A sole-proprietorship is a business firm with only one owner. It is the simplest and most flexible business structure. All sole-proprietorships must be registered with the Accounting & Corporate Regulatory Authority (ACRA).
Characteristics
Who Can Register?
Set Up Costs
Advantages
Disadvantages
Registering Your Sole-Proprietorship
Characteristics
- Owned by one person or one company.
- A sole-proprietorship is not a legal entity (i.e. it cannot sue or be sued in its own name and it cannot own or hold any property).
- Profits are taxed at personal income tax rates.
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Who Can Register?
- Almost anyone or any company can register a sole-proprietorship.
- There are some exceptions. For instance, undischarged bankrupts may not be allowed to register such entities in Singapore. If in doubt, please consult a lawyer.
Appointment Of a Local Manager
- The owner must appoint a local manager if he/she is not "ordinarily resident" in Singapore.
- A person is not "ordinarily resident" if he/she:
- does not have a local address and
- cannot legally remain in Singapore for a long period of time
- The local manager must be above 21 years old and be one of the following:
- a Singapore Citizen
- a Singapore Permanent Resident
- an Employment Pass holder
- an Approval-in-Principal Employment Pass holder
- a Dependant Pass holder
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Set Up Costs
- Fees for approval of business name: S$15 per name.
- Registration fees: S$50
- Yearly renewal fees: S$20
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Advantages
- Quick and easy set up
Many low-risk service businesses such as copywriters, small retailers, pet groomers and designers start off as sole-proprietorships.
- Easy to administrate
Sole-proprietors do not need to audit their accounts or file annual returns with ACRA.
- Easy to manage
The owner is the sole decision maker.
- Exclusive use of profits
The owner receives all the business profits.
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Disadvantages
- The owner bears all costs and risks.
- The owner is personally accountable for debts and losses. The owner may be required by law to sell off personal assets (e.g. house, car, shares, etc.) to pay off debts and losses. You may want to avoid setting up as a sole-proprietor if your business involves big risks and possibly huge losses.
- Borrowing powers for sole-proprietors are more limited. To secure loans from banks and lending institutions, the owner must be prepared to put up his/her own personal assets as collateral.
- The owner cannot raise funds by selling a stake in the business to investors as sole-proprietorships can only be owned by a single individual or company.
- As the business and owner are inseparable, the business may c