Sole Proprietorship
What is a Sole Proprietorship
- A Sole Proprietorship is a type of business that has only one owner who manages all of its assets and liabilities
- A Sole Proprietorship is not considered a separate legal entity
- Owners are legally responsible for all liabilities against the firm
Who can register for a Sole Proprietorship in Singapore
A Sole Proprietorship can be registered in the name of:
- a natural person over 18 years of age who is a Singapore citizen, PR or EntrePass holder
- a Singapore registered company.
A Sole Proprietorship in Singapore is required to appoint at least one manager aged 21 years or more and he/she has to be a resident in Singapore (Permanent Resident or a Singapore Citizen).
Advantages of a Sole Proprietorship
- The sole proprietor enjoys all profits
- A sole proprietor can sell or transfer the business as per his wish
- Profit is taxed at the personal income tax rate and there is no corporate tax
- A sole proprietorship business is easy to administer and manage
- There are minimum administrative responsibilities and compliance requirements for a sole proprietorship
Disadvantages of a Sole Proprietorship
- No separate legal entity
- Unlimited liability
- Do not qualify for corporate tax benefits
- Limited capital
- Low public perception
- Any profits made in the business is treated as the owner’s income, thus subjected to personal tax rate (22%)
How to convert a Sole Proprietorship to a Private Limited Company
The owner of a Sole Proprietorship firm must write a letter stating that they have no objection using the business name for a Private Limited Company.
How to transfer assets from a Sole Proprietorship to a new Private Limited Company
It is important to immediately transfer assets from an existing business to the new company and close the Sole Proprietorship within a period of three months.
Process:
- Open a new bank account under the Singapore Private Limited Company. Hereafter all checks and bank transfers must be made in the name of the Private Limited Company.
- Re-sign the contracts, leases, or service agreements that were previously signed under the Sole Proprietorship.
- Re-apply new licenses and permits that are not transferable otherwise.
Finally, ACRA is then informed about the termination of the sole proprietorship.
