Singapore Company vs Sole Proprietorship?

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Features

Company

Sole-Proprietorship

Introduction

• One of the most preferred corporate vehicle for wider range of business journey

• A basic & simple form of starting the business vehicle

Suitability of Business Vehicle

• Suitable for carrying all types of business activities including professional services

• Suitable for a small scale business with low risks

Definition

• A business form which is a legal entity separate and distinct from its shareholders and directors

• A business owned by one person

Ownership or Owners

• Exempt Private Company – 20 members or less and no corporation holds beneficial interest in the company’s shares
• Private Company – 50 members or less
• Public Company – can have more than 50 members

• Only one person

Legal Identity or Status

• A separate legal entity from its members and directors
• Members have limited liability
• Can sue or be sued in company’s name
• Can own property in company’s name
• Members not personally liable for debts and losses of company

• Not a separate legal entity
• Owner has unlimited liability
• Can sue or be sued in individual’s own name
• Can also be sued in business name
• Can own property in individual’s name
• Owner personally liable for debts and losses of business

Requirements For Registration or Formation or Incorporation

• Minimum of one share.
• Minimum Paid-up capital is S$1 (SGD One Only)
• At least one shareholder.
• At least one director ordinarily resident in Singapore, at least 18 years old.
• If a foreigner wishes to act as a local director of the company, he can apply for an EntrePass from the Ministry of Manpower (MOM).
• Undischarged bankrupts cannot be a director and cannot manage a company without approval from the Court or the Official Assignee.

• Age 18 years or above. Singapore citizen / Singapore Permanent Resident / EntrePass holder.
• If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.
• Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.
• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.

Easiness of Registration

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

Level of Fees for Registration

• High when comparing to other form of business vehicles

• Low set up costs among all business vehicles

Renewal Costs

• Perpetual succession hence renewal is not applicable

• Low costs for renewal

Perception of Business by the Public

• Regarded more trust worthy and credibility

• Regarded least trust worthy and credibility

Funding Opportunities

• Avenue for equities from members including venture capital funding.
• Obtaining financial loans is relatively easier compared to other form of businesses.

• Obtaining loans from banks is only by mortgaging the personal assets.

Yearly Statutory Obligations

• Must appoint a company secretary within 6 months of incorporation.
• Must appoint an auditor within 3 months after incorporation, unless the company is exempt from audit requirements
• Annual returns must be filed.
• Statutory requirements for general meetings, directors, company secretary, share allotments must be complied with.

• Yearly renewals (one year or three years)
• CPF Medisave Top-Up required for Self-employed Persons before they can renew sole-proprietorship

Taxation

• Profits taxed at corporate tax rates

• Profits taxed at owner’ personal income tax rates

Taxation Form

• ECI & Form C or C-S

• Form B

GST Implication

• GST obligation is at entity level based on own turnover

• Based on combined turnover of all of your sole proprietorship firms plus income derived from other trades, professional services or vocation

Perpetual Existence in Law

• A company has perpetual succession until wound up or struck off.

• Existence subject to life of the owner and cessation of the business

Transfer of Ownership

• Ownership can be transferred by sale and purchase of shares

• When the owner exits the sole proprietorship will cease

Closing the Business or Deregistration

• Winding Up – Voluntarily by members or creditors, compulsorily by the High Court
• Striking off

• By Owner – Cessation of business
• Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct