Can a Foreigner Start a Sole Proprietorship in Singapore?

Singapore is widely recognized as one of the easiest places in the world to do business. Its transparent legal system, robust economy, and low tax rates attract thousands of entrepreneurs from all over the globe. However, while the country is open to foreign investment, not every business structure is equally accessible to foreigners.

One of the simplest ways to start a business in Singapore is through a sole proprietorship — but what if you are not a Singaporean? Can a foreigner register one? The answer is yes, though there are important limitations and conditions.

This comprehensive guide explains how foreigners can register a sole proprietorship in Singapore, the steps involved, and the alternatives available.

What Is a Sole Proprietorship?

A sole proprietorship is the most straightforward and inexpensive form of business ownership in Singapore. It is a business structure where one individual owns and controls the entire enterprise. The owner is personally responsible for all aspects of the business, including profits, losses, and debts.

Unlike a private limited company, a sole proprietorship is not treated as a separate legal entity. This means there is no distinction between the business and the owner — all business income is considered personal income, and all liabilities fall on the individual.

Key Characteristics

• Single ownership: The business is owned by one person only.

• Full control: The owner makes all key business decisions independently.

• Unlimited liability: The owner is personally liable for all debts and obligations.

• Taxed as personal income: Profits are declared under the owner’s personal tax return.

• Simple registration: Registered under the Business Names Registration Act with ACRA.

This simplicity makes it a popular choice for small local businesses, freelancers, and self-employed individuals in Singapore.

Can a Foreigner Register a Sole Proprietorship in Singapore?

The short answer is yes, a foreigner can set up a sole proprietorship in Singapore. However, there are residency and management restrictions that must be observed.

Residency Requirements

Under Singapore law, only the following individuals can directly register and manage a sole proprietorship:

1. Singapore citizens

2. Singapore Permanent Residents (PRs)

3. Foreign entrepreneurs holding a valid EntrePass

If you are a non-resident foreigner (for example, living overseas or in Singapore on a visit pass), you cannot directly manage a sole proprietorship. Instead, you will need to appoint a local authorized representative who resides in Singapore and is legally responsible for the business.

Quick Summary

Type of Individual	Can Register Sole Proprietorship?	Requirements
Singapore Citizen	Yes	None
Singapore PR	Yes	None
EntrePass Holder	Yes	Valid work pass required
Foreigner (non-resident)	Indirectly	Must appoint a local authorized representative

The Role of a Local Authorized Representative

Foreigners who are not Singapore residents must appoint a local authorized representative to fulfill the local presence requirement under the law.

This representative must:

• Be a Singapore Citizen, PR, or EntrePass holder

• Be at least 18 years old

• Be ordinarily resident in Singapore

• Be willing to accept legal responsibility for the business’s operations

The local representative serves as the main liaison with Singapore’s government agencies, including ACRA and IRAS. They ensure that the business complies with local regulations and can represent the foreign owner for official matters.

Why Many Foreigners Choose a Private Limited Company Instead

Although foreigners can register a sole proprietorship, most choose to incorporate a private limited company (Pte. Ltd.) instead. This alternative structure offers several important benefits.

1. Limited Liability

A private limited company is considered a separate legal entity. Shareholders are not personally liable for the company’s debts beyond their investment. This protects personal assets — a crucial consideration for entrepreneurs.

2. 100% Foreign Ownership

Foreigners can own 100% of a private limited company in Singapore. There is no need for a local shareholder, although a local director is required (which can be arranged through a nominee director service).

3. Better Credibility and Access to Capital

Investors, clients, and banks generally perceive companies as more reliable than sole proprietorships. This makes it easier to raise funds, apply for loans, or enter into contracts.

4. Tax Efficiency

Corporate tax in Singapore is capped at 17%, with generous startup tax exemptions and incentives. This can result in significant savings compared to being taxed at personal income tax rates of up to 22%.

5. Perpetual Existence

A company continues to exist even if shareholders or directors change. In contrast, a sole proprietorship automatically ceases when the owner deregisters or passes away.

How a Foreigner Can Register a Sole Proprietorship in Singapore

If you still prefer the simplicity of a sole proprietorship, you can proceed by following these steps.

Step 1: Appoint a Local Authorized Representative

As a foreigner, you must first appoint a qualified local representative who will manage compliance matters and act as your point of contact in Singapore. This is a mandatory requirement.

Step 2: Choose a Business Name

You must submit your desired business name for approval through ACRA’s BizFile+ portal. The name should not duplicate or resemble an existing registered name or trademark and must not contain prohibited or vulgar terms.

