Ultimate 2020 Guide To Starting A Business In Singapore
They say that if you want to see a kangaroo, go to Australia. And if you want the best Sushi in the world, go to Japan. But, if you’re planning to start a business, then Singapore is the place to be. The city-state is at the top of, among other reputable corporate rankings, the World Bank’s Ease of Doing Business Index.
It’s worth noting, however, that while running and growing a business is conveniently easy in Singapore, starting one is a different thing altogether. It’s not a matter of just filling up a registration form and submitting it. Rather, setting up a business in Singapore is an intricate multi-step process involving quite a number of critical variables.
Luckily for you though, this article provides the much-needed headstart on how to start a business in Singapore.
Important Factors to Consider When Starting a Business in Singapore
Apart from the standard startup parameters, individuals who are planning to start a business in Singapore should take the following into account:
Type of Business To Incorporate
There are three primary types of companies you could incorporate in Singapore:
Sole Proprietorship: For low-risk entrepreneurs who are planning to run their businesses alone, and can handle unlimited liabilities.
Limited Liability Company: For individuals and corporations that come together to start a business in Singapore. A limited liability company splits its equities into shares, plus separates company liabilities from personal obligations.
Partnership: This is more like a collaboration between several individuals. 2-20 people partner to start and run a business in Singapore under specific terms and conditions.
It doesn’t end there though. Within the three core categories, there are numerous other subcategories and business entities. If you’re thinking of setting up a partnership company, for instance, the Singapore Companies Act gives you the option of proceeding with either a General Partnership or a Limited Partnership. Then when it comes to limited liability companies, you could either set up a Company Limited by Guarantee, a Private Limited Company, or a Public Limited Company, while Private limited companies in Singapore can be registered as LimitedExempt Privateor Limited Non-Exempt Private.
Although the flexibility here is great, we’ve got to admit- it’s one heck of a complicated web of options. It gets even more overwhelming when you consider all the benefits and drawbacks that come with each company type.
Now, to identify the most suitable option, you might want to check out our detailed Singapore Corporate Structure Guidefor a start. Otherwise, you could also consult our experienced in-house professionals for personalized guidance.
Business Plan and Capital
As it turns out, you can start a business in Singapore with a paid-up capital of as low as S$1. That’s quite convenient for everyone. But then again, after company registration comes the much harder part of getting the business up and running. This is where you’ll need a great deal of capital to roll out your business operations.
And why does the money come from?
Well, it all begins with a solid business plan. It’s only after drawing up a comprehensive plan that you get to determine the amount of capital you’ll need during and after starting the business. And while you’re at it, you might also want to capitalize on the various business schemes available in Singapore. Such government offers can convert innovative business ideas into competitive global brands.
We’re talking about schemes such as:
Startup SG Accelerator.
Early Stage Venture Fund (ESVF).
Productivity and Innovation Credit (PIC)
Financial Sector Technology and Innovation (FSTI) scheme.
Angel Investors Tax Deduction (AITD) scheme.
The options are endless.
While Singapore is renowned for its favorable tax policies, the Inland Revenue Authority of Singapore (IRAS)doesn’t charge a uniform tax rate across the board. What you end up paying each year depends on not only your registered corporate structure, but also the types of business activities you’ve been engaging in, the business schemes you’ve enrolled in, the specific tax benefits you’ve won, as well as the net annual income of the company.
Typically, starting a business in Singapore means you should expect a corporate income tax rate of about 4.25% on the first S$100,000. It’s only after you manage to grow the business income that IRAS increases the base tax rate.
In essence, the rates increase progressively to 17% for businesses making up to S$10 million per year. However, once you hit an annual turnover of S$1 million, you’ll be required to register for the Goods and Services Tax (GST), which will then charge you a rate of 7%.
Meanwhile, if you happen to be a foreigner, we strongly advise you to take advantage of Singapore’s tax agreements.
Now, when it comes to registering one, a random location just doesn’t cut it. While Singapore is a well-developed and rounded metropolis, not all neighborhoods and districts are great for commercial activities. That said, one of the most affluent areas you might want to check out is Marina Bay. And if you’re looking to set up the business within a busy shopping district, Orchard Road is worth considering. But, if these two areas prove to be a bit costly in terms of rent, you could alternatively consider Tanjong Pagar, Suntec City, or River Valley.
Migrating to Singapore
Starting a business in Singapore doesn’t automatically give you residence status. Rather, you have to apply for special permits if you intend to relocate into the country, whether permanently or temporarily.
You could, for instance, apply for an Employment Passvia Singapore’s Ministry of Manpower. It’s open to foreign executives, managers, and professionals who earn at least $3,900 per month and have acceptable qualifications. Then if the application sails through, you could even have your family members accompanying you under Dependants’ Passes.
Please note, however, that processing such visas usually takes about 6 months or so. Therefore, you might want to plan ahead of time.
Alternatively, you could try your luck in qualifying for the EntrePasspermit, which typically comes even before the business registration process. The most important requirement here is a well-crafted business plan that details an innovative and feasible business proposition.
As long as the idea is solid, you can even migrate to Singapore with basic academic qualifications, and without a salary. Then get this — the authorities will consequently give you two years to test your business proposition.
What are the Steps to Starting Your Business in Singapore?
