Most investors and entrepreneurs coming to Singapore have one thing in common: to rapidly grow their ventures and create sustainable revenue channels. These, alongside a stable social-political environment, make Singapore the perfect investment destination, but first, you need to determine the right investment vehicle. Singapore is an excellent investment destination that appears in almost all business categories. In 2021, it reported economic growth of 5.5%, which is poised to continue on a positive trajectory in the coming month.
There are different business structures that you can pick, from companies to partnerships, but the most common is a sole proprietorship. This post digs deeper to determine how a sole proprietorship in Singapore works and when to select it.
What is a Sole Proprietorship?
This is a type of business structure that has only one owner. Unlike companies, sole proprietor ships do not have a clear distinction between the owner and the business entities. This is particularly important to note because all business liabilities become personal liabilities too. Therefore, if the sole proprietorship in Singapore has a financial liability, personal assets can be used to recover the debts.
When to Go for Sole Proprietorship in Singapore
For many people, sole proprietorship appears pretty risky. Therefore, they prefer going for alternatives like companies. However, there are instances when opening a sole proprietorship in Singapore might be an excellent idea. Let’s check some of them:
When Starting a Business
If you have an idea, service, or product that is in great demand, starting a sole proprietorship might be the best idea. Because starting a sole proprietorship is faster and easier compared to a company, it implies that your product can hit the market faster. Therefore, you can quickly take advantage of selling a new product or item that is in high demand or only available in seasons. For others, starting a sole proprietorship allows them to prepare the ground for upgrading to other more advanced business formations.
If Unwilling to Share Profits from the Company
Another notable attribute of sole proprietorship in Singapore is that there is no sharing of profits. So, if you are selling software, food products, or service, among other products, all the profits will be channel to your account. Since there are no partners or shareholders, it is an excellent idea to enjoy all the returns. However, remember to make the correct statutory deductions, especially personal taxes.
In Singapore and other countries as well, most sole proprietor ships are used for small businesses. This is mainly because of capital limitations. Indeed, it is a great idea because you can raise funds from the business and only register a company when it reaches a specific level of growth. This means that you will not have to use all the money saved in your account, but the business will generate funds to push itself to the next level.
When Targeting to Only Operate within a Specific Area for a Limited Time
When you open a company in Singapore, we must say that the process of liquidation can be pretty complex. However, this is never a challenge for sole proprietorship because it is only one party that makes the decisions. The only thing that you need to do is ensure there are no outstanding debts. This makes sole proprietorship in Singapore an excellent idea if the project at hand is only targeting a small area and is expected to run for a limited period.
This post has demonstrated that a sole proprietorship can be an excellent business idea. It allows you to enjoy all profits alone and can be scaled up quickly to other formats, such as companies or partnerships. To register a sole proprietorship in Singapore in line with all the legal requirements, make sure to work with the best agency for business formation. Contact MBiA, one of the top-rated agencies in Singapore, for business registration.