A sole-proprietorship is the simplest business form that is owned by one person. It is not a separate legal entity from its owner; thus, the owner has unlimited liability. This means that the owner can sue or be sued in his/her own name, as well as in the business name. Business profit is taxed at the owner’s personal income tax rate. A sole-proprietorship cannot own properties in the firm’s name.
The Advantages of Sole-Proprietorship
- Easy, fast, and inexpensive to form.
- It is easy to administer and manage.
- Unlike a private limited company, a sole-proprietorship has less administrative duties to adhere to.
The Disadvantages of a Sole-Proprietorship
- Owners are personally liable for the debts, losses and liabilities of the business.
- Owners cannot raise capital by selling an interest in the business.
- Sole-proprietorships seldom survive the death or incapacity of their owners; thus may not retain value.
- The owner must be at least 18 years old and a Singapore Citizen/ Singapore Permanent Resident/ Employment Pass Holder/ Dependant Pass Holder.
- If the owner is not a resident in Singapore, he/she must appoint a local manager who is a resident in Singapore.
- Self-employed persons must make sure that they have paid their Medisave account with the CPF Board before they can register a new business, join an existing business, or renew the license of an existing business.
- An undischarged bankrupt needs an approval from the court or Official Assignee before he/she is allowed to manage a business.
- Registration of a Sole-Proprietorship must be renewed every year.
- The registration fee is $50.00 and the business name application fee is $15.00.
Cessation of Business
- By Owner.
• Cessation of Business
- By the Registrar (The Accounting and Corporate Regulatory Authority – ACRA).
• If the owner does not renew the yearly business registration.
• If the Registrar is satisfied that the business is defunct.