According to one global survey, Singapore features prominently among the world’s top economies and ranks second among the best countries to start a business. The primary factors informing Singapore’s global ranking are business-friendly policies and procedures and easy access to startup resources, including skilled labour.
However, maintaining such rankings is only possible through the Singapore Accounting and Corporate Regulatory Authority (ARCA). The government agency offers business information and support to Singapore residents and foreign entrepreneurs seeking to set up a corporate entity in the country. So, keep reading to learn the primary considerations when starting a business in Singapore.
Factors to consider before starting a company in Singapore:
All facts point to Singapore being an attractive choice for setting up a new business. However, such businesses must adhere to regulatory requirements and standard procedures before becoming legal entities.
Such requirements govern the business structure, corporate tax, business licenses, and goods and service tax, among other factors stipulated in The Singapore Company Act. Therefore, below is a guide to help a new business entity comply with the company’s act and avoid non-compliance fines and penalties that could jeopardize its operation.
Determining what and how to start your business in Singapore:
Distinct business operations require unique facilities like a virtual office or a physical office space to run effectively. Such special considerations are essential when applying to have your company registered. So, regardless of whether you are a small business run by a Singapore resident or a foreign investor, establish your business needs starting with the following.
Check if the company name is available:
Your Singapore company name is the first point of contact between your business and your target market and is necessary for your company’s business profile. Therefore, you need to choose a business name that spells brand consistency and uniqueness and is memorable, web-friendly, and free of trademark issues.
However, note that competitors with similar business activities seeking company registration also think along the same wavelength. Therefore, you need to conduct company name research to ensure that your proposed Singapore company name is available.
ACRA is a helpful resource for name searches because it has a repository of names for every business in Singapore. Moreover, the regulatory agency offers guidelines for a proposed Singapore company name, including that they should not be vulgar or too similar to government agency names.
Once you settle on a name that meets ACRA’s guidelines and has no contest, submit your application to register your business name with the government regulatory agency. Singapore has the most affordable company registration fees, and ACRA will approve your application after you pay the fee.
Ideally, the business name application processing should take 15 minutes. However, it may take 14-60 days if ACRA needs to refer to other relevant authorities as dictated by the nature of your business.
Regardless, the regulatory agency will reserve your name for 120 days, during which you should proceed with Singapore company registration or risk losing the reserved name if the 120 days lapses. You will receive a business registration number on completing the registration process.
Once you receive a Singapore company registration number, you can procure a business profile from ACRA’s website. A business profile gives an overview of your business entity and allows you to conduct post-incorporation activities, including permit procurement.
Procure the necessary permits by corporate regulatory authority:
Before commencing operations, any corporate entity or small business in Singapore must apply for relevant permits. The Accounting and Corporate Regulatory Authority issues relevant permits to all businesses operating within Singapore’s boundaries, allowing the company to legal conduct specific business types within the country’s boundaries.
For starters, you may need to apply for a business activity permit or license should your business need to conduct particular activities like renovations and imports. Second, business entities within a specific industry need industry-relevant permits; e.g., a liquor distribution business must apply for a permit from the regulatory authority that monitors liquor distribution in Singapore.
Third, a business in Singapore offering specialized/technical services like health care, venture capital, or engineering must apply for an occupational permit from relevant Singaporean bodies. The permits from referral bodies mean that your business entity qualifies to offer high-quality services.
Recruit the skilled manpower:
Business incorporation qualifies your business as a legal entity empowered to recruit staff to execute specified business functions, as stipulated in the company constitution. Although different company constitutions require different skill levels, every existing company in Singapore, including a sole proprietorship, must have at least one resident director, shareholder, and company secretary.
Below is an overview of their roles as stipulated in the Singapore Companies Act.
At least one resident director:
A resident director’s primary role is to oversee corporate governance, including convening an annual Singapore company general meeting (AGM). Moreover, they are in charge of maintaining filed records of pertinent business information at the business premises or local registered address.
Such records include information on other directors, auditors, members, managers, secretaries, and shareholders. However, one must meet government-stipulated criteria to qualify as a resident director for a Singapore company.
