What is a sole proprietorship?
When considering to start business in Singapore, the most important step is to choose the entity type that is right for you. In this article, we are going to talk about a business entity type that is well-known and commonly practiced in Singapore. As ACRA (Accounting and Corporate Regulatory Authority) defines, a sole proprietorship is a business type that can be owned and controlled by any individual, limited liability partnership or company.
A new company set up in Singapore that is presented as a sole proprietorship means that the owner has full authority on all decision-making. However, this means they are not benefited by limited liability and they are responsible for all liabilities and assets of the company.
What are the requirements of a sole proprietorship in Singapore?
Firstly, to start business in Singapore as a sole proprietorship, you must be at least 18 years of age and a Singapore citizen or Singapore permanent resident. Just as any other new company set up in Singapore, there are several key requirements to follow through to start business in Singapore. Here are five that are stated below:
- Must have a proposed business name that will be approved by ACRA.
- A local manager that is a Singapore citizen or permanent resident that is at least 21 years of age.
- Must have a registered local address that is a physical office.
- There must be a Singapore-based manager for foreign companies.
- Medisave must have sufficient funds prior to registration.
Once all requirements are followed through and the sole proprietorship is registered, you may open a corporate bank account. This will be solely for business transactions or finances within the company. The corporate bank account can be opened with any of the local or international banks in Singapore.
What are the advantages of a sole proprietorship?
When you want to start business in Singapore, there are many opportunities available. Due to it being one of the best trading hubs in Asia. Starting as a sole proprietorship can be advantageous for new business owners to learn more about the ins and outs of the corporate industry in Singapore. These advantages include:
- Flexibility of decision-making as there is a sole individual to make the relevant choices for the business.
- A sole proprietor can sell or transfer their business as they please.
- Few compliance requirements and documentation needed.
- All profits acquired by the business will belong to the sole proprietor.
- It is easy to administer and manage because of undivided authority.
- There are less administrative duties.
A new company set up in Singapore can involve many challenges. However, a business entity type such as a sole proprietorship has fewer compliance duties and can be a great start for aspiring entrepreneurs. This is the best way to start business in Singapore if you are completely new to the industry. Three important points to remember when starting a sole proprietorship in Singapore are: it is not a separate legal entity from the business owner, there is unlimited liability and it can sue or be sued in the owner’s name.