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Learn more about Sole Proprietorship in Singapore

A sole proprietorship is a simple, no-frills form of company registration that is appropriate for enterprises with little or no risk. This form of company simply satisfies the legal obligation to keep track of all profiteering actions that occur on a regular basis.

The lack of compliance requirements and undivided authority is a benefit, but it also limits future growth and development. We do not advocate sole proprietorship to business experts because of the endless obligations. Rather, we advise them to form a Singapore private limited company.

Table of contents

What is a sole proprietorship?

A sole proprietorship is the simplest type of business entity, with only one owner who has ultimate power and is liable for all of the company’s assets and obligations. A Sole Proprietorship can be registered by Singapore citizens or permanent residents. Foreign persons and businesses may form a sole proprietorship, but they must designate a local resident manager.

1. Advantages of Sole Proprietorship

➤ A Sole Proprietorship does not need to file yearly returns since its income is taxed at the personal income tax rate.
➤ There are little documented compliance requirements and documentation.
➤ The company itself is adaptable. Because there is just one person to make the essential decisions, any decisions and modifications may be made quickly.
➤ The Sole Proprietor will own the whole profit earned by the firm.
➤ Because the sole proprietor owns his firm, he may sell or transfer it whenever he wants.
➤ Because of the undivided authority and control, it's simple to govern and manage.
➤ Fewer administrative responsibilities, as well as continuous compliance requirements.
➤ The earnings earned by the firm will be taxed at the corporate level as well as at the individual level.

2. Disadvantages of Sole Proprietorship

➤ The liability of a sole proprietorship is boundless. This means that the Sole Proprietor is personally liable for any business debts and losses, putting all personal assets at risk.
➤ In the case of a business failure, creditors have the right to sue the single proprietor for all outstanding obligations.
➤ Because there is only one person in charge of the company's overall performance, the pressure on that person may rise.
➤ The Registrar has the ability to terminate the business if the sole proprietorship/partnership registration is not renewed on time.
➤ Lack of continuity; because the business is associated with the owner, it is not eternal, and it ends with the owner's death and is not transferrable in part.
➤ Sole proprietors do not enjoy tax exemptions and rebates available to corporations.

How to register a Singapore sole proprietorship?

Themis Partner may assist you in forming a sole proprietorship with ACRA by following the steps outlined below:

Step 1: Business name registration

To start a sole proprietorship business in Singapore, you must register the business name under which your activity is carried out under the Business Names Registration Act (BNRA), unless you qualify for one of the exemptions listed below. Check the availability of a company name on BizFile before registering it. If you’re picking a name, make sure it follows these guidelines:

➤ The name isn't too similar to that of another corporation or business.
➤ The name isn't unsuitable (obscene, vulgar, or abusive) and isn't forbidden by a Minister of Finance directive.

Using a personal name as a business name: Individuals who desire to run a business under their own name are not required to register.

Once you’ve decided on a business name, use BizFile to register it. The application fee for a name is $15. The name will be reserved for 120 days after the ACRA approves it. You have 120 days to register your business or the name will no longer be reserved for you.

Step 2: Address for your sole proprietorship

When registering a sole proprietorship, you must specify a business address. The major address from which you will do business must be reported to the ACRA.
You can use your home address as your company address under the Home Office Scheme. The Home Office Scheme permits homeowners, renters, and occupants of private residential buildings to set up tiny workplaces in their homes. You must adhere to the standard Home Office Scheme requirements and ensure that your business does not cause any inconvenience to your neighbors.

• If you are a member of the Housing and Development Board (Singapore’s public housing body), a flat owner, or an occupant, you should apply for clearance through the HDB website.

• If you are a private residential property owner or occupant, you must apply for permission through the Urban Redevelopment Authority (URA) website.

Step 3: Business registration with BizFile+ in Singapore

To register your business in Singapore, go to the BizFile+ website and fill out an application using your SingPass or CorpPass. You can register on your own or with the help of a licensed filing agency.
Remember that some sorts of businesses (such as architecture, real estate, and military) may require government permission before you can register. The clearance procedure might take anything from 14 to 2 months.

The following is a list of Singapore referral authorities that assess business registration applications before they are accepted by BizFile+.

The cost of registering a business in Singapore for a year is $100. A one-year registration renewal will set you back $30, while a three-year registration will set you back $90.

After completing the registration process, you will be assigned a system-generated Unique Entity Number (UEN), which is a unique identifier that all businesses must use when dealing with government authorities.

Registering a business as a foreign citizen?

You must be a Singapore citizen or permanent resident to create a sole proprietorship.

