A Singapore sole proprietorship is the simplest business structure with only one owner who can enjoy full control and authority when it comes handling his business. But despite such advantages, he should accept that he is directly responsible for all the assets, liabilities, and acts of business which is treated as his legal extension.
Meanwhile, foreign individuals can register a sole proprietorship in Singapore as long as they will appoint a local resident manager who may be a natural citizen or a foreigner who holds EntrePass or Employment Pass.
These are the main features of a sole proprietorship, according to the Singapore Company Registrar (Accounting and Corporate Regulatory Authority or ACRA):
– The owner has unlimited liability which means that he is directly liable for the acts, financial losses, debts, lawsuits, and claims related to his business.
– The business is not considered as a separate legal entity from its owner.
– It cannot own a property, purchase supplies, or file a lawsuit under its name.
– The business is required to renew its permit every year to the Singapore Company Registrar.
On the other hand, here are the key advantages of this Singapore company setup:
The owner is not subjected to complicated requirements and written documentations.
– The owner enjoys flexibility when it comes to making decisions since he is the only one who has the authority to do so.
– Since a sole proprietorship is taxed at a personal income rate, there is no need to file the annual returns.
– As the sole owner, a person can sell or transfer his business to anyone if he wants to.
– All the generated profits of the business belong to the sole proprietor.
While there are notable advantages in having a sole proprietorship in Singapore, entrepreneurs should also consider some of its downside including:
– The owner does not enjoy limited liability, and as a result, his personal assets can be liquidated to pay off for the debts of his business.
– In case of bankruptcy, the creditors can directly sue the sole proprietor for all the incurred debts.
– Being the only owner, it may be more challenging for a person to raise funds, decide for business strategies, and handle the whole operation.
– The business does not enjoy perpetual existence. In case of death or disability of the owner, the existence of his business may come to an end.
AsiaBizServices is the leading Singapore Employment Pass Application specialists. It has assisted thousand of foreign entrepreneurs form a Singapore company including securing their Singapore Employment Pass among other services. Our office is located at Raffles Place, in the heart of the Singapore business district.