Entrepreneurship | Guides | Singapore

1 Dec, 2023

Sole Proprietorships in Singapore: The Ultimate Guide

This detailed guide offers everything you need to know about setting up, managing, and potentially transitioning from a sole proprietorship in Singapore.

A sole proprietorship is the simplest and most common business structure in Singapore, making up 75% of all registered businesses. As a sole proprietor, you have complete responsibility for all aspects of your business, as there is no legal distinction between the business and the owner. While easy to set up and manage, it also carries greater personal risks.

Key Takeaways From This Guide

Sole proprietorships suit simple business ideas. By following this comprehensive guide,

You will understand the following:

  • Pros and cons of structure
  • Exact ACRA registration steps
  • Ongoing license and tax compliance rules
  • The process  of converting or closing

What is a Sole Proprietorship?

An individual proprietorship is the simplest framework for launching a small business. The owner faces no legal distinction between themselves and the company. This differs from a PLC (Private Limited Company) or corporation, where the business exists as a separate legal entity.

From online sellers to accountants, mechanics to artists, this accessible legal formation opens doors for all types of entrepreneurs across all industries. With a Single proprietorship:

  • There is no paperwork like articles of organization.
  • Business registration occurs only for permits/licenses.
  • Ownership and control lie entirely with the founder.
  • Profits are directly passed through to the owner's tax returns.
  • As per the ownership structure, the owner is entirely responsible for all financial debts and obligations of the business, which means that the owner's liability is unlimited.

Setting Up a Sole Proprietorship in Singapore

Registering a Single proprietorship with the Accounting & Corporate Regulatory Authority (ACRA) enables you to operate your business in Singapore legally. The key requirements include:

For locals:
  • Singaporean Citizens or PR
  • Valid NRIC
  • Registered Singapore address
For foreigners:
  • Valid passport
  • Employment/Entrepass
  • Local authorized representative
  • Registered Singapore office address
The registration steps involve:
  1. Choosing a unique business name
  2. Obtaining approval from ACRA
  3. Registering the business address
  4. Appointing a local representative (foreigners only)
  5. Filing the application via BizFile+
  6. Applying for the relevant licenses, permits, and GST registration if turnover exceeds S$1M
Here is a quick 4-step overview of the registration timeline:
Step Description Timeline
Name Application Get clearance for the proposed business name 24 hours
BizFile+ Registration Submit Solopreneurship registration form Immediate
Licenses & Permits Apply for necessary licenses and permits to operate 1-2 weeks
GST Registration (if applicable) Register for Goods & Services Tax if turnover exceeds $1M 1-2 weeks

As the sole owner, you have full control over your firm's decisions and get to enjoy all the profits. However, you also bear unlimited liability for all debts and losses incurred.

Key Benefits of a Sole Proprietorship in Singapore

Single proprietorships offer many rewards that make them a popular choice for first-time entrepreneurs, including:

  • Low setup and compliance costs: Easy to establish with minimal legal paperwork
  • Tax perks: Only personal income tax rates of 7-22% apply
  • Complete control and flexible management as the sole owner
  • Privacy: No requirement to publicly disclose financial statements
  • Easy transfer: Can readily sell or pass on the business

As per the Business Ownership Survey, over half of sole proprietors tap personal savings to fund their business ventures. Some also qualify for government funding programs like the Startup SG Founder scheme, which provides mentorship and startup capital up to $50K to first-time entrepreneurs.

Ongoing Compliance Requirements

To remain legally compliant after registration, sole proprietors must:

  • File annual personal income tax returns + pay 7-22% tax
  • Renew permits, licenses, and GST registration
  • Maintain proper financial statements and bookkeeping
  • Comply with laws such as employee CPF contributions

Audits are not mandatory, but having clean books facilitates easy tax filing, financing, and potential exit strategies.

Consider hiring an external accountant to ensure compliance with accounting standards. The average cost of basic bookkeeping services starts from $100 per month, while an independent audit typically ranges from $2000 based on firm size.

Use affordable online accounting software like Jaz to digitize invoicing, payments tracking, bank reconciliation, and produce regular profit and loss statements. This helps avoid missing any compliance regulations - penalties can be steep for breaches.

Key Ongoing Compliance Requirements:

  • Annual corporate/personal tax filing
  • GST registrations if turnover exceeds $1M
  • Renewal of licenses permits
  • Mandatory CPF contributions for employees
  • Proper bookkeeping and financial reports

Staying on top of compliance obligations is easier if you set reminders for renewal deadlines, have a digital filing system, and leverage technology to automate processes. This reduces the risk of non-compliance penalties. Consider getting a membership with one of over 140 Small and medium Business Centres under Enterprise Singapore, which provides advice on staying compliant.

Comparison Between Sole Proprietorship And Private Limited Company

While simple to set up, single proprietorships carry greater business risks than incorporation options like private limited companies:

Basis of Difference Sole Proprietorship Private Limited Company
Legal Status No separation between individual and business Separate legal entity
Liability Owner has unlimited personal liability Shareholders have limited liability up to paid-up capital
Taxation Only personal income tax rates apply Flat corporate tax rate of 17%
Compliance Relatively simple More obligations like annual returns and financial auditing
Ownership Transfer Can readily sell or closee More complex process with additional legal paperwork

Hence, single proprietorship suits businesses with lower risks. However, once you plan for growth or take on higher risks, consider converting to a private limited firm for liability protection.

The Pros and Cons of Sole Proprietorships

Like any business structure, individual proprietorships come packed with both advantages and disadvantages. Weigh these carefully as you determine if this model aligns with your entrepreneurial aspirations and risk tolerance.


