Regarded as the most basic structure of a business, a sole proprietorship is that which has one owner who simultaneously acts as its operator, and who enjoys full authority over the business’ activities, assets, profits, losses and even liabilities. While both the business and the owner are treated as one, neither of them is granted with a legal status. Hence, an enterprise running on sole proprietorship is not eligible to sue nor is it entitled to sue another.
One feature that makes a sole proprietorship particularly attractive to most investors is its taxability. There are 2 ways to benefit from this feature. First, a sole proprietorship does not subject to double taxation, a characteristic common in corporations.
Double taxation happens when the business enterprise becomes a legal entity separate from its owner and shareholders. As a universal rule, the income incurred by shareholders from the corporation’s business operations are treated as a personal income. Therefore, the shareholders are taxed on a personal level. In addition, the corporate itself, by engaging in business operations and by being considered as a separate entity, acquire a certain amount of income, thereby, qualifying for a distinct corporate tax.
In a sole proprietorship, however, the same thing is not applied by law simply because the proprietor and the business enterprise are recognized as one. By that, the income made by the owner and the company are esteemed as one as well.
The second approach of gaining a tax advantage is the proprietor’s privilege to deduct the business’ losses to the former’s overall income that could spring from all sources including dividends, profits, and interests.
Now, if an investor decides to exercise his knack for business in Singapore, he may have additional advantages. Singapore’s economy follows the doctrine of laissez faire even to foreign entrepreneurs whom are conferred with freedom to repatriate their profits and who are empowered to import capital or own 100% of the stock of the company registered in this city-state.
Through a procurement of an Entrepass, Employment Pass or Dependent Pass, a foreign investor himself can be appointed as the local resident director as mandated by the Singapore Companies Act.
Singapore has a promising business potential, earning a slot in the world’s largest financial centers. As the Business Expectations Survey conducted by Singapore Department of Statistics on the services sector puts it, 24% of the city-state’s services sector bears a positive outlook for the final quarter of 2010 as they forecast an increase in revenues and manpower.
Just on the retail trade industry alone, a net weighted balance of 38% of all retailers shares a common estimate of gaining higher sales for fourth quarter of 2010 and as such, they see more recruitment of employees during this quarter.
In a stark comparison, registering for a sole proprietorship integrates a personal touch to the business firm, for the sole proprietor reserves the sole discretion of making all decisions relating to the business, and thus, reflects that business’ personality.
Nonetheless, constituting for a sole proprietorship in Singapore presents an opportunity to establish one’s reputation on a personal level, whereby, relationships are established, lengthened, and strengthened. These can all come true in Singapore.