Easily convert from a Sole Proprietorship to a Pte Ltd

Converting is really just closing down your Sole Proprietorship and opening a new company. The only thing you can keep is the name. We’ll send an appeal to ACRA to transfer that to your new Pte. Ltd. After that, we will incorporate your new business within an hour. The rest has to happen within 3 months — new bank accounts, assets, contracts, licenses. We also inform ACRA about proprietorship termination.

We’ll help you re-sign all the contracts (rent, suppliers, clients) to the new company. Same goes for bank accounts: we close the old ones, and open new ones to the company name. If your business needs a license, we’ll apply for a new one — these cannot be transferred. Consider which assets you want to transfer. Consider which assets you want to transfer and we'll help with the selling or leasing process.

It makes sense to convert when you see that your business is doing very well. A Sole Proprietorship is a great way to test ideas. Once you know you're going to stick with your business idea and are seeing it succeed, it's time to consider setting up a Pte Ltd (Singapore's abbreviation for a "private limited company"). You may want to convert if you plan to start hiring employees or inviting additional shareholders. The most practical reason to convert is to start paying less tax — you'll pay a flat tax rate of 17%.

You will need to close down your sole proprietorship and open your new company (under its original name). Here's what you need to do:

• Write an appeal to ACRA explaining your name will be used by a new company instead of the proprietorship you are closing.
• Incorporate a private limited company — Osome will do that for you within an hour.
• After that, you have 3 months to set up everything for the new company — bank accounts, assets, contracts, licenses.
• Inform ACRA about proprietorship termination once you are done. That should also happen within 3 months after incorporation. Osome can do that for you, too.

You will also need to do the following:

• Re-sign all the contracts (rent, suppliers, clients) to the new company.
• Same goes for bank accounts: close the old ones and open news ones in the company name. You might want to inform your partners as this could mean a delay in processing invoices.
• If your business needs a license (like a retail shop, a spa or a real estate agency), you will have to apply for a new one — these cannot be transferred.
• Consider which assets (for example, your equipment, cash, or even real estate) you want to transfer. If there are things you don't need anymore, you may want to sell or lease them.

A private limited company can be established by one or more persons by incorporating the company with the help of Companies House. The process includes signing a Memorandum of Association, completing Companies House Form IN01, and paying the registration fee.

• Limited liability. If things go wrong, a proprietor pays all the debt from his pocket. A company, being a separate legal entity, protects you from that.
• A proprietor is on his own. You can’t involve other partners. Your children cannot inherit your business. We hate to be indelicate, but if a proprietor retires or dies, so does his company — while a private limited continues to exist.
• Fundraising is easier. Loans become easier and you can attract investors — a regulated company incurs more trust than a single person.

Advantages:

• A Private Limited Company is a legal corporate body. The law sees it as a juridical person with its rights and responsibilities.
• The Shareholders have limited personal liability and their personal assets are safe
• If the Shareholders die or transfer their shares the company doesn’t cease to exist
• The process of shares transferring is easy
• Your company has the right to certain tax deductions by IRAS
• You can legally have 100% of foreign shareholders

Disadvantages:

• It is relatively difficult to register a Private Limited Company in Singapore as the Singapore Companies Act has a set of strict rules and regulations you must comply with
• The cost to set up and maintain the growth of such a company may be higher, not to mention the fact that there are obligatory annual filing requirements to consider
• It is mandatory to hire a bookkeeper, an accounting service provider, and a corporate secretarial service all of which can be costly, but with our help it won’t be an issue.