  • Simple formation - No convoluted legal paperwork to wrestle with
  • Low startup costs - Avoid expensive filing fees and lawyer bills
  • Easy tax preparation - Pass-through simplicity as personal income
  • Full control - Complete authority over all operations/decisions
  • Privacy - Unlike corporations, less public information filings

With no boards of directors, shareholders, or partners to answer to, sole proprietors hold total reign to run their companies as they wish. For free-spirited entrepreneurs who shun bureaucracy and outside voices, this autonomy fuels the passion and drive to hustle even harder.


  • Unlimited liability - Assets vulnerable to business lawsuit judgments
  • Difficulty raising funds - There are few options beyond personal financing sources
  • Lack of continuity - The business ceases to exist upon the owner's death legally

Unlimited liability means creditors can seize personal assets like houses, cars, investment accounts, and more if they are unable to collect from the company. Additionally, Solopreneurship

receive no protection under corporate veil laws.

Banks seldom offer small business loans or credit cards to unincorporated entities either. Investor dollars rarely flow into Individual proprietorships lacking formal shares to offer in return.

Key Differences: Sole Proprietorship vs Company Incorporation

Beyond liability protection, here are some other key differences in running a single proprietorship vs a private limited company in Singapore:

Raising External Investment

Attracting investors is easier with a company, given the perceptions of credibility, financial transparency, and exit pathways. Most government grants and crowdfunding platforms also require formal business structures.

However, bootstrapped sole proprietors can still access smaller funding amounts from non-traditional lenders like Kickstarter, which accepts non-incorporated entities. But having your ducks in a row with proper bookkeeping and the ability to demonstrate traction helps, irrespective of structure.

Separate Corporate Bank Account

While banks allow personal name business accounts for Single proprietorships, company accounts project financial legitimacy, especially when dealing internationally.

However, digital banks like Nium that offer multi-currency business wallets are lowering barriers for sole proprietors in enabling online commerce across borders.

Hiring Foreign Employees

Qualifying for work visas like EP passes is easier with a company. Sole proprietors need to justify proving specialist skills not readily available locally. Hence, most avoid the lengthy justification process and hire local workers instead.

Government Incentives

Special tax exemptions, subsidies, and cash payout schemes are mostly offered only to Singapore-registered entities due to tighter financial reporting requirements. E.g., only companies qualify for the 250% tax deduction on international marketing expenses under IE Singapore.

Many capability development programs like the Productivity Solutions Grant (up to 70% subsidies for tools technology adoption) and 90% SME Working Capital Loan are open to eligible sole proprietors.

Intellectual Property (IP) Protection

IP assets, when self-created as a sole proprietor, are trickier to establish ownership rights over legally compared to assets produced under a company. Hence, converting before developing key IP can avoid issues later, especially if seeking to license or franchise.

Converting a Sole Proprietorship to a Private Limited Company

For converting to a private limited company:

  1. Prepare a capital contribution statement
  2. Engage a firm to incorporate the private limited company
  3. File regulatory notices to transfer assets and contracts
  4. Close the individual proprietorship

Seeking help from an incorporation specialist streamlines this process and ensures compliance with all dissolution formalities to avoid penalties.

Standard conversion costs range from $1000 - $3000 depending on assets and professional services engaged. Factor increased annual compliance costs, too, post-conversion. For instance, private limited companies must file annual returns and have financial audits.

Closing Down a Sole Proprietorship

To close your single proprietorship, file cessation papers with ACRA and cancel your permits/licenses. Ensure all dues are cleared first.

To protect yourself from future claims, publish a 28-day winding-up notice in a national paper and notify known creditors via registered mail.

This gives them time to submit any unpaid dues lest it complicates reopening a business in the future since Singapore forbids owners with outstanding debts from reconstituting. It takes at least 5 years before they regain this right.

Legally, you must retain accounting records and contracts for up to 5-7 years post-cessation, even if you are no longer operating the individual proprietorship. Offsite backup of digital records eases this compliance.

Take Control of Your Small Business Finances With Jaz

As a small business owner or accountant, you have better things to do than wrestle with spreadsheets. Managing finances, cash flows, and compliance should be simple and manageable. That's why Jaz exists.

Jaz is the all-in-one accounting solution built to simplify and automate your most complex accounting tasks like invoices, bills, bank reconciliations, payments, and more so you can get back to growing your business or serving more clients.

Book a demo now and take control of your financial operations with Jaz.


1. What are the key benefits of a single proprietorship?

Some key benefits include low setup costs, easy tax preparation with pass-through personal taxation, full control over decisions, and privacy since fewer public financial disclosures are required.

2. What are the disadvantages of a Solopreneurship?

Major disadvantages are unlimited personal liability, difficulty raising external funds beyond personal sources, and lack of business continuity after the owner's death.

3. What ongoing compliance rules apply to sole proprietorships?

Key compliance rules include annual tax filing, renewing permits/licenses, proper bookkeeping, preparing financial statements, making mandatory CPF contributions for employees, and staying on top of other regulatory obligations.

4. How does a sole proprietorship compare to a private limited company?

Unlike an incorporated private limited, sole proprietors have unlimited liability, simpler tax and compliance requirements, easier ownership transfer, and more difficulties attracting investors and external financing.

5. What do I need to do to close down my sole proprietorship?

To shut your Individual proprietorship, clear outstanding dues, cancel permits/licenses, file cessation papers with ACRA, publish a 28-day winding-up notice in a newspaper, notify creditors via registered mail,l and retain accounting records/contracts for 5-7 years as legally required.