Characteristics
Single Ownership - A sole proprietorship can be own by one person and one company only.
Non legal entity - A sole proprietorship is not a legal entity hence cannot sue or be sued in its own name and it cannot own or hold any property.
Personal income tax rates - Profits are taxed at personal tax rates
Advantages And Disadvantages
Advantages
Quick and easy set up
Because of its simple structure. Sole-proprietorship is easy to setup and maintain. Many low-risk services, such as writer, small retailers and designers begin with Sole proprietorship.
Easy to administrate and manage
Sole-proprietors do not need to audit their accounts or file annual returns. It's more easier to manage since the owner is the sole decision maker.
Exclusive use of profits
A sole-proprietorship owner receives all his business profits.
Disadvantages
Unlimited liabilities/risks
Owner of sole-proprietorship is personally accountable for all debts and losses. The owner need to sell off personal assets (e.g. house, car, etc.) to pay off debts and losses. Sole-proprietorship should be avoided when business involves big risks and possibly huge losses.
No tax exemption
Sole-proprietors cannot enjoy the three years S$100,000 taxable income tax exemption offered to Company.
Limited funding power
Borrowing powers for sole-proprietors are more limited. The owner has to put up his/her own personal assets as collateral to secure loan. The owner also cannot raise funds by selling a stake in the business.
Compliance
Business Name
Business name must be approved before the incorporation of a sole proprietorship may occur and the name must be in English.
Bad names might be rejected by Singapore authority:
Identical or too similar to another business name/existing tradmarks.
Contains offensive or vulgar word.
Registered Address
All singapore registered company must provide a local Singapore address as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.
Owner
Any individual above 18 years old or any company can be the ownership of a sole-proprietorship. 100% local or foreign owneship is allowed. However, certain individuals are not allowed to register a sole-proprietorship.
Required Documents
Proposed business name
Registered address
Brief description of business activities
Business owner's Particulars: Copy of Singapore NRIC.
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