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Why It’s Better for DP Holders to Start with a Sole Proprietorship (LOC) Instead of a Pte Ltd Company in Singapore
If you’re a Dependant’s Pass (DP) holder in Singapore planning to start a business, choosing the right structure matters more than most people think. Many go straight for a Private Limited Company (Pte Ltd) because it sounds more established. But for DP holders, that choice can actually make things harder at the start.
In most cases, beginning with a sole proprietorship under a Letter of Consent (LOC) is the simpler and more practical way to get going.
How the DP + LOC Setup Works
As a DP holder, you can’t just start working or running a business freely. You’ll need a Letter of Consent (LOC) from MOM. One of the most straightforward ways to qualify is by setting up a sole proprietorship and running the business yourself.
It’s a clean, simple setup that fits well with what MOM expects.
Lower Barrier to Entry
A sole proprietorship in Singapore is quick to set up and doesn’t cost much. There’s very little paperwork, and you can get started without jumping through too many hoops.
A Pte Ltd company, on the other hand, comes with more steps—incorporation, appointing a company secretary, and ongoing obligations. If you’re just testing an idea, that can feel like overkill.
Easier LOC Approval and Renewal
This is where the difference really shows.
For LOC applications and renewals, MOM looks at whether the business is genuine and active. For renewals, you’ll also need to hire at least one Singaporean or PR employee meeting the salary requirement.
With a sole proprietorship, things are straightforward. You’re the owner, you run the business, and it’s easy to show what’s going on.
With a Pte Ltd company, there are more conditions. You’ll need at least 30% shareholding, and expectations around business activity and structure are higher. It’s not impossible, but it does mean more scrutiny and more to manage.
Less Compliance to Worry About
Running a Pte Ltd company in Singapore comes with ongoing responsibilities—AGMs, annual returns, corporate tax filings, proper bookkeeping, and more.
A sole proprietorship is much lighter. There’s no AGM, fewer filings, and income is reported under personal tax instead of corporate tax. For someone new to running a business, that difference can be a huge relief.
Lower Running Costs
Costs add up quickly with a Pte Ltd company—company secretary fees, accounting, tax filing, compliance support. These are ongoing, whether your business is making money or not.
A sole proprietorship keeps things lean. When you’re just starting out and revenue isn’t stable yet, that matters.
More Flexibility to Test Your Idea
Not every business idea works—and that’s perfectly normal. Starting with a sole proprietorship gives you room to try things out, make changes, or even stop without going through a complicated closure process.
Shutting down a sole proprietorship is simple. Closing a company takes more time and paperwork.
When a Pte Ltd Makes Sense
A Pte Ltd company still has its place. It becomes a better option when your business is stable, growing, and you’re ready to scale. If you’re bringing in partners, investors, or want limited liability protection, that’s when it starts to make sense.
At that stage, moving from a sole proprietorship to a company is a natural step.
A Common Mistake
A lot of DP holders jump straight into setting up a Pte Ltd because it looks more professional. But without strong business activity, enough capital, or a clear plan, it can actually make LOC approval or renewal more challenging.
Starting simple often works better.
Final Thoughts
For DP holders, it’s not just about setting up a business—it’s about setting it up in a way that actually works.
A sole proprietorship with LOC keeps things simple, manageable, and aligned with MOM’s requirements. Once the business is running well, you can always move on to a Pte Ltd later.
Need Help Getting Started?
If you’re unsure which setup works best for your situation, it’s worth getting proper guidance early on.
At Achibiz, we help DP holders choose the right structure, handle LOC applications and renewals, and plan the next steps when the business grows. Getting this part right at the beginning makes everything smoother later.
Related articles:
DP Holder in Singapore? Here’s How to Run Your Own Business with an LOC Successfully
EP vs LOC in Singapore: Which Is Better for Running Your Own Business?
