How to Convert Your Singapore Sole Proprietorship into a Pte Ltd Company
Procedure for Converting a Sole Proprietorship into a Private Limited Company
Register the new company. First, business owners should check whether they are able to meet the requirements for setting up a private limited company in Singapore. They can then submit the application to register the new company through the Accounting and Corporate Regulatory Authority (ACRA)’s BizFile+ website.
Obtain approval for the company’s name. The business owner may submit a “No Objection” letter to the Registrar if they wish to use the sole proprietorship’s existing business name as that of the new company.
Execute a formal transfer of all business assets to the newly-incorporated company. The transfer should be done promptly as the sole proprietorship must be closed within 3 months of incorporating the new company. The transfer would include:
Closing of the bank accounts that were used for the sole proprietorship within 3 months of the company’s incorporation, and opening of new bank account(s) for the private limited company
Settling the sole proprietorship’s debts (if any), followed by converting its remaining assets into capital for the company
Novating to or re-signing of contracts, service agreements or leases that were previously under the sole proprietorship, by the company
Reapplying for licences or permits that are not transferable from the sole proprietorship to the company
File a “Cessation of Business” on BizFile+ within 3 months of the company’s incorporation. This is to inform ACRA that the sole proprietorship has ceased.
After incorporating the company, it is helpful to take note if the following have been considered:
The business registration number issued by ACRA must be on all the letterheads, invoices, billings or other official documents of the company
If the company’s business involves import, export, and transshipment, then the company has to be registered with the Singapore Customs for a Customs Account
If the company’s annual taxable turnover is more than or expected to be more than SGD 1 million, it must register for Goods & Services Tax
The company must register with the Central Provident Fund (CPF) for the making of contributions to its employees’ CPF accounts
The company is also required to pay a Skills Development Levy to the SkillsFuture Singapore Agency for each employee hired
While there are many benefits of converting a sole proprietorship into a private limited company, doing so would likely also result in higher compliance costs for business owners. Business owners should therefore carefully consider whether making the switch would be in the business’ interests.
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