Sole Proprietorship

A Sole Proprietorship is a single owner business who assumes all assets and liabilities of the business.  It is the most basic of business entities and the simplest one to setup and manage.

Features of a Sole Proprietorship

  • It does not have a separate legal entity as such it ceases to exist upon death of the business owner
  • The owner assumes unlimited liability
  • A sole proprietorship business is NOT allowed to own property
  • It is the most cost effective business entity to set up.
  • Easiest type of business to manage because compliance requirements is minimal.  Also simplest business to de-register or close.
  • The business owner is taxed under Personal Income Tax for all profits generated by the Sole Proprietorship.

Setup Requirements for a Sole Proprietorship

  • Minimum one owner
  • A local registered office address
  • Non-residents and companies must appoint at one local resident manager
  • The CPF medisave account contribution must be made

Who can setup a Sole Proprietorship?

  • Residents (Singapore Citizens, Permanent Residents, Work Visa holders)
  • Non-residents may also do so but are required to appoint a resident manager.

Important factors for consideration

  • Since the business owner is responsible for all debts and losses,  his personal assets to exposed to risk .
  • Corporate tax exemptions and rebates are not applicable to Sole proprietorships because profits are tax as personal income tax.
  • Sole Proprietorships registrations must be renewed annually.
  • Funds raising is generally more difficult
  • Must renew business registration annually
  • Must ensure that CPF Medisave account is fully topped up.
  • Sole proprietors do not enjoy tax exemptions and rebates available to corporations.