Sole-proprietorship is the most common and simplest form of business entity. It can be owned by an individual or a company.
Features of Sole-proprietorship
- The sole proprietor (owner) is responsible for all business transactions.
- A Sole-proprietorship is not a separate legal entity, therefore:
- The owner is personally liable for all debts and liabilities incurred by the business;
- It is not allowed to acquire or hold any property in its name.
- The business income will be taxed at the owner’s level, which is to say, if the owner is:
- An individual: income to be taxed at personal income tax rate;
- A company: income to be taxed at the prevailing corporate income tax rate.
- It has to be registered with the Accounting and Corporate Regulatory Authority (ACRA) and renew its licence annually.
- No statutory obligations such as filing of audited accounts and annual return.
Requirements of setting-up a Sole-proprietorship
- The individual owner must be at least 18 years of age.
- A Sole-proprietorship must have a business address in Singapore; while using a residential address as the business address will be subjected to Housing and Development Board’s (HDB) approval.
- If the owner is a foreigner or a foreign company, a local resident manager has to be appointed for discharging all obligations of the Sole-proprietorship.
- Desired name of business entity
- Copies of identification (NRIC and/or Passport) of the business owner (including residential address)
- Brief description of principal activities
- Registered business address
- Completed application forms
- Application for Entity Name (subject to availability and approval by ACRA required)
- Registration of the business