What are the pros and cons of having a sole proprietorship?

There are several pros and cons to every business entity. Let us discuss them.

Pros:

• The sole proprietorship is the easiest business entity to form.
• You would not have to file any audited accounts or file annual returns with the Accounting and Corporate Regulatory Authority (ACRA).
• It is most suitable for a small business owner as it only involves a single owner.
• Profits are treated as income, so they are taxed at the personal income tax rate.
• You can quickly close or wind up your business.
• Foreigners can also apply for sole- proprietorship in Singapore; however, they have to appoint a representative who is a Singaporean resident.

Cons:

• The Sole owner is entirely liable for his business and needs to bear all the debts and losses solely.
• He may face limited choices in getting funds from banks.
• He is also restricted from selling stocks of his business to investors to raise funds.