If you choose to proceed after reviewing all the factors, here are is a step-by-step procedure on how to start a business in Singapore:
Pick The Ideal Corporate Structure: Once you come up with a solid business plan, you should review all the corporate structures available in Singapore, and then identify the most suitable structure based on your business needs, as well as the statutory qualification parameters.
If you’re setting up a new company from scratch, Singapore allows you to choose between Sole Proprietorship, Exempt Private Limited, Non-Exempt Private Limited, Public Limited, General Partnership, and Limited Partnership.
Assemble Your Corporate Team: With the corporate structure identified, you can now begin assembling all the parties you’ll be setting up the Singapore business with.
If you’re thinking of starting a Limited Liability Company, for instance, you’ll need at least one shareholder, who could also be a director. But, make no mistake. At least one of the company directors should be a Singapore resident.
When it comes to a Partnership Company, however, one shareholder won’t suffice. You’ll need 2-20 parties to start such a business in Singapore. Then for Sole Proprietorships, on the contrary, you can proceed comfortably without any additional parties.
In the long run, a limited company is also expected to appoint a company secretary within 6 months of incorporation, plus an auditor within 3 months of incorporation.
Register a Business Name: When starting a business in Singapore, business name registration generally precedes company incorporation. It’s only after you’ve successfully registered and reserved a name that you can go ahead and attach it to your incorporation application form.
That said, business name registration occurs on ACRA’s BizFile+ website. As a business filing agency, we usually log into the portal and place applications on behalf of our clients. ACRA subsequently reviews the names and then gives a go-ahead in hours or days.
An approval here means your business name will be reserved for 60 days, within which you can proceed to incorporate the company.
Get a Business Address: As we’ve mentioned, ACRA will need a valid physical address during company registration. So, it’s always a good idea to secure one beforehand.
The address here should essentially be the physical location where your business will be placed. And in case you’re wondering, ACRA doesn’t accept P.O Box addresses. Only valid physical addresses can be approved.
But, don’t confuse that with your residential address. While you could use the same address for both fields during incorporation, your business address and residential address should be different.
Set The Paid-Up Capital: In most cases, Singapore entrepreneurs choose to proceed with the minimum allowed paid-up capital of S$1. Pretty understandable for a small business starting from scratch.
All in all though, avoid setting such a random amount as your company’s paid-up capital. Instead, you should work out the value of the company’s total assets on your business plan, and then enter the figure as the paid-up capital.
And if you’re working with partners or shareholders, you might want to confirm their individual contributions, the number of shares on offer, plus the corresponding value of each share.
Draft The Company’s Constitution: The company constitution is more or less the Memorandum of Association (MOA) and Articles of Association. Apart from the company’s details and constituent members, it spells out all the in-house administrative regulations, as well as the relationships between the shareholders.
Ultimately, the final copy of the company’s constitution should state the business name, all the company addresses, the names of all the shareholders along with their respective equity amounts, the company’s objectives, the liabilities of the shareholders and directors, as well as the operation, dissolution, and formation guidelines.
Incorporate The Company: With the company’s members and registration documentation all sorted out, you can go ahead and incorporate the business in Singapore.
This is yet another procedure we generally handle on behalf of both foreigners and residents who are seeking to start a business in Singapore. And yes, as you might have guessed already, the whole procedure is carried out on the BizFile+website.
Apply For Business Licenses and Permits: Unfortunately, the virtual certificate of incorporation doesn’t come with the privilege of conducting business in Singapore. You can only proceed to roll out your products and services after acquiring all the relevant business licenses and permits.
Now, when it comes to that, you’ll notice that Singapore offers a diverse range of permits for different types and scales of businesses. So, the best approach here would be researching extensively to discover all the requirements, before zeroing in on the specifics.
Open a Corporate Bank Account: Business is all about transactions, and transactions are usually facilitated by banks. So, of course, it goes without saying that you’ll need a corporate bank account for your new Singapore business.
Now, the good thing about Singapore is, it hosts quite a wide range of banks. You have the option of using a local bank or a foreign bank with branches across different countries. The choice is yours.
Hire Employees: Although Singapore has a rich array of job skills and talents, hiring and managing employees immediately after incorporation may not be as simple as you imagine. There are specific regulations you need to follow before, during, and after hiring the workers.
That said, you can start familiarizing yourself with the basics by studying the Singapore Employment Act.It outlines all the legal frameworks and compliance requirements when it comes to hiring and managing both domestic and foreign-based workers.
Delegate Compliance Filing: As you excitedly embark on your new Singapore business venture, the last thing you’ll want to deal with is keeping up with all the intricate compliance requirements.
Fortunately though, at least you can assign all these compliance filing tasks to a specialized provider like WealthBridge.
Click here if you want to see our in-depth guide on how to start your online business in Singapore.
Over To You - Where To Start
We hope this guide has answered all the questions you had about setting up a business and registering a company in Singapore. Eventually, the whole process could take you only a couple of days.
But then again, you could take a shortcut and save yourself all the stress that comes with incorporation and compliance. ACRA in Singapore recommends getting yourself a specialized service provider.
As such, if you need to register a company in Singapore, give us a call here at WealthBridge. Not only can we get that done for you, we can also handle all the subsequent compliance filings, as well as take care of your accounting, payrolls, and company secretarial tasks. Basically all the compliance backing you need while you focus all your energy on getting the business up and running.
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