There’s a point when your Sole Proprietorship is ready to convert. You’re making a sound profit and pay way too much taxes, there’s a lot of responsibility on you personally, you are limited in your fundraising options and you want to involve other partners or hire employees. Pte Ltd is the next step for businesses that keep growing.
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. And if you make S$90,000 a year, you’ll save S$4,200.
What is the process like?
Converting really is 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 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. We’ll help process selling or leasing them.
What are the benefits of Pte Ltd?
Limited liability protects you from risks, like having to pay company debt from your pocket. Another plus with Pte Ltd is you can involve other partners or pass your business to your heirs. And fundraising is easier.