According to the Singapore Companies Act, a resident director must be at least 18 years old, as evidenced by their Singapore identity card. Second, they must be a Singapore resident with a local residential address, regardless of whether they are a Singapore resident or foreign entrepreneurs with permanent resident status.
Third, they must be physically fit and of sound mind. Given the magnitude of a resident director’s role, you may consider hiring a professional service firm to recruit a qualified, trustworthy candidate for the position.
At least one shareholder:
Singapore corporate laws also direct that a company in Singapore must have at least one shareholder during registration. Shareholders have no direct role in the company’s day-to-day running at the designated office address, but they put up equity for the business.
As stipulated by the Singapore company constitution, shareholders can raise allotted equity or issued share capital in a lump sum or instalments. Therefore, their equity in the company entitles them to attend meetings and express their interests in company matters, especially during AGMs.
Moreover, they can also convene meetings, vote, earn dividends, and gain assets during company dissolution. Although shareholders own Singapore company equity, the company is a legal entity separate from their assets, meaning they are in a limited liability partnership.
In the case of a sole proprietorship, the sole proprietor can double as a shareholder. However, unlike the shareholders in private limited companies, the proprietor and the sole proprietorship are a single entity; hence are liable for company losses.
The company secretary functions as the legal compliance officer in a Singapore private limited company. Their roles entail informing the chairperson, board members, and shareholders of their legal responsibilities stipulated under Singapore’s company law.
Moreover, they must ensure that relevant parties fulfil their legal obligations. However, unlike shareholding, a sole proprietor cannot double as a company secretary. Nonetheless, the proprietor can consult a professional service firm to hire a qualified company secretary.
However, the incumbent must be a natural person or a Singapore resident with a verifiable residential address. Nonetheless, they do not have to be Singapore citizens.
The paid-up capital of a company is a fraction of the issued share capital that shareholders have paid up. Singaporean corporate law stipulates that an entity qualifies for company registration if they have a paid-up capital of at least one Singapore dollar S$1 deposited into its corporate bank account.
Moreover, corporate laws do not specify a duration over which the paid-up capital should remain in the business’s corporate bank account. However, the paid-up capital sum appears on the company business profile, meaning having a more significant sum bolsters your company’s reputation.
The company has complete autonomy to raise the remainder of the issued share capital. Moreover, it also decides how to spend the paid-up capital.
A Singapore address:
A physical office address is a mandatory requirement while registering a new business in Singapore. It is where relevant authorities shall deliver all official business communications regarding the business entity.
ACRA stipulates that you cannot substitute the physical office address with a postal address. Moreover, the office space must be accessible to the public during registered office hours.
File relevant taxes:
The Singapore Companies Act recognizes a Singapore company as a taxable entity. Therefore, your newly incorporated Singapore company must file relevant taxes depending on its business structures.
However, any new company must register with the Inland Revenue Authority of Singapore (IRAS) to receive customized information on the taxes that apply to the said entity. Such taxes include goods and services tax and corporate tax. Moreover, IRAS offers guidance on tax benefits you can accrue from annual taxable revenue and tax treaties that have double taxation agreements.
Advantages of setting up a business in Singapore:
As stated above, Singapore has the second most conducive environment globally to set up a business. Therefore, below are some benefits to Singapore citizens, permanent residents, and foreigners seeking to establish a small business or a private limited company in Singapore.
A robust economy:
According to the World Economic Forum’s Global Competitiveness Report, Singapore’s economy is the most competitive globally. The country’s economic prosperity generates immense growth potential for a business entity within its borders to thrive.
Factors contributing to a robust Singaporean economy include healthy competition among producers and corporate service providers. Such healthy competition spurs innovation leading to diversity in product features.
The innovation also creates opportunities for startups to exploit emerging niches in different economic sectors. Moreover, Singapore has a highly-skilled labour force to push the innovations and supply technical minds to startups.
Second, the country also supports physical, energy, and communication infrastructure to support a thriving economy. Moreover, the communication infrastructure facilitates knowledge creation and dissemination.
Attractive tax system:
Singapore’s investor-friendly corporate tax system ranks 9th globally on the global tax haven index ranking. First, the country only taxes profits rather than total corporate income.
