A ‘Sole Proprietorship’ may be described as a business that is carried on by an individual on his or her own without the use of a separate and distinct business form.
The sole proprietorship is the simplest form of business organisation. The law does not regard the sole proprietorship business as a different entity from its proprietor (or owner). As such, all rights that the business has are rights that belong to the proprietor. Similarly, all liabilities or debts that are incurred by the business are in law the liabilities or debts of the proprietor. The assets and profits that the business generates are owned by the proprietor who is personally liable to pay whatever tax payable in respect of these assets and profits. Should the proprietor die, the business will cease to exist.
What is the Tax Rates?
Business income is taxable in the sole-proprietor’s or self-employed person’s name. Therefore a sole-proprietor or self-employed person who receives this income has to prepare statement of accounts and report the income in his individual tax return. The business income will be added to all other personal income and the total is subject to personal income tax rates.
Registration and Compliance
When a person wishes to carry on business in Singapore as a sole proprietor, he or she must first apply toprivate listed companiesin accordance with the provisions of the Business Registration Act (Cap 32). This may be done by completing and submitting the relevant forms electronically using ACRA’s e-filing portal, Bizfile. The documents may be filed personally online or at ACRA or with the help of a professional firm of lawyers, accountants, chartered secretaries or service bureau. Subsequently, the proprietor must comply with all the requirements set out under the Business Registration Act such as the filling of changes in particulars of the business and its owner.
Under regulations made pursuant to the Business Registration Act, the Registrar may require a business owner who is not ordinarily resident in Singapore to appoint a local manager to be appointed.
Cessation of Sole-Proprietorship Business
A sole-proprietorship business will cease when the proprietor either dies or otherwise ceases to carry on business. The Business Registration Act requires any person registered under it that has ceased to carry on business to notify the Registrar of this. Failing to do so is an offence and may result in the imposition of a fine.
While the law does not mandate a company to amend its M&AA to cater to one director company, you may wish to examine your own M&AA to determine if it contains any provisions that will not be operatable if the number of directors is reduced to 1. Every company can draft its own set of M&AA and need not rely solely on the provisions in Table A of the Companies Act. In this regard, please refer to section 4 and 184 of the Companies Act.
Singapore dormant company need not submit audited accounts, if your company does not have any accounting transactions for that financial year other than the exceptions set out in section 205B(3) of the Companies Act, eg. maintenance of registered office. If you are not sure whether there was any accounting transaction for your company, please seek professional advice from your Paul Hype Page & Co, ACRA Certified Public Accounting Firm.
*For more details on filing Company’s annual returns, click here
Paul Hype Page & Co. is an ACRA-certified business adviser. Our team of seasoned professional can help you set up a company in Singapore very quickly and easily following all legal entities, and offer you sound advice on how to make it successful too.
In addition to business registration, we’ll also guide you how to:
Write a business plan – Learn how to write a compelling business plan by accessing our sample business plans, or other helpful market research information
Perform market research – Understand your business market, learn how it can enhance your business growth, and how to properly conduct a market research for your business
Corporate Secretary Services – If you are registering a company in Singapore, you will need a Corporate Secretary. Corporate compliance in Singapore is a complex legal requirement for all Singapore registered companies. Our company secretarial team helps our clients and their officers to fulfil their statutory obligations in an efficient manner.
Manage your finances – We’ll offer you the best resources and information to help you fully understand all financial concepts and teach you how to perform basic accounting tasks like budgeting, bookkeeping, financial analysis, among others
To further aid you, we have provided here a resource area with industry specific information and other industry resources to help you successfully start and run your business.
By Eric Eio
Managing Partner of Paul Hype Page & Co.
Eric was awarded an ACCA graduate in 2000 and also graduated from University of Sydney with a Bachelor degree in Computer Science & Accounting. Since graduation, he had worked in Big 4 as an auditor , including a one year overseas stint with Ernst & Young, Shanghai in 2005. He left his last appointment as an Audit Managerial position with PricewaterhouseCoopers, Singapore in 2008 before setting up his own Certified Public Accountant Practice– Paul Hype Page & Co. His firm is being selected to be one of the advisory panel for Singapore top 500 SME.