There are a number of entrepreneurs who prefer to set up a Sole Proprietorship. First of all, compared to private limited companies, a sole proprietorship is relatively easy to set up. Cost wise, it is possibly the cheapest form for a company. The only drawback for this company structure is that there is no separation of liabilities. The owner and the proprietorship is one and the same. This form of company structure is suitable for one who needs to be self employed, however it can be found to be highly unsuitable should the business expand rapidly.
Second, it is easy to manage and administer since the sole proprietor is usually the only decision maker. In cases where the business expands quickly, the proprietor will find the lack of protection from personal liability quite unsettling and may then proceed to convert the proprietorship into a limited company. Please note that such conversion cannot be easily done. The proprietorship will have to cease operations before the limited company can be formed with a similar trade name.
Third, sole proprietors are not required to audit their business accounts or file annual returns with ACRA. If the turnover is less than S$500,000 in a year, a four line statement is sufficient for the purpose of filing tax returns. In cases where the turnover is more than S$500,000 a year then proper accounts needs to be submitted together with the personal tax returns. The business is taxed at the personal income tax rates.
Should a person incorporate a number of proprietorships, then for the purpose of meeting the requirement for compulsory registration for GST, all proprietorships turnover are taken in total for this assessment.
Almost anyone, who is ordinarily resident here can register a Singapore sole proprietorship. However, if you are an undischarged bankrupt, you may not be allowed.
The requirements of setting up a sole proprietorship are basically the same as that of private limited companies – although much less complicated. You will need a business name, a local manager who is a Singapore Resident, and a registered address. There are a few businesses that are required to obtain licenses and permits before you can register your sole proprietorship.
Sandhurst can effectively assist you in registering your sole proprietorship.