Since a Singapore sole proprietorship is only owned by one person, experts believe that this is the most flexible and simplest business structure, making this setup particularly ideal to micro and small businesses.
The most notable advantage of the sole proprietorship is the full control and authority enjoyed by the owner when it comes to handling his business.
However, the advantage of having full authority comes with a price as the sole proprietor is directly liable for all the debts, financial losses, and lawsuits related to his business which is treated as his legal extension.
These are the basic features of the sole proprietorship defined by the Singapore Company Registrar:
– The business is not a separate legal entity from the sole proprietor.
– It cannot file a lawsuit or be sued, purchase supplies, and own a property under its name.
– It is required to renew its business permit to the Singapore Company Registrar.
– The sole proprietor does not enjoy unlimited liability which means that he is legally liable for all the acts, lawsuits, claims, debts, and financial losses related to his business.
Meanwhile, these are the basic advantages of the sole proprietorship:
– It is easy for the sole proprietor to transfer or sell his business anytime he wants to.
– All the profits and earnings of the business belong to the sole proprietor.
– Since the business is only taxed at a personal income rate, the sole proprietor is not required to submit his annual returns.
– The sole owner enjoys more flexibility when it comes to making decisions since he has a full control over his business.
– The owner is not required to perform complicated procedures and compliance matters and is subjected to less written documentations.
While there are notable benefits associated in having a Singapore sole proprietorship, businessmen should still consider some of its downside and limitations:
– The sole proprietor does not enjoy limited liability protection, thus, his personal assets can be used to pay off the debts and liabilities incurred by his business.
– The creditors can directly sue the sole proprietor if the latter fails to pay his debts due to bankruptcy.
– It is more challenging to raise capital, handle the business operation, and make crucial decisions since there is only one owner.
– The existence of a business is directly affected by the death or disability of its owner, which means that it does not enjoy perpetual succession.
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