Second, although the country’s corporate tax rate stands at 17% and the goods and services tax at 7%, tax incentives and other business-friendly tax policies make establishing a taxable entity worthwhile. Moreover, IRAS exempts eligible Singaporean startups from taxes on the first S$100,000 on standard chargeable income for three consecutive assessment years.
Eligibility for the startup tax exemption includes that the startup must be a Singapore registered company. It must also be a tax resident in Singapore during the assessment years.
100% foreign ownership and no currency controls:
Most companies require that foreign business entities seeking company registration within their borders issue a specified share capital percentage to native populations. For instance, foreign-owned companies must have a local director and a shareholder.
However, a foreign-owned business entity setting up shop in Singapore can appoint whoever they deem qualified as a shareholder during company formation. The shareholder mustn’t be a Singapore citizen or resident during company formation.
Moreover, the Companies Act does not restrict foreign currency use within its borders during tax remittance and repatriation. Restrictions on foreign company ownership and currency restrictions are primary barriers to entry for global businesses in most countries.
Additionally, local and foreign-owned companies operating in Singapore can access government grants. Nonetheless, foreign-owned companies applying for such grants must have at least 30% local ownership.
Ease of incorporation and operation:
The information above shows that the incorporation process for small businesses and a Singapore private limited company is straightforward and fast. The relevant authorities make information on the same readily available for any party needing a guide before starting company in Singapore.
Moreover, the process is standard for local and foreign-owned companies. Although referral registrations may take slightly longer, the process retains its integrity.
Global economic experts classify Singapore as the gateway to Asia, linking Asia to the world. The country enjoys proximity to prominent aviation and shipping routes, giving foreign investors unparalleled access to Southeast Asia and the rest of the Asian continent.
What should I know before registering my Singapore company?
Below is a user-friendly summary of everything you need to know before registering any business type in Singapore.
Must require a local address of Singapore:
Having a local registered address makes you accessible to your consumers, corporate service providers, and government agencies for seamless interactions. However, note that the local address must be physical and not a P.O. box.
Company name must be approved before registration:
It takes 15minutes without referrals and 14-60 days with referrals. Ensure you review ACRA’s guidelines for appropriate company names and generate approximately three names because ACRA’s repository is not real-time. Having multiple company name options creates alternatives in case some of the names
Must appoint one resident director:
Appoint at least one local director to comply with Singapore corporate laws. The resident director mustn’t be a Singapore citizen but a Singapore resident with a residential address or an EntrePass visa holder. Moreover, they must be at least 18 years old and of sound mind.
Must appoint one qualified resident company secretary:
The resident company secretary docket is a sensitive position requiring an expert on Singaporean corporate laws. Moreover, they have to keep abreast with changes in corporate laws and ensure company compliance.
Must hold a minimum of SGD$1 share capital:
Although S$1 is the minimum share capital to qualify for registration, you can deposit more paid-up capital into your corporate bank account as the amount reflects on your business profile.
What documents are required to open a company in Singapore?
Brief description of business activities
Company secretary particulars
The last day of the company’s proposed financial year-end
How can I set up a company in Singapore?
Begin by choosing the perfect corporate name according to ACRA guidelines and submit your shortlisted brand name to the regulatory body for approval and reservation. According to Singapore’s corporate law guidelines, the brand name reservation lasts 120 days, so use that time to recruit shareholders, a resident director, and a company secretary.
Lastly, submit the required documents for incorporation. You can explore each step in detail here. However, dependent on the type of entity, you can only engage a corporate services provider to help incorporation your company, example if you are looking to setup a private limited company.
Setting up a business in Singapore is more straightforward than most countries but requires adherence to stipulated laws and regulations. You can use the guide above to generate a comprehensive checklist to make the incorporation process smooth.
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We are a group of entrepreneurs coming together based on our specific skills set with the dream of starting our own business in Singapore after working for giants in our industry. After conducting intense research reading multiple websites we find online, we almost gave up the dream until we got introduced to Startup Biz Consultants (SBC). As we are all foreigners working in different parts of the world, it is nearly impossible for us to understand all applicable laws in Singapore and piece them all up into a big picture.
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