Singapore Sole Proprietorship vs Partnership?

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Features

Sole-Proprietorship

Partnership (General)

Introduction

• A basic & simple form of starting the business vehicle

• A basic form of business vehicle with two or more co-partners

Suitability of Business Vehicle

• Suitable for a small scale business with low risks

• Suitable for a small to medium size of business journey with co-partners

Definition 

• A business owned by one person

• An association of two or more persons carrying on business in common with a view to profit

Ownership or Owners

• Only one person

• Between 2 and 20 partners.
• A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships)

Legal Identity or Status

• 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

• Not a separate legal entity
• Partners have unlimited liability
• Can sue or be sued in firm’s name
• Cannot own property in firm’s name
• Partners personally liable for partnership’s debts and losses incurred by other partners

Requirements For Registration or Formation or Incorporation

• 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.

• 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

• Low set up costs among all business vehicles

• Low set up costs among all business vehicles

Renewal Costs

• Low costs for renewal

• Low costs for renewal

Perception of Business by the Public

• Regarded least trust worthy and credibility

• Regarded least trust worthy and credibility

Funding Opportunities

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

• Capital injection is limited to the new partner.
• Obtaining loans from banks is only by mortgaging the personal assets of the partners.

Yearly Statutory Obligations

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

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

Taxation

• Profits taxed at owner’ personal income tax rates

• Profits taxed at partners’ personal income tax rates

Taxation Form

• Form B

• Form P for Partnership & Form B for respective Partners

GST Implication

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

• Based on combined turnover of all partnership businesses with the same composition (structure) of partners

Perpetual Existence in Law

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

• Existence subject to partnership agreement

Transfer of Ownership

• When the owner exits the sole proprietorship will cease

• Partners can be changed

Closing the Business or Deregistration

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

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