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  2. Sole Proprietorship Conversion to Pte Ltd

Easily convert from a Sole Proprietorship to a Pte Ltd

If your sole proprietorship is making a significant profit, consider converting it to a Pte. Ltd. structure. This will give you more fundraising options, lower tax rates, and less personal responsibility.

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<i>Easily convert</i>from a Sole Proprietorship to a Pte Ltd
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Incorporation Process

Change of business structure questions, answered

What is a Pte Ltd?

What is a Pte Ltd?

A private limited company (Pte Ltd) is the most popular type of business entity in Singapore. This type of company has limited liability, which means that the company's responsibility is limited to the value of the shareholders' shares. Profits earned by the company are subject to corporate tax, but shareholders don't have to pay any tax on the dividends they receive.

Advantages of converting to a Pte Ltd

Advantages of converting to a Pte Ltd

  • You won’t be legally responsible for all lawsuits filed against your business.
  • Sole proprietors face a greater risk of financial ruin than directors of private limited companies.
  • You can enjoy tax benefits that a sole proprietor won’t have, such as tax exemptions.
  • Your capital is not limited.
  • You can find a successor if you happen to leave the business.
  • You have a greater chance of partnering with serious businesses.
Are there any downsides?

Are there any downsides?

While there are many perks that come with converting your sole proprietorship to a Pte Ltd, there are a few drawbacks:

  • A company's dissolution is a complex task
  • Such companies are more difficult to manage
  • Pte Ltds in Singapore must comply with stricter rules and regulations according to the Singapore Companies Act

Thankfully, we are professionals in all things business structure and what's best for your needs. Trust us with this process so that you're paying the right tax and are compliant with authorities at all times.

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Company conversion admin, sorted

  • Sole proprietorship cessation filing

    Sole proprietorship cessation filing

    We'll file "Cessation of Business" with ACRA when you open a Pte Ltd or change business structures within 6 months. This allows time to transfer documents and contracts to your Pte Ltd.

  • Incorporation of a Pte Ltd company

    Incorporation of a Pte Ltd company

    We submit a Name Application to ACRA along with a "Name Appeal Letter" so that you can still operate under your old company name.

  • Transfer of business matters

    Transfer of business matters

    We move your assets, bank accounts, and other matters from the existing Sole Proprietorship to your new Pte Ltd company before the cessation date.

  • Termination of Sole Proprietorship

    Termination of Sole Proprietorship

    When the cessation date lapses, your SP will be automatically terminated. You don't need to send any notices of cessation to ACRA.

Got questions? Chat with our local experts

Choose a convenient time to chat with our incorporation experts and get the answers you need to take the next step.

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Value-for-money packages for your Pte Ltd business in Singapore

Conversion + Secretary

Perfect if you want us to handle the conversion process and take care of filings with ACRA

S$ 800
  • SP entity cessation
    • Filing of cessation
    • Name appeal
  • Pte Ltd entity incorporation
    • Registration preparation and filing, including S$315 government fees
    • Company constitution
    • All post-incorporation documents (share certificates, registers, minutes book)
    • ACRA name checking
    • ACRA business profile set-up
  • Business bank account
    • Assistance in connecting with our banking partners
  • Corporate secretary
    • Expert support via in-app chat
    • Preparation and filing of Annual Return, including S$60 government fee
    • Holding of Annual General Meeting (AGM)
    • Appointments and resignations of directors, officers, or auditors
    • Unlimited changes in company name, address and business activity
    • Shares management of up to 50 shareholders
What's included?

Full compliance

If you want your sole proprietorship converted to a Pte Ltd with new incorporation, corporate secretary, and accounting services included

S$ 1,590
  • SP entity cessation
    • Filing of cessation
    • Name appeal
  • Pte Ltd entity incorporation
    • Registration preparation and filing, including S$315 government fees
    • Company constitution
    • All post-incorporation documents (share certificates, registers, minutes book)
    • ACRA name checking
    • ACRA business profile set-up
  • Business bank account
    • Assistance in connecting with our banking partners
  • Corporate secretary
    • Expert support via in-app chat
    • Preparation and filing of Annual Return, including S$60 government fee
    • Holding of Annual General Meeting (AGM)
    • Appointments and resignations of directors, officers, or auditors
    • Unlimited changes in company name, address and business activity
    • Shares management of up to 50 shareholders
  • Accounting and tax
    • Filing and bookkeeping support via in-app chat
    • Support SLA 6 business hours
    • Annual management reports reviewed by accountant
    • Estimated Chargeable Income (ECI) filing
    • Unaudited Financial Statements preparation
    • Annual tax return filing (C-S/C)
  • Bookkeeping
    • Unlimited bookkeeping
    • Automatic reconciliations
  • Financial software
    • Create, send, and chase invoices
    • Capture bills and receipts easily
    • Reimburse expenses
    • Connect your banks
    • Use multiple currencies
    • Get real-time ecommerce sales reports
    • Connect one marketplace
What's included?
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FAQ

  • Is it cheaper to run a Pte. Ltd. than a Sole Proprietorship?

    Pte. Ltd. is more expensive to manage — you have to hire a corporate secretary and file annual returns to ACRA. But taxes are super low thanks to a flat rate and a lot of exemptions. If you do the math, it turns out it’s cheaper to convert after you’ve made more than S$32,857 a year in profit.

  • Is it expensive to manage a Private Limited Company?

    A private limited company is more expensive to manage — you have to hire a corporate secretary and file annual returns to ACRA. But taxes are super low thanks to a flat rate and a lot of exemptions.

    A sole proprietor pays progressive tax up to 22%. A private limited company pays 17% flat minus all the exemptions. Add a corporate secretary to that and it's S$300 a year with Osome.

  • Can a Private Limited Company take a loan from a bank?

    According to the Companies Act, which was established in 2013, loans by Private Limited Company could be accepted from banking institutions as well as from Directors and any other corporation.

  • Is a Private Limited Company a corporation?

    The main difference between a company and a corporation is the size. A corporation is a bigger business entity than a company.

  • Can a private limited company give loans to outsiders?

    A Private Limited Company cannot give loans to any other individual or corporate bodies which is beyond 60% of its Paid-up Capital + Free Reserves + Security Premium, or 100% of Free Reserve + Security Premium.

  • Who owns a private limited company?

    A company can be owned by individual people, trusts, associations and/or other companies. The owners are called shareholders.

  • What is the process?

    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.

  • What exactly has to happen?

    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.

  • When should I consider converting my company?

    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%.

  • What should I do after I decide to convert?

    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.
  • How is a private limited company formed?

    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.

  • Why is a private limited company better?

    • 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.
  • What are private limited company advantages and disadvantages?

    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.
Ask your question
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