Foreign enterprisers seeking to set up small businesses in Singapore start by registering as sole traders in order to make sure they make some profits before they switch to another business form which enable them to increase their activities. Most of the times, sole proprietorships are changed into limited liability companies in Singapore; however, those not ready to enter the market as a company can change the sole trader into a partnership. One of the most common types of partnerships in Singapore is the general partnership.
Below, our company formation agents in Singapore explain how to transform a sole trader into a general partnership.
You can also watch our video on changing a sole proprietorship into a Singapore general partnership:
From the beginning we mention that there is no direct way of switching from a sole proprietorship to a general partnership in Singapore. Even if both business forms are similar in the way that they are not considered legal entities, when changing a sole trader into a general partnership the business owner must de-register with the Accounting and Corporate Regulatory Authority (ACRA). and then register the partnership with the same ACRA.
De-registration is mandatory because the Singapore sole trader has one member, while the partnership must have at least two members.
Our Singapore company formation experts can explain the main differences between sole traders and general partnerships.
Once the sole proprietor has de-registered with ACRA, the general partnership agreement can be signed and filed with ACRA. At this point, the sole trader can bring one or more members to the general partnership.
Compared to changing a Singapore sole trader into a LLC, when changing it into a general partnership, the following information can be kept:
The newly established general partnership must, however, apply for new business licenses depending on the activities it undertakes.
From a taxation point of view, just like in the case of the sole trader, the members in the Singapore general partnership will be levied the personal income tax.
For assistance in changing a sole trader into a general partnership, please contact our company formation consultants in Singapore.