Starting a Business in Singapore: A Comprehensive Guide

Do you have plans to start a new business in Singapore? In this guide, let us help you to get a clear understanding of all the necessary information that you will need in order to get your business started legally in Singapore.

In this section of the guide, we will be exploring the necessary preparation and procedures for the registration of a Sole Proprietorship business in Singapore.

If you have yet to decide on your business type, Click here to read more on:
Part 1: Different Business Types in Singapore
Part 2a: Incorporating a Private Limited Company in Singapore

Part 2b: Registering a Sole Proprietorship Business in Singapore

(i) Requirements

What is a Sole Proprietorship?

A sole proprietorship is a business that can be owned and controlled by an individual, a company or a limited liability partnership. There are no partners in the business.

The legal status of a sole proprietorship can be defined as follows:

• It is not a separate legal entity from the business owner

• The business owner has unlimited liability (i.e. the business owner is personally liable for all the debts and losses of the sole proprietorship)

• It can sue or be sued in the owner’s name

What are the basic requirements for Registering a Sole Proprietorship in Singapore?

To set up a sole proprietorship in Singapore, you must be:

• At least 18 years old

• A Singapore Citizen, Singapore Permanent Resident, or an EntrePass Holder

• Singapore citizens or PRs registering for a sole proprietorship must ensure that their Medisave accounts have sufficient funds before proceeding with the registration.

• A local Singapore address must be provided as the business address for the sole proprietorship.

  • Under the Home Office Scheme, residential premises can be used as a business address but owners must seek written approval from HDB (for HDB properties) or URA (for private properties) to use their homes (owned or rented) for home office use.

  • Sole Proprietors can also choose to use a registered office address service as their business address
    
    Click here to read more information on:
    – Registered Business Address for a Sole Proprietorship Business in Singapore
    – Lionsworld Registered Business Address Service

What are the advantages and disadvantages of registering a Sole Proprietorship Business?

Advantages:

• Easy to set up: It is the easiest and least expensive business structure to set up.

• Owner Control: As the owner of a sole proprietorship business, the owner will be in complete control of all the business affairs including decision making.

• No profit sharing: Owners will accrue all income generated by the business.

• Ease of termination: Terminating a sole proprietorship is easier, less time consuming and less expensive than other business entities.

• Least compliance requirements: Sole Proprietor businesses are not required to do annual filings. Sole Proprietors simply need to renew their business registration every 1 or 3 years.

Disadvantages:

• No separate legal entity: Sole Proprietorships are not considered as a separate legal entity from the owner. This means that the financial and legal liability for all debts and legal actions against the business is the responsibility of the owner.

• Unlimited liability: Creditors may sue the owner for debts incurred and can also obtain a court order to claim against the personal assets, including property, of the owner.

• No corporate tax benefits or incentives: Taxes are determined based on personal income tax rate and owners of sole proprietorships do not enjoy special tax benefits that are available to a Private Limited Company.

• No perpetual succession: The business lives and dies with the owner.

• Low public perception: This entity is the least preferred for serious businesses. Sole proprietorship businesses face a greater difficulty in obtaining loans and investments. 

• Sale/transfer of all or part of the business: Owner can transfer the business only by the sale of business assets.

• Cannot act as a corporate shareholder: As sole proprietorships are not considered as separate legal entities in Singapore, it cannot act as a corporate shareholder of a company.

• Sole proprietors must ensure that all letterheads, invoices, bills or other documents used for the purposes of doing business have the registration number listed.

(ii) Documents, Procedures and Costs

Once you have managed to fulfill all the requirements for the registration, you will be able to proceed with registering your sole proprietorship business.

How long does it take to register a sole proprietorship business in Singapore?

Sole proprietorship businesses are easy to register.

Unlike a Private Limited Company, there are only owner(s) in the business, no requirement to appoint other positions (such as a corporate secretary for Private limited companies) and no requirement to keep a minute book. As such, sole proprietorship businesses can be registered directly on ACRA once the requirements have been fulfilled.

If there are no referral or delays by ACRA, your business can be successfully registered within 1 day. 

What are the procedures to register a sole proprietorship business in Singapore?

3 Steps for Incorporation or Registration of company in Singapore: