A sole proprietorship is a business entity that is wholly owned by a single individual or a company. The sole proprietor has absolute control over the business and can run the business in any lawful manner that he chooses. However, because there is no legal distinction between a sole proprietor and the sole proprietorship business, the sole proprietor is personally responsible for all the liabilities of the business. We will now examine some aspects of a sole proprietorship in Singapore.
In terms of the Business Registration Act a business in Singapore is defined as “every form of trade, commerce, craftsmanship, calling, profession and any activity carried on for the purposes of gain “. This definition excludes any of the offices or employment or any of the exempted businesses or individuals specifically mentioned in the First Schedule which is a list of exempted individuals/entities. Other than the exempted categories under section 4, every other person must register with the Accounting and Corporate Regulatory Authority (ACRA) before carrying on business. Because individuals and companies are legal entities in their own right, they may set up and own sole proprietorship but, because it does not meet these conditions, a sole proprietorship may not register another sole proprietorship. A foreign company cannot register a sole proprietorship unless it is itself registered under the provisions of the Companies Act. Carrying on a business implies some form of continuity in the business activity and failure to register is an offence that is punishable with a fine or imprisonment or both.
Registration may be done online using ACRA’s electronic filing and information retrieval system called BizFile. A sole proprietor may also engage the services of a professional firm such as an accountant or a lawyer or a service bureau to apply on his behalf. The name approval fee of $15 and the registration fee of $50 (making a total of $65) have to be paid and registration normally takes 15 minutes after the payment of the fees. It could take longer if the application has to be referred to other authorities for approval. Before registering, Singapore citizens and Singapore permanent residents are required to top up their Medisave account with the Central Provident Fund Board.
While choosing a name for the sole proprietorship, the sole proprietor should ensure the following:
- the name is not desirable
- the name is not identical to the name of any existing business whether it be a sole proprietorship, a partnership, a company or any other form of business entity where the name has been reserved under the applicable Singapore law.
- the name should not be one which the Minister has instructed the registrar not to accept.
The sole proprietor is required to furnish the registrar with the address of the principal place of business as well as any other place where business may be carried out. A P.O. Box cannot be used as a business address. A home address may be used but prior approval is required. Eligible flat owners/residents can gain prior approval by submitting applications at the HDB or the URA websites.