Sole Proprietorship — is a business set up by one individual. A disadvantage is it doesn’t provide a separate legal entity. The entrepreneur thus personally owns all the risks. For example, you’d have to take a bank loan in your name, and pay out the debts yourself. The advantage is Sole Proprietorship is very easy to start and manage.
What are the advantages of Sole Proprietorship?
Sole Proprietorship doesn't require any setting up. You just inform ACRA that you have started business activity. Unlike withh LLC, you don't need a Company Secretary and you don't have to file your annual returns with ACRA. You also report taxes as an individual and pay the progressive income tax rate. It starts from 0% on the first S$20,000 and goes up to 22% above S$320,000.
What are the requirements to set up a Sole Proprietorship
In order to register a Sole Proprietorship, you need to be
- at least 18 years old and one manager who is over 21 years old
- a resident of Singapore
- have a local business address
- have sufficient funds on your Medisave account
Once you've set up, you need to renew your status with ACRA annually
Sole Proprietorship examples in Singapore
Sole Proprietorship is a very easy form for Singapore residents to open and run a small business. It might also be a good start to check and see if the business starts to grow. You can always convert into Pte Ltd later.
For example, if you want to open an online cupcake shop. You invest your own savings, you bake and advertise yourself, so there are no employees, and your appartment is going to be your registered address. Then, once you receive lots of orders, need to expand out of your kitchen and hire additional bakers, you can convert to LLC.