In Singapore, you must register a business (sole proprietorship, pte ltd company, or limited liability partnership) if you are engaged in any activity that is carried out on a continual basis for the purpose of gain. The regulating authority for registry of businesses in Singapore is called Accounting and Corporate Regulatory Authority (ACRA).
This guide provides information on registration of a sole proprietorship in Singapore. If you are not sure which type of business entity is right for you, you should read the guide Overview of Business Entities in Singapore first.
Sole proprietorship is the simplest form of business structure in Singapore. However, it's suitable only for very small single-owner type businesses that do not carry any risks. Unlike a private limited liability company, a sole proprietorship does not provide limited liability protection and your personal assets are not protected from business risks.
Sole-Proprietorship - Quick Facts
- A sole proprietorship in Singapore does not constitute a legal entity therefore it is not distinct from the owner/ proprietor, hence the business owner is personally accountable for all liabilities incurred during the course of the business.
- Any Singapore registered company or a natural person of at least 21 years of age is eligible to register a sole proprietorship, however it has to be noted that undischarged bankrupts and persons disqualified under specific clauses are not eligible to register.
- Sole proprietorship must appoint at least one manager who is a natural person of at least 21 years of age and who is ordinarily resident in Singapore - a Singapore Citizen, Permanent Resident, Dependent Pass holder, Entrepass or Employment Pass holder. In most of the cases, the owner himself/herself will act in this capacity.
- A local Singapore address must be registered as the business address for the sole proprietorship. Under the Home Office Scheme, residential premises can be used as business address but owners must seek written approval from HDB (for HDB properties) or URA (for private properties) to use their homes (owned or rented) for home office use.
- Singaporean citizens or PRs registering Sole Proprietorship must ensure that their Medisave accounts have sufficient funds before proceeding with the registration.
- Profits of the sole proprietorship are treated as income of the individual who owns the entity, thus it is subjected to a tax rate as that of personal income, and where the owner is a pte ltd company, the profits will be subjected to corporate tax rate.
- As a Singapore sole proprietorship is not a legal entity, it cannot register another business firm.
- Sole proprietorship must ensure that all letterheads, invoices, bills or other documents used for the purposes of doing business have the registration number listed.
- Sole proprietorships do not need to audit their accounts or file annual returns with ACRA as any profits will be taxed as personal taxes.
- Raising funds or expansion options as a sole proprietorship will be limited because investors will hesitate to deal with non incorporated entities.
- Any changes to the particulars of the business must be lodged with the Registrar within 14 days from the date of change
- Registration of Singapore sole proprietorship needs to be renewed annually.
Considerations for Foreigners
Foreigners interested in setting up a sole-proprietorship in Singapore must apply to the Ministry of Manpower (MOM) for an Entrepreneur Pass (EntrePass). Successful candidates will be issued an In-Principal Approval letter with which the applicant may proceed with the sole proprietorship registration process. Upon receipt of the Certificate of Registration from ACRA, the applicant must send a copy of the certificate of registration and the In- Principal Approval letter to MOM for the issuance of the Entrepreneur Pass.
It shall be noted however that most of the foreign entrepreneurs prefer to register a Pte Ltd company in Singapore and not a sole proprietorship. In case of foreigners, a professional service bureau must be engaged to register the business as per the rules by ACRA. Professional service bureaus provide a comprehensive service for a reasonable fee and foreigners can avail their services to complete the sole proprietorship registration formalities as well as the entrepass application filing and related services. It's quite easy to do an online search for such professional service bureaus in Singapore.
Registration Timeline
Registration of sole proprietorship business in Singapore can be completed within 1 day, provided all the documents are lodged properly with due endorsements. However if the name or or the nature of business requires referral to another authority (as decided by ACRA), it may take between 2 weeks to 2 months. Examples of businesses that may be referred to relevant authorities include financial, media, educational services, etc.
