It’s no secret that Singapore’s online-based businesses have been growing tremendously over the past couple of years, to a point of raking in billions of dollars annually. By the end of 2020, for instance, the city-state’s ecommerce revenue is projected to hit US$ 2.4 billion.
In the subsequent years, it’s set to experience an average annual growth rate of about 12.1%, which will cumulatively push the overall market volume to US$ 3.8 billion by 2024. The e-commerce business structure in Singapore is becoming a booming industry with categories such as health and beauty, food, and consumer electronics.
The ecommerce business model allows individuals to generate income through their own online business, with minimal capital, requirements, and business expenditures. While starting an online business in Singapore might seem like a straightforward process at first, it can all get pretty confusing when it comes to the real thing.
How to Start an Online Business in Singapore
Online businesses have a unique framework different from a traditional corporation or a private limited company. Unlike regular companies, an e-commerce business would conduct business transactions with potential customers and clients via web-based platforms, and base their marketing strategy on online advertising.
Although an e-commerce business operates differently, it is still considered a business venture. As such, Singapore requires them to be incorporated officially, just like their offline counterparts.
Do I need to register my online business in Singapore?
The simple answer is yes -- you do need to register any business venture in Singapore, whether it is a physical, or an online store. Many online businesses operate on e-commerce platforms, which won't require them to register their business idea, unless the store would like to register as a verified e-commerce business, such as in Shopee Mall and LazMall.
You may confirm the legal details from Section 5 of Singapore’s Business Names Registration Act (BNRA). The statute, which was passed in 2014, requires all types of businesses to file for registration with the official registrar of companies in Singapore, the Accounting and Corporate Regulatory Authority (ACRA).
While you might find some exemptions and loopholes, don’t let them mislead you. All companies and business owners intending to carry out profit-generating activities are required to register their business in Singapore. This includes even ecommerce-based ventures.
In addition to the standard corporate laws, online businesses are expected to comply with the Internet Code of Practice (ICP). This is a special set of rules that seek to regulate your web publications and activities. Hence, you can bet that Singapore’s Infocomm Media Development Authority (IMDA) will be tracking your website to ensure full compliance.
And speaking of which, you might also want to familiarize yourself with Singapore’s Broadcasting Act. It explicitly outlines what you’re allowed to publicly broadcast through your ecommerce website, as well as the various licenses you should apply for.
It’s worth noting, though, that the licensing and registration specifics depend on the type of online business you intend to set up. Not all commercial websites in Singapore are considered online businesses. What’s more, not all online businesses in Singapore run entirely from the web.
What are the Examples of Online Businesses in Singapore?
- Online Selling of Physical Products: This is the standard ecommerce setup for a lot of business owners with an online business in Singapore, and it typically entails selling tangible items directly through a web-based store.
Customers essentially shop for the products on your digital platform and then proceed to pay via digital payment processing systems. You, in turn, follow up by processing the orders accordingly and shipping the purchases to their respective buyers.
- Online Selling of Digital Items: This is a lot like the ecommerce framework we’ve just mentioned for online business in Singapore. But, instead of selling physical items, your business chooses to sell virtual products like games, eBooks, accounting software, and videos, and more.
- Service Provision: These are web-based ventures that specialize in professional services. In other words, skilled professionals such as designers, architects, programmers, and tutors basically choose to sell their services to online clients through their own websites, or third-party online platforms like Fiverr.
- Online Marketing: This is a unique category of online businesses that fundamentally generate revenue from digital ads, sponsorships, and marketing partnerships. Pretty much where you’d find bloggers, YouTube content creators, social media influencers, affiliate marketers, etc.
Whichever group you fall in, ACRA requires you to fully register the business before rolling out your operations. Subsequently, you’ll notice that while business registration helps Singapore’s statutory bodies keep tabs on every single corporate entity, it also benefits businesses in multiple ways.
Why Is It Important to Register Your Singapore Company as a Web-Based Business?
In essence, you should consider registering your web-based business with ACRA because it’ll ultimately:
- Protect You From Liabilities: Business registration in Singapore gives you the chance to establish the company as a separate entity, complete with a distinct name and independent liabilities. Your personal assets are legally detached from the company’s holdings, leaving the business to run and manage its liabilities autonomously. That means even its debts and losses won’t be extending to your personal estate.
- Minimize Tax Rates: Although business registration in Singapore will have you paying corporate taxes at the end of your company’s financial year, the rates are bound to be lower than what you’d otherwise pay as personal income tax. The Inland Revenue Authority of Singapore (IRAS) charges companies a corporate tax rate of not more than 17%, while individuals, on the other hand, are usually subjected to personal tax rates of up to 22%. What’s more, Singapore offers its registered companies multiple tax benefits, exemptions, and cuts.
- Facilitate Adequate Licensing: After incorporating the business in Singapore through ACRA, you can go ahead and apply for all the relevant licenses from the GoBusiness Licensing portal. This will give you the legal backing to conduct your profit activities freely, as well as apply for supportive corporate schemes.
- Reserve Your Domain Names: ACRA happens to influence even Singapore’s national internet registry, thanks to the direct link it shares with the Singapore Network Information Center (SGNIC). As such, you count on it to help you reserve up to up to five local business domain names with .sg or .com.sg suffixes.
What Are The Things You’ll Need To Register When Starting an Online Business In Singapore?
As you’ll come to notice, the business registration process in Singapore is not the same across all online companies. The incorporation requirements, cost, and compliance procedures vary according to, among other parameters, the type of corporate structure you’ve selected for your business.
Singapore Sole Proprietorships have the simplest and cheapest registration process- but eventually, they end up with the fewest corporate benefits. Singapore Limited Liability Companies, on the other hand, attract very technical compliance procedures- but they ultimately make up for that with huge corporate perks.
As for Partnerships in Singapore, you could say they offer a balance of both worlds. The business incorporation process is a little complicated and costlier than registering a Singapore Sole Proprietorship business, but cheaper and simpler than applying for a Singapore LLC business.
Now, when you take everything into consideration, you could say that the basic requirements for registering a conventional web-based Singapore business include;
- A unique company or business name.
- A registered business address in Singapore.
- The personal details of the partners, directors, and shareholders.
- A statement outlining the business activities.
- A company constitution.
- The company’s paid-up capital.
- The identification documents of each company member.
- At least one local resident or nominee director in Singapore, who could double up as a shareholder.
- A company auditor.
Where To Start -- Singapore Company Incorporation
Ecommerce, particularly within Singapore’s favorable business environment, offers immense business potential. You could potentially grow your idea into an incredibly profitable online enterprise. It all depends on how you approach your business strategy -- right from planning and registration, to target customers, compliance, and execution.
Before you can reach out to your target market, you’ll need to go through proper business registrations to legitimize your business. Our extensively-experienced corporate experts are here to help you with all the registration intricacies of Singapore company incorporation, as well as guide you throughout your online business journey.
Get in touch with us today and let’s have a chat about your Singapore business name, Singapore company incorporation laws, corporate taxation, payroll administration, company secretary, or compliance filing. Get started with your new online business - whether in a limited liability partnership, or sole proprietorship!