responsible for all debts and liabilities incurred by the business. If his business incurs debts or fails, his business creditors have the rights to claim the proprietor's personal assets. The business also cannot own property in its name. Profits are taxed at the proprietor's personal income tax rate for an individual, or corporate tax rate for corporations.
A sole proprietorship is suitable for businesses that have negligible risks and is owned and run by one person, such as freelancers, independent contractors and other small businesses.
As your business grows or needs investments or loans to further its expansion, you may wish to convert your sole proprietorship to a private limited company. Please visit our Converting Sole Proprietorship to a Private Limited Company page for more information.
VOPlus can advise you on the most suitable type of business entity for your business and help you convert a private limited company in Singapore promptly. Contact us today for a consultation!