Registering the business and legal aspects
The sole proprietorship is the simplest business structure adoptable in Singapore. Its registration process is extremely streamlined and requires minimum effort from the business owner.
It allows to carry out most activities in Singapore without many filing obligations with the local authorities. All about Sole Proprietorship Singapore just below.
Register a Sole Proprietorship in Singapore
In order to register a Sole Proprietorship the owner must:
- Be a Singapore Citizen or Permanent Resident 18 years old and above. The Sole Proprietorship is not an available for Foreigners wanting to do business in Singapore, check our guide here: STARTING MY BUSINESS IN SINGAPORE
- Choose a Business Name for your Sole Proprietorship and select the main activities the business will be carrying out. The main activities must be selected among the ones listed in the Singapore Standard Industrial Classification (SSIC) code. The business name chosen must be different from other businesses so to be able to be recognizable and respect the criteria imposed by the local company registry (no obscene names, as well as vulgar or offensive). Once the name is reserved it will stay so for 120 days until the business owner confirms it, otherwise it will be realized for others to be selected.
- Select an Address for the business. This can be a residential one, provided the HDB or URA (Urban Redevelopment Authority) grant approval through the Home Office Scheme. A P.O. box can’t be chosen as business address for the Sole Proprietorship.
- Provide the following documents:
- Proposed Business Names
- Proposed Business address and owner’s address
- Brief Description of the business activities
- Copy of the Owner’s ID
- Declaration of compliance and statement of non-disqualification
The application with the Company Registry usually takes less than a working day to be approved.
There are significant limitations to consider when selecting a Sole Proprietorship, most importantly:
- It is not a separate legal entity from its business owner. This means that the entrepreneur will be directly and personally liable for all the debts and losses incurred by the Sole Proprietorship, without limitation.
- This business structure is not fit to be scaled up. Investors might be reluctant to inject funds in the business and there are no partners in the sole proprietorship.
- As mentioned before in this guide, it is not available for Foreigners residing in Singapore. As a foreigner we would recommend you to incorporate a Private Limited Company.
Ultimately, the Sole Proprietorship is the right entity choice for businesses involved in activities that pose very little to no risk.
Sole Proprietorship registration and maintenance requires limited compliance obligations and it’s most suitable for single-owner businesses as it requires the business owner to be fully involved in the management and control of the business.
Tax Framework for a Sole Proprietorship owner
The owner of a Sole Proprietorship is generally considered a self-employed person in the eye of the Tax Authority in Singapore. This means that, among other obligations, the business owner is required to declare the income derived from the activities of the sole Proprietorship in a selected accounting period.
This is usually a 12-month long period for you to calculate the profits or losses from the sales of goods/provision of services of the business. It is important for Sole Proprietors to keep track of their sales and expenses by maintaining supporting evidence such as vouchers, receipts or invoices. In fact, IRAS will not accept inaccurate and incomplete accounts.
At the end of the accounting period, most sole proprietorships choose 1 January to 31 December, the business owner is required to prepare a Statement of Accounts (SoA). This is a much simpler way of representing the financial position of a Sole Proprietorship and it can be in the form of a 2-line SoA or 4-line SoA:
|2 Line Statement of Accounts|
|Second Line||Adjusted Profit and Loss|
|4 Line Statement of Accounts|
|Second Line||Gross Profit/Loss|
|Third Line||Allowable Business Expenses|
|Fourth Line||Adjusted Profit and Loss|
As the Sole Proprietorship is not a separate legal entity from the business owner, the income generated from the business activities must be reported in the personal Income Tax Declaration of the business owner and it will be taxed and the Individual Income Tax Rates.
Singapore adopts progressive marginal rates (0% to 24%) to tax resident individuals, which means that higher earners will pay proportionate higher tax rates, and for the income generate in the year 2023 and beyond, the highest rate is 24% (for 1 million SGD income and above).
This change has been implemented to achieve greater progressivity with the top marginal income rate for top earners raised from 23% to 24%.
|Chargeable Income||Income Tax Rate (%)||Gross Tax Payable ($)|
In excess of $1,000,000
Entrepreneurs Ecosystem in Singapore
Singapore has a vibrant business ecosystem, constantly ranking on top of all charts for ease of doing business. Its strategic location in the heart of Southeast Asia makes it the perfect landing spot for Entrepreneurs and Businesses to capitalize on the endless business opportunities of this growing region.
Many SMEs and Entrepreneurs have selected Singapore to set up their bases, thanks to the solid financial reputation of the country and the key role as trading center for the region.
Singapore has the busiest port in Asia, a competitive and highly skilled workforce, English is widely spoken and the number of investors, accelerators and talents has been growing year after year.
Most of the main top global players already have a presence in Singapore, where they chose to set up regional headquarters. Amazon, Meta, Microsoft, IBM, Salesforce, Google, Alibaba, Lazada and PayPal are just some of the heavyweights already present in Singapore.
What does it mean for newcomers? A great business ecosystem complemented by top-notch infrastructures, international talents, and access to innovation of all kinds.
Singapore allows entrepreneurs to leverage the local ecosystem to acquire new customers and scale their businesses. More than 50% of the SEA population is under 30 years old with one of the highest internet usages in the world. The combine middle-affluent population is on the rise, hitting 64% of the 650 million people living in Southeast Asia by 2030.
