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 much less 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.
For other business models that require the hiring of staff or are looking at rapid expansion, a sole proprietorship may not be suitable and you should consider looking into other business structures. 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.
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.
Registering a Sole Proprietorship
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)
The Business Names Registration Act 2014 states that 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) or $175 (3-year). 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 only reserved for 60 days and an alternate 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 its expiry date.
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 24 months, or both.
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