Guide to Setting Up a Sole Proprietorship in Singapore

Starting your own business in Singapore can be a rewarding venture, and a Sole Proprietorship is one of the simplest and most affordable business structures available. This guide will walk you through the process of setting up a Sole Proprietorship in Singapore, its benefits, and compliance requirements.

What is a Sole Proprietorship?

A Sole Proprietorship is a business owned and operated by one individual or entity. It is the simplest business structure in Singapore, ideal for small businesses or self-employed individuals starting out. However, it is not a separate legal entity, meaning the owner is personally liable for the business's debts and obligations.

Benefits of a Sole Proprietorship

1. Easy and Affordable to Set Up
   The registration process is simple and costs are minimal compared to other business structures.
2. Full Control
   As the sole owner, you have full decision-making authority over the business.
3. Minimal Compliance Requirements
   Sole Proprietorships have fewer reporting obligations compared to Private Limited Companies.
4. Tax Advantages
   Income from the business is taxed as personal income, potentially leading to lower tax rates for smaller profits.

Step-by-Step Guide to Setting Up a Sole Proprietorship

1. Choose a Business Name
   

   Select a unique and appropriate name for your business. The name:

   • Must not be identical or too similar to an existing business name.
   • Must not infringe on trademarks.
   • Must not contain prohibited or vulgar words.

   You can check the name's availability and reserve it through the Accounting and Corporate Regulatory Authority (ACRA) BizFile+ portal.

2. Meet the Registration Requirements
   

   To register a Sole Proprietorship, ensure you meet these criteria:

   • The owner must be a Singapore Citizen, Permanent Resident, or EntrePass holder.
   • The business must have a local registered address in Singapore.
3. Prepare the Necessary Documents
   

   You will need:

   • Proposed business name
   • Owner's identification (NRIC or FIN)
   • Local business address

   Description of business activities (aligned with the Singapore Standard Industrial Classification - SSIC code)

4. Register via ACRA's BizFile+ Portal
   

   Log in to BizFile+ using your SingPass. Complete the registration process by providing the required details. Once submitted, your Sole Proprietorship will typically be registered within a day if there are no issues.

5. Pay the Registration Fees
   

   The cost to register a Sole Proprietorship includes:

   • Name application fee: S$15
   • Registration fee: S$100 (valid for 1 year) or S$200 (valid for 3 years)
6. Obtain Licenses (If Applicable)
   

   Depending on your business activities, you may need additional licenses. For example:

   • Food & Beverage businesses require food licenses.
   • Retail businesses may require specific permits.

Compliance Requirements for Sole Proprietorships

Although compliance is minimal, Sole Proprietorships must adhere to the following:

1. Renew Registration: Renew your business registration before it expires. This can be done online via BizFile+.
2. Maintain Accurate Records: Keep proper records of income and expenses for accurate tax reporting.
3. File Income Tax Returns: The owner's income from the business is reported under personal income tax. File your returns annually with the Inland Revenue Authority of Singapore (IRAS).
4. Update Business Details Notify ACRA of any changes in business particulars, such as address or business activities, within 14 days.

Limitations of a Sole Proprietorship

While a Sole Proprietorship is simple and cost-effective, it has some drawbacks:

• Unlimited Liability: The owner is personally liable for all business debts.
• Lack of Continuity: The business ceases to exist if the owner passes away or decides to close it.
• Limited Growth Potential: Sole Proprietorships may face challenges in raising capital or expanding operations.

Why Engage Professional Help?

While setting up a Sole Proprietorship is relatively straightforward, professional assistance can ensure:

1. Proper registration and compliance with ACRA regulations.
2. Guidance on licenses and permits required for your business.
3. Advice on tax obligations and record-keeping.

At Apexia Corporate Advisory, we help entrepreneurs like you set up their businesses quickly and efficiently, so you can focus on building your dream venture.

Conclusion

A Sole Proprietorship is an excellent choice for individuals starting small businesses in Singapore. By understanding the registration process and compliance requirements, you can get your business up and running in no time. Need help with the setup or compliance of your Sole Proprietorship? Apexia Corporate Advisory is here to guide you every step of the way. Contact us today for professional support and personalized solutions!