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What is a ‘Sole Proprietorship’?

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 organization. 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 are the Tax Rates?

Business income is taxable in the sole-proprietors or self-employed person’s name. Therefore, a sole-proprietor or self-employed person who receives this income must prepare a 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.

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Registration and Compliance

When a person wishes to carry on business in Singapore as a sole proprietor, he or she must first apply to private listed companies in 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 (Accounting and Corporate Regulatory Authority) 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 offense and may result in the imposition of a fine.

Sole Proprietorship FAQs

What are the advantages of setting up sole proprietorship?2020-12-23T09:56:51+08:00

The major advantages of sole proprietorship are it is simple and affordable as compared to other business entity. It also offers freedom and flexibility in business operation as well. 

Can a foreigner set up Sole Proprietorship in Singapore?2020-12-23T09:55:37+08:00

Yes, foreigners can register a sole proprietorship in Singapore. Nonetheless, if they live outside of Singapore, they must appoint an authorized representative who is a legal resident in Singapore.  

What are the disadvantages of setting up sole proprietorship?2020-12-23T09:55:58+08:00

The major disadvantages of launching a sole proprietorship are business owner is liable for the debts of the business and any other legal action taken against it. Apart from that, difficulty in tracking expenses is also another disadvantage of sole proprietorship. 

Does sole proprietor need to pay tax?2020-12-23T09:56:12+08:00

Yes, like other business entity, all sole proprietors need to pay tax. 

What are the examples of sole proprietorship?2020-12-23T09:56:26+08:00

Saloons, restaurants, mini market are some of the examples of sole proprietorships. 

2021-02-04T18:06:58+08:00January 8, 2015|Comments Off on Sole Proprietorship
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