Starting a business in Singapore is a popular idea, especially as the country is known as one of the leading business hubs in Asia. Setting up small, medium, or even micro enterprises is a great way to get into the Asian market, and start your business goals.
The Singaporean government even provides grants to potential SMEs, as these businesses contribute to the country's GDP. SMEs are vital to the economic growth of both developed and developing countries, despite being smaller businesses and having fewer employees than multinational corporations. Simply put, SMEs outnumber large businesses.
What is SME?
The European Union defines small and medium-sized enterprises (SMEs) as businesses that employ fewer than 500 employees. SMEs, sometimes categorized under micro, small, and medium-sized enterprises (MSMEs), operate on a much smaller scale compared to large companies, and take up a vital role in economic development.
In Singapore, an SME are small enterprises and medium businesses with no more than SGD100 million annual sales turnover, and less than 200 employees - an important distinction if you're looking to apply for government grants.
The Importance of MSMEs in Singapore
Micro enterprises, small businesses, and medium-sized enterprises contribute to almost half of Singapore's GDP. There are over 130,000 registered SMEs in Singapore, each with no more than 200 employees. An estimated 70% of Singapore's workforce is employed in small and medium-sized enterprises as SMEs play an important role in the development of economic growth.
Grants for Small and Medium-sized Enterprises in Singapore
SMEs in Singapore are eligible for various grants and government assistance set up to provide funding for small and medium-sized enterprises. There are 20 government grants in total, each with a corresponding number of requirements and criteria small and medium-sized businesses must meet to be eligible for the grant.
Grants may be in the form of cash grants, equity, tax incentives, and other schemes. These grants are offered to small businesses with growth potential, and are meant to boost the country's economy by growing local enterprises. Some examples of grants for SME development are as follows:
- Enhanced PACT
- Enterprise Development Grant (EDG)
- Enterprise Financing Scheme (EFS)
- Market Readiness Assistance (MRA) Grant
- Productivity Solutions Grant (PSG)
- Small Business Recovery Grant (SBRG) - 2022
- Start-Up Tax Exemption (SUTE)
- Venture Debt Programme (VDP)
Requirements for Setting Up a Small and Medium Enterprise in Singapore
Setting up a small and medium enterprise in Singapore is relatively simple. Small and micro businesses tend to register as sole proprietorships, where the business owner takes responsibility over the assets, liabilities, and equity of the company. However, small businesses may convert to a partnership or a private limited company for growth.
Medium-sized enterprises, on the other hand, tend to operate under a Limited Liability Partnership (LLP) or as a Private Limited Company (Pte Ltd), though medium-sized sole proprietorships also exist with a small business administration handling the company affairs.
Requirements for Setting up SMEs in Singapore
Whichever type of business, the requirements for an SME follows the business structure. For instance, a sole proprietorship SME business will need to submit the required documents for a sole proprietorship. The same principle goes for partnerships, private limited companies, and more. Here are the requirements for each business structure:
- A recognized company name;
- Local business address;
- Copy of official ID in Singapore;
- Verified residential address;
- A Statement of Non-disqualification;
- A declaration of compliance;
- A description of the main business activities.
Limited Liability Partnership
- The proposed name of the LLP;
- The LLP's registered office address;
- Partner/manager information, including the residential addresses of partners and managers;
- Statement of Non-disqualification to act as manager, and consent to act as manager;
- Compliance statement.
Private Limited Company
- A distinctive and original business name;
- At least one resident director;
- At least one corporate secretary;
- At least one shareholder;
- Details of the director, secretary, and shareholder;
- The company’s constitution;
- Verified local business address.
Am I Eligible to Apply for an SME Grant in Singapore?
To be eligible for a government grant or a loan, an SME must be fully-registered as a company in Singapore. Most grants also require that the company operates in Singapore, and has at least a 30% local shareholding.
The company must also be an SME, which entails that: (1) the company employs fewer than 200 employees, and (2) annual sales turnover is less than SGD 100 million. As long as these conditions are met, your company is eligible to apply for a government grant in Singapore meant for SMEs!
How to Set Up Small and Medium Enterprises in Singapore: A Step-by-step Guide
Step 1: Choose the Business Name
The first thing to do is to choose your business name. The name of your company must be unique, and can be different from your trade name. Check BizFile+ for your potential business name, and see whether the name has already been taken by another company. If your chosen name is available, you can proceed with the application.
Step 2: Determine the Type of Business Structure
Next, determine what type of business you're getting into. Will you take on the shared responsibilities with a sole proprietorship, or would having partners benefit you better in a partnership or private limited company? We recommend having your business as a separate legal entity from your personal affairs - it protects you from legal and financial obligations!
Step 3: Take Note of the Requirements & Documents
Take note of the requirements and necessary documents you need to submit to the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. Each type of business has different requirements and criteria to meet, and it is best to have all the necessary files on hand before you submit your business registration application to ACRA.
Step 4: Fill Out the Forms; Submit the Application
Fill out the application form for the type of business you're applying for. You can find and download these forms through BizFile+; just make sure you're filling out the form for the ownership structure you want your company to operate under.
Many companies opt to avail corporate services to ease applications. This is particularly helpful if you're not familiar with the processes in Singapore. WealthBridge provides corporate services to streamline the application process, and we'll be with you as you grow your SME as well!
Step 5: Wait for Approval
The last step is to wait for approval. After filling out all the necessary details, and proofreading that everything is true and correct, submit the application form along with other supporting documents to ACRA. From there, it may take anywhere from 1-3 business days, or more, depending on the nature of your business.
For instance, opening a small school may require that your documents be reviewed by the Ministry of Education (MOE), which ACRA will forward your registration documents to after they have approved your application forms. MOE will review your application, and approve or deny the business, depending on the details.
Starting Up with WealthBridge
Starting up with WealthBridge is the way to go - our corporate services will help you achieve your business goals, and make running your company easier. Let us handle your business application as you focus on the products and services your business will offer.
Send us a message, and we can discuss how WealthBridge can help your business!