Most foreign enterprisers who set up businesses in Singapore start with small companies, usually under the form of sole proprietorships. This type of structure has many benefits among which the simple registration process with ACRA and the low maintenance costs. However, there are also certain drawbacks when establishing as a sole trader in Singapore, especially related to the liability of the business owner which is unlimited.
When the venture start registering more profit than expected, most investors consider changing the sole trader into a limited liability company (LLC) in Singapore. Below, our Singapore company formation representatives explain the process of changing a sole proprietorship into a LLC.
We invite you to watch our video on how to change a sole trader into a LLC in Singapore:
De-registering a sole proprietorship – a procedure explained by our Singapore company formation consultants
There is no direct process of changing company types in Singapore, therefore when considering switching from a sole trader to a LLC the business owner must first de-register from ACRA.
This process is quite simple and requires filing a petition with the Trade Register. ACRA will erase the sole trader from its registers within 3 months. During this timeframe, the former sole trader must register the LLC and transfer the assets of the old business to the new one.
Registering the Singapore LLC
When converting a sole trader into a Singapore LLC, the company formation process of the limited liability company should start right after the petition for de-registering the sole trader has been filed. The business owner can keep the trade name of the old company as long as he or she files a No Objection Letter with ACRA.
Our company formation experts in Singapore can help with the registration of a LLC.
Transferring the assets of the sole trader to the Singapore LLC
The transfer of assets when changing a sole proprietorship into a LLC must be completed within 3 months, before the sole trader is stricken off the Trade Register. The following can be transferred to a LLC after closing a sole trader in Singapore:
- – the existing assets which can be converted into the share capital of the company;
- – the bank account;
- – the contracts which have not expired.
The assets can be transferred once a resolution has been passed, while the bank account of the sole proprietorship must be closed and then a new one must be opened.
It should be noted that the newly incorporated LLC will have to undergo the licensing phase, as existing business licenses cannot be transferred from the sole proprietorship.
For full information on how to change business forms or if you need assistance to open a Singapore company, please contact us.