Guide To Sole Proprietorship Registration in Singapore
The structure of Sole Proprietorship business in Singapore is the simplest, and is suitable for the entrepreneurs who would want to start small and thrive in the conducive business environment in this country. However, you should understand that however small a business entity is, it should be registered with the relevant authorities (including the Accounting and Corporate Regulatory Authority “ACRA”) so that you can be allowed to serve and gain in the process.
Just like any businesses, the sole proprietorship business carries some risks. Unlike the private limited liability entity that provides protection for the limited liability, the personal assets of the sole proprietorship owner are not secured from business risks.
Risks Of A Sole Proprietorship Business Are Personal
Unlike a limited company that have directors and shareholders who can share the risks of the business, a sole proprietorship has no separate legal entity and hence the owner is liable for anything that may happen to the business. He or she will be personally accountable for all the liabilities that may occur in the running of the business.
It is therefore prudent to do a reconnaissance study of the type of business you want to register in Singapore, understand all the requirements and raise enough capital to start it.
A sole proprietorship business differs significantly from other types of Singapore companies, including partnership and private limited company.
Who Is Eligible To Register Such A Business
A sole proprietorship business can be registered by either a natural person who is above 18 years of age, or an entity registered in Singapore, such as a limited company. The business should have at least one manager, a person who is above 21 years of age and an ordinary Singapore resident. If you have acquired permanent Singaporean residence, you can also be the manager of your business.
Other Requirements Needed For The Sole Proprietorship Registration
Just as the other types of businesses, you should provide a physical address for your business and it should not be a P.O. Box. You can use your residential home address to register the business too, although you will need a written approval for that, which you will get from either the Housing and Development Board (HDB) or the Urban Redevelopment Authority (URA) – for private properties. The approval is to show that they have allowed you to use the rented premise for office purposes.
If you are a Singapore citizen, then you ought to ensure that your Medisave accounts are in order with sufficient funding before you register the company. Remember that the profits you get from your business as a sole proprietor will be treated as individual monthly income, hence they have to be subjected to taxation just as that of a personal income.
Compliance after Registering Singapore Sole Proprietorship Business
All the documents you use to conduct business such as invoices, delivery notes and other bills should have the letterhead of the company and the registration number that you were given after registration.
There will be no need to worry about auditing the accounts of the business or filing returns with the ACRA, because the profits you make are taxed as personal income. That may sound as a reprieve. On the other hand, it is important to note that you must still prepare and maintain the full set of accounts (including certified reports of financial statements), preparing the necessary reporting of your tax every year (including 2 line or 4 lines statement and tax computation) to the Inland Revenue Authority of Singapore (“IRAS”).
Lastly, always remember to renew the registration of your sole proprietorship business annually. If you need assistance to register a sole proprietorship business or for sole proprietorship reporting matters, J Accounting has the solution for you. Refer to our sole proprietorship package pricing.
