Forming a Sole Proprietorship in Singapore
What is a Sole Proprietorship?
A sole proprietorship is a business owned by one person. The owner of the business is also called a sole proprietor. He/She will have absolute say in the business, including its management and the day-to-day running of the business.
Why a Sole Proprietorship?
A sole proprietorship is the easiest and least costly of all business structures to set up. It will also be much easier to administer and manage. Moreover, all profits generated by your business will go directly to you, as the sole proprietor. Unlike companies, sole proprietors have fewer compliance requirements, and do not have to adhere to formalities such as annual reporting.
However, in a sole proprietorship, the business and its owner are considered a single legal entity. This means that the business owner is personally liable for the debts of the business and any other legal action taken against it. He/She can be sued personally and has unlimited liability. This will put the owner’s personal assets at risk.
If you are considering fundraising or are looking at rapid business expansion, a sole proprietorship may not be suitable and you should consider looking into other business structures.
On the other hand, if you are looking to set up and run a business on your own on a small scale, a sole proprietorship would be the most ideal option. If your business picks up to the extent that you want to operate it on a larger scale, you can always convert it into a private limited company later on.
You may read our other article to learn the pros and cons of sole proprietorships and private limited companies in more detail.
Registration Requirements for a Sole Proprietorship
Any Singaporean citizen, Permanent Resident (PR) or EntrePass holder who is 18 years old and above is allowed to register for a sole proprietorship.
Also, from 1 January 1994, all Singaporean citizens and PRs are required to top up their Medisave account with CPF Board before they register for a sole proprietorship.
How to Register a Sole Proprietorship in Singapore
Once you meet the registration requirements, you can then proceed to register for a sole proprietorship. Here are the following steps you need to take:
1. Choose a name for your sole proprietorship
While this may seem like an easy process, there are strict rules governing the usage of names for businesses. For example, offensive or vulgar names are not allowed. In addition, no two businesses are allowed to have similar or identical names due to possible copyright and trademark protection issues. You can read more about choosing a name for your business in our other article.
2. Choose an address for your sole proprietorship
Applicants are required to notify ACRA of the principal address from which the business will be conducted. Should applicants wish to use their residential address to register their business with, they have to apply for the Home Office Scheme with HDB.
3. Appoint a local authorised representative (only if necessary)
Where an individual proprietor, all the partners of a firm or all the officers of a foreign company does not or do not reside in Singapore, the individual proprietor, firm or foreign company must appoint at least one authorised representative.
Hence, if you are an individual proprietor who does not reside in Singapore, you are required to appoint a local authorised representative, who must be ordinarily residing in Singapore, be at least 18 years of age and have full legal capacity.
4. Register online through BizFile+
The last step of the registration process is registering online through the BizFile+ website, with a registration fee of $115 (1-year registration) or $175 (3-year registration). Once the fee has been paid, the sole proprietorship is set up within 15 minutes. Should the application be sent for a review for approval, the set-up process could take from 14 days to 2 months.
Note that approved business names are reserved for only 60 days and an alternative address for the business may be reported to ACRA for a fee of $40.
Renewing Your Business Registration
Business registration renewal can be done annually on the BizFile+ website, or through Inter-Bank Giro (IBG), before the expiry date of your registration.
It is an offence to continue your business without renewing your business registration before its expiry date. Upon conviction, defaulters incur a fine not exceeding $10,000, or imprisonment for a term not exceeding 2 years, or both.
Frequently Asked Questions About Sole Proprietorships
Can sole proprietors hire employees in Singapore?
Yes, sole proprietors can hire both local and foreign employees in Singapore. Read our other article to learn more about hiring employees in Singapore.
Can sole proprietors use their personal bank accounts for business purposes in Singapore?
While sole proprietors can use their personal bank accounts for their business, it is advisable to open a separate bank account to keep personal and business finances separate. Having a clear and separate record of business transactions would also aid with accounting and tax filing.
Learn more about opening a business bank account in our other article.
- Startup Incubator or Accelerator: Why & How to Join in Singapore
- Guide to Finding Investors For Your Singapore Start-Up
- How to Get a UEN Number in Singapore: Step-by-Step Guide
- 8 Checks to Conduct on Registered Companies in Singapore
- Artificial Intelligence in Business: Legal & Ethical Considerations
- High-Tech Farming Business in Singapore: How to Get Started
- How to Start a Business With a Co-Founder in Singapore
- How to Start Your Own Law Firm in Singapore
- Registering a Business in Singapore: Do I Need to and How?
- Deciding Your Business Structure: A Sole Proprietorship, Partnership or a Company?
- How to Choose an ACRA-Approved Name for Your Business
- 7 Start-Up Government Grants in Singapore (and How to Apply)
- How to Open a Corporate Bank Account in Singapore
- Finding a Suitable Corporate Secretarial Firm in Singapore
- Financial Year End (FYE) Singapore: How to Decide/Change
- 8 Tips on Choosing the Best Virtual Office in Singapore for Your Business
- Company Seals vs Rubber Stamps in Singapore: When to Use What
- Multinational Company (MNC): How to Set Up One in Singapore
- How to Set Up a Holding Company in Singapore (With FAQs)
- Registering a Company in Singapore: Process, Documents, Etc.
- Guide to Limited Liability Companies in Singapore
- Starting an Exempt Private Company in Singapore: Benefits and Process
- Registration and Compliance Fees for Singapore Companies
- Setting Up a Company Limited by Guarantee in Singapore
- Why and How to Set Up a Subsidiary in Singapore (with FAQs)
- Why and How to Set Up a Branch Office in Singapore (with FAQs)
- Offshore Company: What is It & How to Set Up One in Singapore
- Trading Company in Singapore: Why and How to Set Up One
- Shelf Company: What It Is and How to Buy One in Singapore
- Special Purpose Vehicle: Do Singapore Start-Ups Need One?
- Singapore GST Registration Guide for Foreign Businesses
- Applying for Tech.Pass in Singapore: Eligibility and Benefits
- How Can Foreigners Start a Business in Singapore?
- Foreign Companies Setting up in Singapore
- Singapore Representative Office: How Can a Foreign Company Set Up?
- Redomiciliation: Why and How to Convert Your Foreign Company into a Singapore-Registered Company
- Singapore Entrepreneur Pass: Who Is It For? How Do I Obtain One?
- Setting Up a Company in Malaysia: A Foreigner’s Guide
- Do You Need a Licence to Sell Home Bakes in Singapore?
- Legal Checklist for Setting Up a Restaurant in Singapore
- How Businesses Can Import Food into Singapore
- How to Apply for Halal Certification for Your Singapore Restaurant
- How to Apply for a Liquor Licence to Sell Alcohol in Singapore
- Public Entertainment Licence: Guide for Business Owners
- Want to Busk in Singapore? Here's How to Get Your Busking Licence
- Guide to Writing Website Terms and Conditions in Singapore
- Using Smart Contracts in Singapore: Benefits and Risks
- Your Guide to Joint Venture Agreements in Singapore
- Do You Need a Partnership Agreement When Setting Up?
- Do You Need a Shareholder Agreement When Setting Up?
- Memorandum of Understanding (MOU): Does Your Business Need One?
- Guide to VIMA in Singapore (Venture Capital Investment Model Agreements)