Documents Required
In order to register a sole proprietorship business in Singapore, the following documents/information are required:
- Proposed business name
- Description of principal activities
- Local business address for the proposed business
- For Singapore citizens and permanent residents, copy of their Identity Card (NRIC). For foreigners, copy of their passport and Employment Pass / Dependent Pass / Approval-In-Principle letter of Entrepreneur Pass is required.
- Local residential address of sole-proprietor
- Declaration of compliance and Statement of Non Disqualification
Registration Procedure
The whole procedure to register a new sole proprietorship business in Singapore (as well as any subsequent changes to it) is done online through ACRA's online system at www.bizfile.gov.sg. Local residents can do it themselves (requires a SingPass account), while foreigners not residing in Singapore shall appoint a professional service bureau to carry out the registration procedure.
The first step is to apply for name approval for your new sole proprietorship business. The fee for Name Approval application is S$15 and is payable for each approved name. If the approved name does not conflict with any existing name and the name (along with its intended business activities) does not require approval from any referral authorities, you will receive an approval in less than an hour via email. An approved name will be reserved for 60 days from the date of application. An application for the extension of the name reservation period, for another 60 days can be made by paying S$10 for each approved name. To maximize chances of speedy name approval, make sure that it
- is not identical or too similar to any existing local company or business names
- does not infringe with any trademarks or copyright
- is not obscene or vulgar
- is not already reserved
Once the name has been approved, you can proceed with the registration of your sole proprietorship business. The fee payable for registering a sole proprietorship business is S$50. The registration of sole proprietorship must be renewed annually before the expiry date. You will receive a reminder letter from ACRA at the registered business address regarding the renewal. The fee for renewal is S$20.
Documents Issued by ACRA
Once you have submitted the sole proprietorship business registration application and if everything is in order, ACRA will send an email notification confirming the successful registration along with the registration number. ACRA does not issue a hardcopy registration certificate anymore by default as the softcopy is valid and acceptable in Singapore. However, if you still would like to have a hardcopy, you can make a request to ACRA by paying an additional fee of S$50. You should receive a hardcopy certificate within 7 working days from date of request via postal mail.
After you have received the email notification of successful registration, you can retrieve a business profile for your new Singapore sole proprietorship that contains important registration information. ACRA charges S$5 for requesting the business profile document and will be emailed to you as a soft copy normally within 30 minutes of request. The original email notification of business incorporation along with the business profile are the two important documents that you will need in Singapore to open business bank account, sign office lease, obtain a business phone line, etc.
If certified copies of the extracts are required for specific purpose, a request for certified extract can be made. Such requests will be processed manually and certified copies of forms will be issued. Upon submitting request, within one working day, ACRA will notify the amount to be paid. Upon receipt of payment, the certified documents will be either mailed or kept ready for collection within one working day.
Bank Account Opening
After registering the sole proprietorship in Singapore, a bank account can be opened in any of the several international, foreign and local banks in Singapore. The business can open separate accounts of various currencies or a single multi-currency account. The account opening procedure varies across the banks and most of the bank require the business owner to be present in person while opening the account. Some of the documents that have to be produced are
- Account Application - Business Form
- Passport copies of owner and authorized signatories for foreign persons
- Copy of Singapore Identity Card (NRIC) for local residents
- A latest print out of the business profile for sole-proprietorship
- Minimum Deposit (varies by bank) in Cash or Cheque
The bank has the sole authority to approve or deny the opening of an account. The duration for opening a business bank account in Singapore upon submitting all the required documents may vary between minimum of two working days to a few weeks. The minimum account balance and the other bank charges vary depending on the banks.
Final Thoughts
Sole proprietorship is the basic no frill type of entity suitable for businesses with no or negligible risk. This type of business entity essentially meets the statutory requirement to register all profiteering activities carried out on a continuous basis. Freedom from compliance formalities and undivided authority is a merit but also the limiting factor for potential growth and development.
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