Sole Proprietorships and Partnerships

Sole Proprietorships

A sole-proprietorship is a business firm with only one owner. This business structure is the simplest and most flexible since the owner is the sole decision maker.

A sole-proprietorship is not a legal entity which may be sued on its own or in its own name. It also cannot hold or own property. The owner is personally accountable for all costs, risks, debts and losses of the business. As the business and the owner are inseparable, the business may come to a standstill if the owner falls ill or dies.

Profits from this business structure is taxed at personal income tax rates.

Partnerships

A partnership is a business firm owned by more than one individual.

In a partnership, as in a sole-proprietorship, all the partners are personally liable for the costs, risks, debts and losses involved in the business. A partner may be made accountable for the loss caused by another partner.

Profits from this business structure is taxed based on each partner’s personal income at personal income tax rates.

Unique Entity Numbers for Law Practices

Please note that from 1 May 2009, sole proprietorships and partnerships will need to register with ACRA.

From 1 January 2009, all entities registered in Singapore will have a Unique Entity Number ('UEN') as a common identification number for interaction with government agencies. Law practices will also be issued UENs to interact with government agencies.

All sole proprietorships and partnerships will be registrable under the Business Registration Act from 1 May 2009 to facilitate the issuing of UENs to law firms. Such registration is in line with the current practice for law corporations and limited liability law partnerships, which are already registrable with ACRA.

Existing sole proprietorships and partnerships (as at 30 April 2009) will be automatically registered under the Business Registration Act with effect from 1 May 2009, without any application for registration being made. The duration of registration under the Business Registration Act is for 12 months and all law firms which are automatically registered from 1 May 2009 will be required to renew their registration on or before 1 May 2010, and annually thereafter so long as they continue to carry on business.