Choosing the Right Business Type – Sole-Proprietorship
Wanted to start a business, but having difficulty in choosing which business type? Among the four business types that are generally available in the market now, a sole proprietorship is the simplest form of business organization.
Formation and Liability of Sole-proprietorship
Sole Proprietorship may be described as a business that is carried on by an individual on his or her own without the use of a separate and distinct business form. As sole proprietorship was not identified as a different entity from its proprietor, or owner, all rights that the business has are rights that belong to the proprietor. Same goes to the assets, profits, liabilities or debts and tax payable that are incurred by the business are owned by the proprietor. Subsequently, should the proprietor die, the business will cease to exist.
Business income is taxable in the sole proprietor’s name or self-employed person’s name. Hence, a sole proprietor or self-employed person who receives this income has to prepare statement of accounts and report the income in his individual tax return. The business income will be added to all other personal income and the total is subject to personal income tax.
In order to register a business in Singapore as a sole proprietor, you must first apply to ACRA in accordance with the provisions of the Business Registration Act (Cap 32). You may choose to complete and submit the relevant forms electronically using ACRA’s e-filing portal, Bizfile. You may choose to file personally online or with the help of a professional firm of lawyers, accountants, chartered secretaries or service bureau. The proprietor must comply with all the requirements set out under the Business Registration Act such as the filing of changes in particulars of the business and its owner.
Apart from that, the Registrar require a business owner who is not ordinarily resident in Singapore to appoint a local manager to be appointed.
Termination of Sole Proprietorship
As discussed in the article earlier, sole proprietor business will cease when the proprietor dies or ceases to continue the business. In accordance with the Business Registration Act, any person registered under it that has ceased to carry on Business to notify the Registrar of this. Failing to do so may result in the imposition of a fine.
Knowing more about business forms that are available in the market now and having more understanding will help you to choose the right types of business to incorporate. One of the ways to achieve this is through engaging services provider. Feel free to contact 3E Accounting for more information.