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Change Of Ownership Of A Sole-Proprietor Business
A sole-proprietorship operates as an aspect of the owner’s personal identity. The owner is liable for all business debts, and all assets and liabilities are placed in the name of the owner and not in the name of a separate business entity. Transferring ownership of a sole proprietorship involves an asset sale and closing out the original owner’s personal responsibility for the business.
If you plan to transfer business ownership of the Sole-Proprietorship, you must lodge the change with the Registrar online via BizFile+ using SingPass or CorpPass within 14 days from the date of the change. Late notification of the change may attract penalty.
For Singapore tax purpose, profits of the sole-proprietor business are taxed as self-employed income for the sole-proprietor. Each owner is obliged to file personal tax on the respective profits of the sole-proprietor business according to the period of ownership.
Generally, the gain arising from the sale of business is a capital gain which is not taxable in Singapore. The sale of business may involve a sale of fixed assets. Do note that balancing allowance or balancing charge have to be computed on the sale of fixed assets in the tax return for the previous owner. On the other hand, the new owner who is taking over the fixed assets can claim capital allowances on its acquisition.
If you are planning to sell or buy a sole-proprietor business, contact us at firstname.lastname@example.org for a no-obligation consultation!