When is conversion better?
You can switch when your business is up and running. Sole proprietorship is a good choice to try out practical ideas. If you have determined that you want to stick to your career, you may consider setting up a private limited company. It is also a good time to switch when you start hiring. And the most obvious time is when you realize that your taxes are too high.
Why are private limited companies better?
- Limited liability. If there is a problem with the company, the sole proprietor needs to repay all the debts by himself. And private limited companies can avoid getting you into this situation.
- Sole proprietors can only rely on themselves, you cannot have other partners, and your children cannot inherit your business. If a sole proprietor retires or dies, his company will also end, but the private limited company will continue to exist.
- Financing is easier. Loans will be easier, and you can also raise funds by attracting investors. People tend to trust regulated companies more.
What happens to my funds?
The management costs of private limited companies are higher, you must hire a company secretary and submit an annual report to ACRA. Thanks to a uniform tax rate and a large number of tax exemption policies, the taxes and fees you will pay will be super low. Let's do it together. Sole proprietors need to pay progressive income tax up to 22%. The tax payable by the private limited company is 17% minus all exemptions, and a company secretary is required to be hired-the price of Osome is S$300 per year. The results show that if your annual profit exceeds S$84827, the cost after conversion to a private limited company will be lower. If you make 120,000 SGD a year, you will save 550 SGD.
Scenario 1: The annual profit is 25,000 SGD
Scenario 2: Annual profit is S$84827
Scenario 3: Annual profit is S$120,000
I'm sure I want to switch, what should I do?
Conversion is actually closing your sole proprietorship and registering a new company. The only thing you can continue to use is your company name. Here is what you need to do:
- File a complaint with ACRA stating that you will set up a new company to replace the sole proprietorship you are about to close, and your new company will continue to use this company name.
- Register a private limited company-Osome can do it for you within an hour.
- 注册完成之后，您有3个月的时间为新公司做准备— 银行账户、资产、合同和许可证等。
What is my specific job?
- You need to re-sign all contracts (lease, supplier, customer) in the name of the new company.
- Bank account: Close the old account and open a new account with the company name. You need to notify your partner because this may cause invoice processing to be delayed.
- If your company needs permits (such as retail stores, spas, or real estate agents), you must apply for new permits—these permits cannot be transferred directly.
- Consider the assets you need to transfer (such as equipment, real estate, or cash). You can sell or rent them.