Step 3: Prepare the Required Information

To complete the registration, you’ll need:

• Proposed business name

• Business activity details (using SSIC code)

• Singapore business address (no P.O. boxes)

• Identification documents for both the owner and representative

• Declaration of compliance form

Step 4: Register the Business with ACRA

Once the name is approved, you can register your sole proprietorship online. The process is fast — most applications are completed within one or two business days.

Step 5: Apply for an EntrePass (If You Intend to Relocate)

If you plan to live in Singapore and personally manage your business, you must obtain an EntrePass from the Ministry of Manpower (MOM). This pass allows foreign entrepreneurs to operate their business in Singapore legally.

Step 6: Open a Bank Account

After your registration is approved, open a business bank account under your business name. This ensures your financial transactions are properly separated from personal funds.

Ongoing Obligations After Registration

Even though a sole proprietorship is simple to run, there are important compliance matters you must maintain.

1. Annual Renewal

The registration must be renewed each year. ACRA will typically notify you a month before the renewal is due.

2. Notify ACRA of Any Changes

If your business address, ownership details, or local representative change, you must update ACRA within 14 days.

3. Income Tax Declaration

All income generated from the sole proprietorship must be declared in your personal income tax return (Form B or B1) filed with IRAS.

4. Licenses and Permits

Depending on the nature of your business, you may need sector-specific licenses — for example, if you are running a restaurant, an employment agency, or a travel agency.

Benefits of Starting a Sole Proprietorship

There are several advantages that make sole proprietorships appealing, especially for smaller setups or solo operators.

1. Low startup cost: Registration fees are minimal (approximately SGD 115).

2. Fast setup: Registration can be completed in a matter of days.

3. Full control: The owner makes all business decisions without interference.

4. Simplified taxes: Business income is taxed as part of your personal tax return.

5. Ease of closure: Deregistration is quick if you decide to stop operations.
   

Disadvantages and Risks for Foreigners

Despite its simplicity, this business model comes with notable drawbacks, particularly for foreign owners.

1. Unlimited liability: The owner is personally responsible for all debts, lawsuits, and losses.

2. Residency restrictions: Foreigners must rely on a local representative.

3. Lower credibility: Some clients and financial institutions prefer dealing with incorporated entities.

4. Difficult to scale: Limited access to financing and investors.

5. Ends with owner: The business cannot continue if the owner passes away or withdraws registration.

Because of these factors, foreigners who intend to expand their business often convert their sole proprietorship into a private limited company later.

Comparison: Sole Proprietorship vs. Private Limited Company

Criteria	Sole Proprietorship	Private Limited Company
Legal Entity	Not separate	Separate legal entity
Liability	Unlimited	Limited
Ownership	Single owner	Up to 50 shareholders
Foreign Ownership	Requires local representative	100% foreign ownership allowed
Tax Rate	Personal tax (up to 22%)	Corporate tax (17%)
Setup Cost	Low (~SGD 115)	Moderate (~SGD 315)
Compliance	Minimal	Higher but manageable
Credibility	Low	High
Longevity	Ends with owner	Perpetual existence

Common Mistakes Made by Foreign Entrepreneurs

1. Choosing the wrong structure: Many foreigners begin with a sole proprietorship without understanding its legal implications.

2. Neglecting the residency requirement: Failing to appoint a local representative leads to rejected applications.

3. Operating without an EntrePass: Managing your business in Singapore without proper authorization can lead to penalties.

4. Not obtaining necessary licenses: Some sectors require additional permits before operations can start.

5. Mixing personal and business funds: This can cause accounting confusion and potential tax issues.
   

Professional Assistance for Foreigners

Foreign entrepreneurs are strongly advised to engage a Singapore business registration service provider or corporate advisory firm. These professionals can help you:

• Register your sole proprietorship or company with ACRA

• Serve as your local authorized representative

• Apply for work passes such as the EntrePass

• Handle tax and compliance filing

• Offer advice on whether a company structure may be more suitable

Partnering with an experienced local consultant helps ensure your registration process is smooth, compliant, and aligned with Singapore’s legal framework.

Conclusion

To conclude, foreigners are allowed to set up a sole proprietorship in Singapore, but certain conditions must be met. You will need either an EntrePass or a local authorized representative to fulfill the residency requirement.

While the process is relatively simple and affordable, a sole proprietorship exposes the owner to unlimited personal liability and may limit business growth opportunities. For these reasons, many foreign investors opt for a private limited company, which offers limited liability, tax advantages, and a more professional image.

Nonetheless, if you’re testing the market or managing a small-scale venture, starting as a sole proprietor can be a practical first step toward entering Singapore’s dynamic business landscape — as long as you comply with the relevant legal obligations.