3 Steps to Launching Your Own Business in Singapore
- Posted by Lee Bon
- On 28.02.2017
Starting a new business overseas always seems to be a daunting and tangled procedure braked with paperwork, red tape, and risks. Opting for Singapore as a destination for your startup, you have a chance to experience an absolutely different reality of business easiness. The World Bank has been hailing Singapore as the easiest place for doing business for several years in a row. And in 2016, the tiny island country tops the ranking again proving its business pre-eminence over 189 economies of the world.
What are Singapore’s business fortes? Ease of filing taxes (ranked #5), protection of minority investors (#1), enforcing contracts (#1), ease in getting construction permits (#1), getting credits (#19), registration of property (#17) – just to name a few.
In Singapore, the online registration of a new firm usually lasts less than a day (several hours) and doesn’t require any paid-up capital – you only symbolically contribute 1 SGD. The whole procedure of business setup (including dealing with necessary authorities) will take no longer than 3 days. For comparison: the medium incorporation time is 26 days for other Asian countries and over 8 days for high-income OECD countries (according to the data of the World Bank Group).
From this article, you will find out how you can easily set up your new SG-based business in only 3 steps – without any fuss.
1. Legal Entity Choice
Before you move on to the basic paperwork and reach out to the authorities for the registration, it’s crucial to choose a business entity that suits your business idea. Although there are a lot of legal options (the limited liability company, sole proprietorship, subsidiary, branch office, representative office, and so on), you shouldn’t choose at random because your choice defines the track and opportunities of your future firm.
For example, if you need to expand your overseas business to Singapore, use the form of the Subsidiary if you want to protect your foreign company’s assets from possible risks or the form of the Branch Office if your Singapore-based company isn’t going to derive lots of Singapore-sourced income so that you could save on corporate tax a lot. If you need to set up the presence of your foreign business in Singapore and you wish to start with preparing the analytic background before moving on to launching profitable activities, you can try the form of the Representative Office. As this formation doesn’t have a corporate nature, you avoid the corporate tax.
If your future Singaporean firm isn’t based on any already existing foreign company (parent company), it is reasonable to use the form of the company with a limited liability (Private Limited Company) because such business formation protects personal assets of its founders/members and implicates a capability of scaling up and expanding. Register as a Sole Proprietorship if you have a very small business with modest transactions and scarce staff. But ensure that your visa allows acting as a founder of the SP because, for example, the Employment Pass doesn’t.
All business entities differ from each other with tax benefits, liabilities, image, powers in borrowing money in development, visa limitations and requirements for mandatory appointments. You shouldn’t rush things. Take your time to analyse your business values, goals, and budget in order to make a well-informed entity decision. Probably, you will need to consult a tax specialist who will explain all possible tax benefits/risks in your particular situation.
2. Registration Procedure
Setup requirements differ for every kind of business entity. We will look at the Private Limited’s registration procedure as this legal entity is the most popular. The new company must be registered by the ACRA (Accounting and Corporate Regulatory Authority). It must also get the tax file number from the IRAS (Inland Revenue Authority) and comply with the Companies Act and local legislation.
Consider these points of successful company registration:
- Company’s name. It must be a unique name that doesn’t duplicate any other local business name/brand or sound immorally. ACRA will check this name in their database and give their approval. In order to avoid any hassles at the registration, you can get your name suggestion checked in advance by our incorporation specialists.
- Paid-up capital. ACRA allows it to be as low as only 1 SGD, but banks usually set up a higher minimum deposit for the account. You should inquire about this minimal amount at the bank of your preference.
- There must be at least one and no more than 50 of them. Limit your company with 20 shareholders if you would like to benefit from the governmental startup tax incentive.
- The resident director (1 or more) appointed. This person must ordinarily reside in SG (be a Singaporean citizen/permanent resident/EP or EntrePass holder).
- The company’s secretary This person must ordinarily reside in SG (be a Singaporean citizen/permanent resident/EP, S Pass or EntrePass holder). If the company has only one director, he/she cannot also perform as the secretary. If there are 2 or more directors, one of them can perform the duties of the secretary.
- The company’s address This must be a real physical Singaporean address, not a PO box.
On the final stage of your registration, the ACRA gives you the Registration Number (a code that must be put on all official business documents) and issues your company’s Business Profile. The Profile is actually an electronic document which contains all crucial information about your business (the Registration Number, share capital, the number of shareholders, registration date, and so on). Later, this profile will be required if you address a bank for opening a corporate account or relevant authorities for getting necessary licences.
At this stage, your incorporation is complete; however, there are a number of post-incorporation procedures your business may need to undergo (proceeding from its features). They are:
- obtaining permits, approvals, and licences (for such niches as private schools, travel agencies, banks, moneylenders, importers, etc.);
- registration for the Goods and Services Tax (for companies whose expected annual revenue is more than 1 million SGD);
- registration for paying contributions to the Central Provident Fund (a pension/insurance programme for SG permanent residents and citizens);
- registration with the customs (if your business implies import/export).
3. Bank Account Setup
Singapore is a high-powered business hub of the Asia-Pacific region. You are welcomed to leverage its reliable and cutting-edge corporate banking services provided by a number (over 700) of well-established Singaporean and international financial institutions. Ensure you have the resolution to open the bank account issued by the Board of Directors as this is a mandatory requirement.
Gather and evaluate information about the requirements of different banks according to your unique corporate needs and determine on the right bank. Please bear in mind that some banks require a physical presence of the company’s director during the account registration or even attending an interview. Alternatives are opening the account at the bank’s overseas branch or involving the notary public for signing necessary documents.
Inquire about the minimal deposit as this amount doesn’t usually match the minimal paid-up capital the ACRA allows for the incorporation (1 SGD). What else you should pay your attention at when choosing the bank your company will go with? Inquire about the account’s currency, online banking opportunities, minimal monthly limit, credit card, business insurance and loans, money transfers, market/treasury/trade finance/liquidity management services etc.
To get your account set up, you need to fill in the forms and provide the resolution issued by the Board of Directors, a document that proves the residential address of the signatory/director, and certified copies of the Certificate of Incorporation, Business Profile, MAA (Memorandum and Articles of Association), passports, and so on. Inquire about the full document checklist proceeding from your particular business circumstances.
Although incorporation in SG is very quick and straightforward, it still requires a lot of paperwork, wise strategizing and tax consultations. Leverage the advice of incorporation professionals to reach the pinnacle of your corporate goals.