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
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?
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.
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:
Reserve your Company Name
In order to register a sole proprietorship business in Singapore, the following documents/information are required:
- Proposed business name
- Description of principal activities
- Local business address for the proposed business
- Copy of owner’s Singapore ID
- Local residential address of sole proprietor
- Declaration of compliance and Statement of Non Disqualification
Once you have the above information, you can proceed to reserve your company name on ACRA. Click here to read more about: Choosing a Company Name.
As long as the company name does not require referral to any other authority and does not violate section 17 of the Business Names Registration Act, the reservation will be able to proceed almost immediately. If referral is required, it can take from 14 to 60 days to get approved.
Register your Sole Proprietorship Business
Once the company name has been successfully reserved, you may proceed to complete the registration with ACRA.
The process is fully computerised and should be fairly straight-forward to proceed.
I’m a foreigner and I want to register a Singapore sole proprietorship business. Can a foreigner register a sole proprietorship business in Singapore?
Sole Proprietorship businesses can only be registered by a Singapore Citizen, Singapore Permanent Resident or an EntrePass holder.
Foreigners who wish to register a sole proprietorship business are required to seek approval from the Ministry of Manpower before registering your sole proprietorship.
Foreigners who are residing overseas will need to appoint at least one local resident currently residing in Singapore as an authorised representative of the business.
As registration for a sole proprietorship is fully computerised via SingPass, foreigners who intend to register for a sole proprietorship will need to engage the services of a registered filing agent (such as Lionsworld), to submit the application on their behalf. Only individuals with a SingPass or CorpPass account can submit an application on BizFile+ for the registration of a sole proprietorship business.
(iii) After Registration
How will I know if my business has been successfully registered?
Once you have submitted the sole proprietorship business registration application and if everything is in order, you will receive an official email notification from ACRA notifying you that your sole proprietorship business has been registered.
This email will also inform you of your company’s registration number and is treated as the official registration information for your company.
A hard copy of the certification of registration is no longer issued by default. However, if you need one, you may approach a registered filing agent to assist you in obtaining an official hard copy certification from ACRA.
Besides the certificate of incorporation, you will also be able to obtain a PDF version of your company business profile.
The company business profile will normally be available within 24 hours after Incorporation and will contain the following key details:
- Company name and registration number
- Previous names for the company, if any
- Date of registration
- Principal activities
- Registered office address
- Owners’ details
The email notification of registration and company business profile are sufficient in Singapore for most legal and contractual purposes, including the opening of corporate bank accounts, signing of office leases, subscriptions to telephone/internet services, etc.
Are there any further filings that will need to be completed?
No. For sole proprietorship businesses, the business will be able to operate legally once it has been successfully registered. The owner(s) will not need to do any further filings until expiration date of the business.
Sole proprietorship businesses have an expiration date of 1 or 3 years from the registration date.
A reminder letter from ACRA will be sent to the owner(s) before the expiration date and the business registration can be renewed within 6 months from the expiry date for another 1 or 3 years.
If the expiry date lapses, the business will not be legally allowed to operate until the business has been renewed.
Ready to convert your Sole Proprietorship Business? Click here to read:
Part 3b: Converting from a Sole Proprietorship Business to a Private Limited (Pte. Ltd.) Company
Schedule a consultation with us or Send us your enquiries now!
Tel: +65 6336 9911
Whatsapp: +65 9869 5512
Lionsworld Incorporation Pte. Ltd.
111 North Bridge Road #21-01 Singapore 179098
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