Taking the leap to become your own boss is an exhilarating milestone in any professional career. If you are looking for the most straightforward way to formalise your business in Singapore, learn how to start a sole proprietorship and take your first step toward entrepreneurial independence.
What is a Sole Proprietorship in Singapore?
According to the Accounting and Corporate Regulatory Authority (ACRA), a sole proprietorship is a business owned and controlled by one individual or entity.
The defining characteristic of this structure is that when creating a sole proprietorship, there is no legal separation between the owner and the business. Unlike a small business registered as a Private Limited (Pte Ltd) company, when you register a sole proprietorship, the business is not a separate legal entity.
The Implications of Unlimited Liability
Because the business and the owner are viewed as one and the same, the owner has unlimited liability. This means you are personally responsible for all business debts and losses. If the business incurs debt it cannot pay, your personal assets (such as your car, savings, or property) can be used to settle those obligations.
Who is it Suitable For?
Despite the liability risks, establishing a sole proprietorship remains a popular choice because it is easy to set up and maintain. It is particularly suitable for:
- Freelancers and gig economy workers.
- Consultants and coaches.
- Small retailers or hawkers.
- Creative professionals like designers and copywriters.
- Solo entrepreneurs testing a low-risk venture.
Who Can Register a Sole Proprietorship Business in Singapore?
Singaporean citizens, permanent residents (PR) and foreigners are all allowed to register a sole proprietorship business in Singapore, but there are specific eligibility criteria depending on the residency status.
Criteria for Singapore Citizens and Permanent Residents to Create a Sole Proprietorship
Establishing a sole proprietorship as a Singapore Citizen or PR is simple. You must be:
- At least 18 years old
- Cannot be an undischarged bankrupt
Criteria for FIN Holders (Employment Pass or EntrePass) to Create a Sole Proprietorship
If you hold an Employment Pass (EP) or EntrePass, you are generally expected to work for the employer specified on your pass. If you wish to register a sole proprietorship business, you must:
- Approach the Ministry of Manpower (MOM) and check your eligibility
- Obtain a Letter of Consent (LOC) or necessary approvals from MOM before proceeding.
Criteria for Foreigners Residing Overseas to Create a Sole Proprietorship
Foreign entrepreneurs residing overseas looking to start a business in Singapore can register a sole proprietorship, but have to meet a list of strict requirements:
- You must appoint at least one authorised representative who is a resident in Singapore.
- You cannot self-register. You must engage a registered filing agent (such as a law firm, accounting firm, or corporate secretarial firm) to submit the application via BizFile+ on your behalf.
- If you intend to move to Singapore to manage operations actively, you must obtain approval from MOM.
Step-by-Step Guide to Register a Sole Proprietorship Business in Singapore
Here is a step-by-step guide on how to register a sole proprietorship and start a business in Singapore.
Step 1: Choose and Reserve Your Business Name
Your business name is your first brand asset. It needs to be unique, relevant, and free of any vulgar or sensitive terms.
- Action: Submit an application via ACRA's online portal, BizFile+.
- Fee: SGD $15 per name application.
- Timeframe: Once approved, the name is reserved for 120 days. You must complete the registration within this window.
Step 2: Prepare Required Information and Documents
Before logging in, ensure you have the following information and documents ready:
- Singpass: A valid account is required for all locals to access the system.
- Business Address: You must provide a registered business address. This must be a physical location, P.O. Boxes are not accepted.
- Tip: While you can use your residential address under the Home Office Scheme (subject to HDB/URA approval), using a premium business address from a provider of coworking spaces like The Work Project adds a layer of professionalism and privacy.
- SSIC Code: The Singapore Standard Industrial Classification (SSIC) code that matches your primary business activity.
- Identification: NRIC for locals, passport details for foreigners.
Step 3: Submit Your Registration Application via BizFile+
Once you have prepared all the necessary information and documents, you can begin the process to register a sole proprietorship business.
- Log in to ACRA’s BizFile+ portal.
- Select "Register new business entity" under the sole proprietorship category.
- Fill in the details, including the business name, commencement date, and the description of activities.
You will also be required to pay registration fees at this stage. The costs are:
- 1-Year Registration: SGD $115
- 3-Year Registration: SGD $175
Step 4: Receive Your Business Registration
After you complete your registration, processing typically takes 1 to 2 business days.
Once approved, you will receive an email notification containing your Unique Entity Number (UEN). You will also receive a free Business Profile (an electronic certificate of registration), which is available for download for 30 days.
Step 5: Complete Post-Registration Requirements
You are officially in business! However, there are a few housekeeping tasks to complete:
- Open a Corporate Bank Account: While not legally required for sole proprietorships, it is highly recommended to keep personal and business finances separate for clear accounting.
- Register for GST: If your expected annual turnover exceeds SGD $1 million, you must register for Goods and Services Tax (GST).
- Licensing: Check if your specific industry (e.g., F&B) requires additional licences.
- Insurance: Consider indemnity or liability insurance to mitigate the risks associated with unlimited liability.
Managing Your Sole Proprietorship in Singapore
After establishing a sole proprietorship, there are a few ongoing compliance tasks you need to be aware of:
Renewals
A sole proprietorship registration can expire. The expiry date depends on the choice you made when you registered the business. You must renew your registration before the expiry date and you can choose to renew your registration for one year or three years. The renewal fees are:
- SGD $115 for one year
- SGD $175 for three years.
Tax Obligations
Sole proprietors in Singapore are taxed at personal income tax rates. You must file your income tax returns annually (Form B or B1) to declare your business income.
Warning: Carrying on a business after your registration has expired is an offence under the Business Names Registration Act. Always keep track of your renewal dates.
Take Your Sole Proprietorship to the Next Level with The Work Project
For the solo entrepreneur, the sole proprietorship offers the perfect blend of simplicity and speed. It allows you to test your business idea with minimal red tape and low startup costs.
However, "working solo" doesn't mean you have to work in isolation. The environment you work in plays a massive role in your perceived professionalism and productivity.
While your business structure may be simple, your workspace should be world-class. Operating from a home address can sometimes lack the professional gravitas needed to win high-value clients.
The Work Project supports sole proprietors by offering:
- Premium Business Addresses: Register your business at prestigious locations like Great World City, CapitaSpring, or Capital Tower.
- Flexible Workspace Solutions: Whether you need a dedicated desk space for a few days a month or a dedicated private office, The Work Project provides an agile work environment when you scale.
- Networking Opportunities: Connect with a vibrant community of like-minded professionals, potentially finding your next investor, client or collaborator right at the coffee bar.
If you have successfully created a sole proprietorship and are ready to find a home for your business, we are here to help.
Contact The Work Project today to tour our award-winning workspaces and discover how we can support your entrepreneurial journey in Singapore.
