Singapore isn’t recognised as one of the top places in the world to do business for nothing. No matter the size of business entrepreneurs have in mind, whether starting a small venture or setting up an offshore or multinational firm, the Lion City has just the right combination of strong government support, infrastructure, and talented pool of local and international talent that makes any business for Singapore company formation a worthwhile investment.
What’s more, Singapore offers a variety of business entities to cater to a wide range of business models. If you’re thinking of taking baby steps to launch your entrepreneurial career in the Lion City, you can do so by having your business registered as a sole proprietorship.
What is a sole proprietorship
Most neophyte entrepreneurs who want to start off small prefer to register their business as a sole proprietorship. Under this model, the business is owned by one person, who is called a sole proprietor. Being the sole owner, the sole proprietor has absolute control over the business.
The sole proprietorship business entity is a popular choice amongst new entrepreneurs and it’s easy to understand why. It’s the simplest, most basic form of business registration, which means it is the easiest and cheapest to set up amongst other legal entities in the Lion City.
Small and medium enterprises (SMEs), independent professionals who offer freelance, consultancy, or contractual services, and service providers like designers and copywriters prefer to register their venture as a sole proprietorship as it offers convenience in terms of registration, paperwork, and management.
How to register as a sole proprietor
Being a simple and basic legal entity, it is easy to register as a sole proprietorship for Singapore company formation. You can even do the procedure yourself or you can engage a company formation service if you want to be thorough in following all the various steps in the formation of a company under sole proprietorship.
If you are not Singapore citizen, resident, or EntrePass holder, you should appoint a Singapore resident to be your authorised representative. If you are self-employed, you are also required to top up your Medisave account with the CPF Board before you proceed to register your sole proprietorship business.
Advantages and disadvantages of starting a sole proprietorship
All business entities in Singapore carry with them certain characteristics that may or may not be ideal for specific business models. Before you opt for a sole proprietorship, it is important that you understand the unique features of this legal entity and compare them to the needs of your business.
It is recommended that you hire a company formation services in Singapore to help you understand better how you can benefit from a sole proprietorship or not, should you decide to register your business as one.
Pros
● Easy to set up: If you want to start a business in Singapore right away, choosing to register as a sole proprietorship is your best bet. Local entrepreneurs prefer this legal entity when they’re looking to start off small before registering as a private or public company should they decide to expand.
● Low registration cost: Compared to setting up as a private or public company for Singapore company formation, registration for sole proprietorship is more affordable.
● Less compliance requirements: Compared to running a private or public company, you won’t need to meet a lot of compliance requirements to run a sole proprietorship business. You don’t have to file tax returns annually and just need to renew your membership every year.
● You have absolute say on running the business: Since you are the sole owner, you have full control of the business. You don’t have to consult anyone when making a business decision or on any matters related to managing the business.
● Business profits are all yours: Being the sole owner, you don’t have to share the profits of the business.
● Easy to dissolve: Should you decide to terminate business operations, you can do so easily as you are the sole owner and decision maker.
Cons
● There is no separate legal entity: You, as the sole owner, don’t have an entity or personality that is separate from the business. You and the business are considered as one. This means that you can be held personally liable for any debts or losses incurred by the business.
● The sole proprietor has unlimited liability: Since you don’t have a legal entity that is separate from the business, your liability is infinite. Legal actions that are taken against the company are also taken against your own name. Since you are liable for the debts and losses, you don’t have control over your personal assets.
● Not eligible for corporate tax benefits and incentives: Calculation of your taxes is based on your personal income, since you and the business are considered one and the same. You are not eligible for any tax benefit or incentive that most companies enjoy.
Raising capital and securing loan are a challenge: It may depend on your credibility should you need to increase your capital or secure a loan. Most banks prefer to grant loans to companies as they are more credible.
Refer to these pros and cons to come up with a sound decision when thinking of setting up a sole proprietorship in Singapore. Should you opt to register as one, you can make the process of business registration easier by hiring a company formation service.
Apart from giving you expert insights when deciding to sign up as a sole proprietor, a company formation services in Singapore can make the process of registering a sole proprietorship business easier and hassle-free.
These professional services providers are adept in all aspects of business registration and company incorporation of all kinds of businesses. A company formation service can provide you with specialists to handle all your registration requirements as well as filing of essential documents, ensuring that they are filed timely and in an efficient manner.
Should you decide to expand your business, you can also count on company formation services in Singapore to guide you on which type of company suits your business best. You can ask them for tips and advice on the cheapest offshore company formation or how you can go about the steps of company formation with bank account.
Whether or not you decide to sign up for sole proprietorship, know that arming yourself with essential information before registration is key to successfully set up this kind of business. With the help of an expert company formation firm, you can weigh the pros and cons easily and simplify as well the procedures you need to complete to start a sole proprietorship business in the Lion City.