Foreign citizens who appoint an authorized representative who is a legal resident: a Singapore citizen, permanent resident, or EntrePass holder, can form a sole proprietorship in Singapore.

Before forming a sole proprietorship, you must obtain Ministry of Manpower clearance if you are a foreign resident already residing in Singapore. Only anyone with a SingPass can apply through the BizFile+ website.

For foreigners, sole proprietorship is not a possibility. Instead, foreign business professionals should form a private limited company.

What are the company registration requirements?

A sole proprietorship must be ACRA-registered. A self-employed individual must top up their Medisave account with the Central Provident Fund (CPF) Board before they may register a sole proprietorship, become the owner of an existing business name, or renew a business registration. In Singapore, the registration procedure consists of reserving a name and registering the entity. The following details and/or documents are required:

➤ Approved business name
➤ Description of major operations
➤ Local business address for the proposed business
➤ Copy of Singapore ID for the owner
➤ Local residential address of sole proprietorship

Following registration, any modifications to the sole proprietorship‘s particulars must be filed with the Registrar within 14 days of the date of change.

A registration is valid for one year from the date of registration and must be renewed on an annual basis.

Carrying on a business after the registration validity has expired or the registrar has terminated the registration is illegal.

1. Licenses and permits

Some business operations in Singapore are governed by government authorities. Even though your company has been registered, you cannot begin operations unless you have received approval or a license from the appropriate government authorities.

2. Registered office hours

You must have a registered office address and have the office available to the public for at least three hours each day during normal business hours on weekdays.

3. Company registration number

ACRA’s business registration number must appear on all letterheads, invoices, billings, and documents used for business communications.

4. Custom company registration

If your business involves import, export, or transshipment into and out of Singapore, you must register with Singapore Customs and get a Central Registration Number, often known as a CR Number. For Singapore corporations or organizations engaged in trade operations, the central registration number is required.

5. Singapore Goods and Services Tax Registration

The Products and Services Tax (GST) is a tax levied on the provision of items and services in Singapore as well as the importation of goods into the country. GST is not levied on goods exported from Singapore or on foreign services delivered from Singapore. The current interest rate is 7%.

All Singapore enterprises must register for GST if their annual taxable revenue exceeds S$1 million, or if they are actively making taxable supply and their annual taxable revenue exceeds S$1 million. The company is required to register for GST within thirty days after being judged liable.

You can also choose to register for GST on your own. The Comptroller in IRAS has the authority to approve voluntary registration. Once approved, you must stay enrolled for at least two years.

6. Registration of Singapore Central Provident Fund (CPF)

The Central Provident Fund, sometimes known as CPF, is a mandatory pension fund program in which both the employer and the employee contribute a portion of their monthly wage to the fund.

Employer CPF contributions are required for all local employees who are Singapore citizens or permanent residents and earn more than S$50 per month. The maximum CPF contribution rate for employers and employees is 14.5 percent and 20%, respectively, and can be lower based on circumstances such as employee age, permanent residence status, and so on.

What is the tax on sole proprietorship?

A sole proprietorship, although being a tax resident, is not considered a firm entity, and hence its profits are taxed at the owner’s personal income tax rates. Singapore’s personal income tax rates for resident taxpayers are progressive, ranging from 0% to a maximum of 22% on income over SGD320,000. In Singapore, the maximum corporation tax rate is 17 percent.

Self-employment is the norm for sole proprietors registered with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). When a person earns a livelihood through a trade, business, profession, or vocation, they are termed self-employed. All self-employed individuals must declare the money generated by their business activities as business income rather than salary, which is included in their total personal income.

How to open a company bank account?

After registering the sole proprietorship in Singapore, a bank account in any of the numerous international, foreign, and local banks in Singapore can be opened. The company can open several currency accounts or a single multi-currency account. The method for opening an account varies per bank, and most banks need the business owner to be present in person throughout the account opening process. Typically, the following documents will be required:

➤ Account application
➤ Copy of owner's Singapore Identity Card
➤ A latest print-out of the business profile for sole proprietorship
➤ Minimum deposit (varies from bank to bank) in cash or cheque

How to terminate a sole proprietorship?

When the proprietor of a Singapore sole proprietorship dies or otherwise ceases to carry on business, the business ceases to exist. The Business Registration Act requires everyone who is registered under it to inform the Registrar if they stop to carry on business. Failure to do so is a criminal offense that may result in a fine.

A Singapore sole proprietorship is a single individual or one Singapore-registered corporation that owns a business. It is the most basic type of business structure in Singapore that satisfies the regulatory obligation to register any profiteering activities that are carried out on a continuous basis.

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