A Sole proprietorship or partnership, which is the most basic form of business structure in Singapore, will be discussed in this article. Keep reading our article to find out more about the process to register in Singapore, and some of our thoughts and considerations before deciding to go with the registration process.
What is a Sole Proprietorship?
Any person who is thinking of performing activities, such as selling goods or even providing services, that obtain an income, needs to register their business activity in Singapore. But in which cases a person can become a registered sole proprietor? Let’s explore first this term to understand what it entitles.
In simple terms, a single individual providing or doing activities can register himself or herself as the owner to become a formal business. This is the basic concept of a Sole Proprietorship. Some examples could be a person who runs a small convenience store in front of his or her house, an individual providing services like a freelancer and even an artisan.
From the perspective of the legal standing of this business entity, the individual and the business are not separate legal entities, therefore all the liabilities from the business fall over the individual. For example, if the sole proprietorship business gets into debt or there are losses from running the activities, the business owner gets unlimited liability by the agreements contracted and he or she risks all its assets.
It is important to also make the distinction between a Sole Proprietorship and a Partnership since the regulatory authority gets them in the same category. More details are to come in the next subsection.
Pre-Registration Requirements for Sole Proprietorship
As it is one of the simplest business structures in Singapore, there are a few requisites to register a Sole Proprietorship. The requirements for locals are a bit simpler. That is not the case for foreigners, they need to take additional steps. Let's discuss these two scenarios!
For locals or Singapore Permanent Residents:
- An individual must be at least 18 years or older.
- Being a Singapore citizen or a Permanent Resident.
For Foreigners who are not Singapore Permanent Residents:
A foreigner can register a Sole Proprietorship. Foreigners that live in Singapore can obtain a FIN (Foreign Identification Number). With FIN, an individual can log into the system to start a registration. But in any case, a foreigner needs to obtain authorization from the government.
In a more realistic scenario, most of the time, a foreigner cannot do it by himself or through the registration process. Consequently, there will be the need to hire a professional firm to help and file the application for registration with the corresponding government bodies in Singapore.
Sole Proprietorship Registration Process
To register a Sole Proprietorship, an individual needs to take some steps with the Accounting and Corporate Regulatory Authority (ACRA). Here we will name the steps to take for this registration process:
- Choose a name for your business: as with other types of business entities, the name must not be used by other businesses registered in Singapore. The name chosen also must not confuse or contain offensive words.
- Defining the business activity: it is important to specify the activity that your business will conduct, and it is normally done together when selecting the name of your business.
- Selecting a business address: an address must be provided to register your business. A residential address can be provided but is subject to the approval of the authorities under the home office scheme. Otherwise, a local business address is necessary.
- Singapore ID of the owner: the ID of the owner must be provided as well as the “owner's local residential address” and it will be kept in the record. In the case of foreigners, a local authorized representative, who is a permanent resident, must be nominated for the process.
- Submission of the application through Bizfile+: once the information has been gathered, it needs to be submitted through the online government platform.
- Waiting for the result: as there is an administrative fee for the process, once it has been paid, the authorities will process the application and give a decision.
In this subsection, we will share some of our thoughts related to what comes after the registration of a Sole Proprietorship. Here we enlist some aspects:
- Time frame: the approval process may take from 12 days to 2 months, depending on the business activity that you will be engaging in.
- Tax Filing: a Sole Proprietorship is not taxed as a corporation, therefore, it does not need to pay corporate taxes. All the profit generated from the business operations is considered individual income profit, and it is taxed as such.
- Managing the operations: if a foreigner that registered a Sole Proprietorship wants to manage the operations directly and wishes to reside in Singapore, he or she needs to seek approval from the Ministry of Manpower.
- Continuity and transfer: a Sole Proprietorship can process a notification to cease its business to the Accounting and Corporate Regulatory Authority (ACRA). If the owner dies, the business cannot continue. The Sole Proprietorship can be transferred to another person by selling the assets of the business and making the corresponding notifications of ownership with the authority.
- Business account: a Sole Proprietorship cannot operate with a personal account. It needs to have a separate business account. A solution for this issue is to go to a banking institution to request the service for a corporate bank account. A new trend is to go the way of digital accounts. A digital business account will help your business and save you time and all the hassle from the banks.
With the structure of a Sole Proprietorship, an individual can give formality to business registration. It is the most basic expression of running a business by a single individual.
Furthermore, people from other countries can participate in this structure. However, you will need some help from a professional who is specialised in this area. The issue of having a business account for a Sole Proprietorship needs to be considered as well. Some banks could find it difficult to provide their services.
At Statrys, we understand the issues that SMEs and entrepreneurs are facing with opening business accounts. Currently, businesses incorporated in Singapore, Hong Kong and the BVI are eligible to apply for a business account with Statrys. If you are looking for an alternative solution, please submit your application online on our signup page and our onboarding team will get back to you within 24-48 hours.
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