Can foreigners set up a Sole Proprietorship or Partnership?

We have received many inquiries from foreigners lately regarding setting up a sole proprietorship or partnership here in Singapore. So the question is can foreigners do so? In this article, we will answer that question. But first, we need to know what is a sole proprietorship and a partnership.

What is a Sole Proprietorship?

This form of ownership belongs to an individual, a company or a limited liability partnership (LLP). There are no other co-owners (shareholders) or partners (directors) managing the business. Although this will mean that you have total control over your business and make quick decisions for your business, there are many disadvantages.

Advantages:

• Total and complete control in all company matters by you alone
• Quick and hassle-free to make changes to company matters

Disadvantages

• A sole proprietorship is not a separate legal entity from you
• This means you can be sued in your personal name
• You have unlimited liability (you will be personally liable for all debts incurred by the business)

Requirements

Any Singapore citizen (SC), Permanent Resident (PR) or EntrePass holder, at least 18 years old. All other FIN holders are strongly advised to check with the pass issuing authority example Ministry of Manpower (MOM), on their eligibility before registering a sole proprietorship.

As such this would mean that as a foreigner residing overseas, you will need to engage a resident authorised representative (SC/PR/EP or Employment Pass holder). The foreigner must also engage a registered filing agent like ourselves to do the application.

You will also need to seek approval from MOM to operate their business physically in Singapore, after registering the sole proprietorship. You will need to engage a registered filing agent to apply on your behalf. As only individuals with a Singpass account can do the submission.

Conclusion

Based on the above requirements and disadvantages. It is more prudent to register an exempt private company limited by shares rather than a sole proprietorship as a foreigner. The costs involved for you as a foreigner are largely the same regardless of the business structure. You will need to engage a resident representative (Nominee Director) to front your company if you reside overseas.

The risks of a sole proprietorship are much higher as well. Since you can be sued in personal name if your business incurs losses or is in debt. This is very risky as you can go into bankruptcy if things do not work out. If you are still unsure or have more questions, please do not hesitate to contact us immediately.

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