Singapore is pro-actively helping founders, entrepreneurs and business owners to capitalize on the great current market opportunities through a great ecosystem of agencies supporting the growth of local businesses in every aspect. From mentorship to financial support, from talent sourcing to infrastructural support the StartUp SG network encourages the collaboration and proliferation of innovative businesses.
Proliferation of businesses is encouraged by Singapore academic sector, among the leaders in Asia and promoting incubation and community initiatives to build valuable linkages to abroad ecosystem and investors.
Agencies you should be familiar with
ACRA is the Account and Corporate Regulatory Authority in Singapore. ACRA regulates business entities, as well as corporate services providers and public accountants, and ensure the regulatory framework constantly adapts favoring a flourishing business environment in Singapore.
IRAS is the Inland Revenue Authority in Singapore, regulating all tax matters. New Proprietors are not required to inform IRAS when registering a Sole Proprietorship. Every year, usually by the 15th of March, IRAS will contact the business owner to inform him/her to report the income generated from the business activity.
MOM is the Ministry of Manpower in Singapore. The MOM is the main source for labour and manpower-related information such as work permits. Whether it is a workplace safety matter or employment practices, the MOM is the relevant regulatory body.
SINGAPORE CUSTOMS is the agency in charge of trade facilitation in Singapore. Business importing goods in Singapore should activate their accounts with the Singapore Custom before doing so. All goods imported and exported in/from Singapore should be declared in advance to the Singapore Custom.
EDB is the Economic Development Board, the Singapore agency in charge of promoting strategies to augment Singapore reputation as business hub. EDB encourages and collaborates with international businesses, entrepreneurs and investors setting up shop in Singapore.
EDBI is the investment arm of the EDB and one of the global leading investors. Focused primarily on innovation-intensive sectors (for example Healthcare, Emerging Technologies and ICT) supports the portfolio companies through tech access, enhancing regional ecosystem visibility and strategic financing.
ESG, Enterprise Singapore is the local government agency supporting businesses in their growth journey providing assistance to build capabilities, expand internationally and innovate. ESG provides multiple solutions including tax incentives, loans, grants and supports with dedicated digital programs.
Sole Proprietorship Singapore : MBiA offer
MyBusiness in Asia offers streamlined, fast and reliable solutions to business owners to register and manage their companies. We offer digital solutions complemented with professional expertise:
- 100% digitalized services
- leverage on our team of industry experts, part of the award-winning RBA Group
- We have developed our own corporate platform, so all your company administration activities are now simplified, paperless and easy to track
- We focus on assisting Small Businesses, Entrepreneurs and Start Ups to grow their business in Singapore and Southeast Asia
We have tailored our offers to assist you navigate the tax, accounting, and compliance obligations in Singapore with peace of mind. We offer all-inclusive packages for entrepreneurs needing to outsource the most time-consuming business functions:
|HOLDING COMPANIES PACKAGE|
|SINGLE ENTREPRENEURS PACKAGE|
|YOUNG BUSINESSES PACKAGE|
|ESTABLISHED SMES PACKAGE|
Our online solution has been designed to empower your business with ease and immediacy, allowing you to monitor your company, easier, faster, and more efficiently.
Unlock global opportunities: Open a global account in just a few days to manage domestic and foreign currencies, create virtual payment cards and take advantage of low-cost transfers domestically and internationally.
All your corporate documents, tax returns, and mail are always just a click away. Easy and immediate to retrieve, download, comment, and share.
TIPS FOR BUSINESS OWNERS
- HOW TO ENGAGE FOREIGN TALENTS IN SINGAPORE?
Employment Pass (EP) is the working visa to hire managers, executives and skilled professional. The minimum qualifying salary for an EP will be S$ 5,000. Understand COMPASS, the new employment regulation in Singapore.
- CORPORATE BANK ACCOUNT OPENING
In Singapore you have plenty of choices, from branches of international banks to established local and digital solutions. Discover how to open a Business Bank Account in Singapore.
- CORPORATE TAX RATES
Singapore taxes corporates at a flat rate of 17%. However, companies can benefit from a multitude of tax rebates and tax relief schemes. For example, qualified newly incorporated companies can benefit from a Tax Exemption on the first SGD 200,000 of Chargeable income for three consecutive years.
|Chargeable Income||Tax Exemption (%)||Tax Exempted Amount|
|First SGD 100,000||75%||SGD 75,000|
|From SGD 100,000 to SGD 200,000||50%||SGD 50,000|
- FINDING THE RIGHT OFFICE FOR YOUR BUSINESS
The city spoils enterprises with office options, with most of the new buildings home of the majority of companies situated in the Singapore business center (CBD). The best option for businesses is to outsource the registered office address to release their staff from administrative tasks such as managing mails and ensure deadlines are met.
- CAPITAL CONTROL
Singapore allows for free circulation of capital. Foreign individuals or foreign companies are allowed to own 100% of the shares in a Singapore company. There are also no restrictions on the repatriation of profits or import of capital. This is one of the many reasons why Singapore is considered the best launchpad for business expansion in Asia.
- COMPANY LIABILITY
Understanding the different level of liability when selecting the right entity type is crucial for every business owner. Private Limited companies have the great advantage to offer limited liability to their investors / founders, limited to the contributions they have injected in the Private Limited company.
On the other end, the liability of the business owner who has registered a sole proprietorship is, by definition, unlimited. The entrepreneur is therefore directly responsible for all the debts and obligations of the sole proprietorship.