Anyone who has the intention of starting a business in Singapore must first decide the type of business entity under which the business is to be run. One such business entity which exists in Singapore today is that of the sole proprietorship. The sole proprietorship is the simplest business form under which one can operate a business in Singapore. The sole proprietorship is not legally defined as a legal entity. The owner of a sole proprietorship is a person who owns the business and is personally responsible for all of its liabilities and debts. A sole proprietorship is allowed to operate under any business name of the owner’s choice as long as the name adheres to the business name laws of the country in which it operates. The selection of the business name, however, does not cause the sole proprietorship from becoming a legal entity which is separate from the owner of the sole proprietorship.
Circumstances in Which a Sole Proprietorship Should Be Established
There are certain situations in which a prospective business owner in Singapore ought to set up a sole proprietorship rather than any other business entity. One of the circumstances in which setting up a sole proprietorship will be advantageous occurs when the owner does not have much in the way of resources. This is because the resources required to start a partnership, limited partnership, or private limited company in Singapore are much more than those required to start a sole proprietorship. When a business owner finds it difficult to afford the setup of a Singapore-based company, the owner can always choose to mitigate the cost through the establishment of a sole proprietorship.
Business owners who do not plan to run a business on a long-term basis should also start a sole proprietorship. This is because it is relatively simple to terminate the existence of a sole proprietorship due to the fact that sole proprietorships do not have any shareholders. Therefore, if the owner at any point decides to terminate the business, this can easily be done because the input of shareholders is not required before the termination of the business takes place.
Another situation in which it is advantageous for a Singapore-based business owner to start a sole proprietorship occurs when nobody is ready or willing to join the business owner in the business venture. This lack of collaboration would cause the total initial resources of the business to be relatively low. For this reason, those who are unable to find any suitable business partners are advised to set up a sole proprietorship rather than any other business entity.
One other advantage of setting up a sole proprietorship exists with regard to legal incorporation procedures. Not every business owner is able to afford the payments for such procedures with regard to other business entities because they may sometimes be fairly expensive. Thus, business owners who do not have the adequate finances to pay for legal procedures for the incorporation of business entities other than sole proprietorships in Singapore ought to set up a sole proprietorship.
In each of the circumstances which have been mentioned, it has clearly been shown that it is often advantageous to set up a sole proprietorship in Singapore. Of course, it should also be noted that sole proprietorships are not the only business entity which could be established in Singapore. The business entity which should be selected by a business owner depends on the needs of the business owner, the financial requirements and corporate objectives of the business, and the demands of the market. Therefore, if you are uncertain about the business entity which would best suit the business which you plan to establish, contact us at Paul Hype Page & Co at any time. Our incorporation team will provide you with much input and assistance concerning your business needs and objectives. We will thoroughly analyze your current situation in order to help you determine the business entity which you should use.