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Epica Learn Series

What You Need to Do If You Are a Foreign Business Owner Who Want to Register A Sole Proprietorship in Singapore

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Can a Foreigner Register a Sole Proprietorship in Singapore [ Technically YES - Practically NO]

In Singapore, if you want to carry out any business activity, then you need to register it as a business entity. Singaporean business owners can register sole proprietorships, partnerships, or limited liability partnerships in the country. Meanwhile, foreign business owners can register private limited companies or public limited companies in Singapore.

Of these types of businesses, a sole proprietorship is the most simplified structure. A sole proprietorship also has a more affordable registration and maintenance fees. Thus, foreign business owners with limited budget usually ask if they can register sole proprietorships, instead of companies, in Singapore. Let’s find out!

What You Need to Do If You Are a Foreign Business Owner Who Want to Register a Sole Proprietorship in Singapore: What Is a Sole Proprietorship?

A sole proprietorship is a single-person and small-sized business. However, a sole proprietorship does not have an independent legal entity like what a company has. In this business structure, the proprietor is the decisive body and accountable for all the assets and liabilities owned by the business. A sole proprietorship cannot also own a property.

According to ACRA, a proprietor has unlimited liability, which means that he or she is personally liable for the debts and losses of the sole proprietorship. A sole proprietorship can also sue or be sued in the proprietor’s name.

Who Can Set up a Sole Proprietorship?

To be able to set up a sole proprietorship, you must be:

  • At least 18 years old
  • a Singapore citizen, Singapore permanent resident, or Entrepreneur Pass (EntrePass) holder

What You Need to Do If You Are a Foreign Business Owner Who Want to Register a Sole Proprietorship in Singapore: The Answer

Foreigner Sole Proprietorship Registration Singapore - Answer

Technically, a foreigner can register his or her business as a sole proprietorship provided that he or she will appoint one Singapore citizen or permanent resident as an authorized representative. The name of this person must appear on ACRA records.

What Are the Differences Between the Authorized Representative and the Nominee Director, Especially in terms of the Risks That They Take?

Foreigner Sole Proprietorship Registration Singapore - Diffrence between authorized and norminee

The Authorized Representative of a Sole Proprietorship

Since a sole proprietorship is not an independent legal entity, the proprietor is fully responsible for the liabilities of his or her business. If the proprietor is in a foreign country, the authorized representative will be held responsible for these liabilities. Also, in case the sole proprietor becomes uncontactable because he or she is in a foreign country, the liabilities will be settled through the personal assets of the authorized representative.

Foreigner Sole Proprietorship Registration Singapore - Nominee Director

The Nominee Director of a Company

Since a company is an independent legal entity, the company and the nominee director are regarded as two different entities. The nominee director will not be accountable for the liabilities of the company, even if all of the company shareholders are in a different country.

In principle, the role of the authorized representative in a sole proprietorship is much riskier compared to that of the company nominee director.

A Piece of Advice to Foreign Business Owners Who Want to Register Sole Proprietorships in Singapore

Foreigner Sole Proprietorship Registration Singapore - Piece of advice

Even if the law allows foreigners to register their sole proprietorships in Singapore by appointing authorized representatives, professional firms in the country will not provide them with persons to be appointed with such role the way they provide nominee directors. Nevertheless, if you have a relative or friend who is willing to take the risk of being an authorized representative, then your sole proprietorship can be established. Otherwise, your best option is to register a private limited company.

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