Sole Proprietorship

Updated 2 years ago by QuentinC

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.


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