How to start a business in Singapore?
In this comprehensive guide, SOAS will serve as your knowledgeable companion, guiding you through the intricacies of setting up a business in Singapore. Our guide will explore all the crucial aspects you need to be aware of and address those burning questions lingering in your mind.
Venturing into the realm of establishing a business in Singapore? It’s a brilliant choice! Singapore, renowned globally, offers unparalleled opportunities for starting and expanding businesses. The process of initiating a business here can be smooth sailing, provided you’re organised and well-informed.
Benefits of Initiating a Business in Singapore
Considering starting a business in Singapore? You’re in for a host of advantages. Here’s why setting up your venture in this vibrant nation is a wise decision.
1. Robust Economy: Singapore boasts a robust and stable economy, making it an ideal environment for businesses to thrive. The country’s strategic location, coupled with a business-friendly atmosphere, ensures ample opportunities for growth and profitability.
2. Low Tax Rates: Singapore offers attractive tax incentives for businesses. The corporate tax rates are competitive, allowing entrepreneurs to retain a significant portion of their profits. Additionally, the country has double taxation treaties with numerous nations, further easing the tax burden on international businesses.
3. Streamlined Incorporation Process: While the incorporation process is stringent, it is also remarkably efficient. Singapore offers a clear and smooth procedure for registering a company, ensuring that entrepreneurs can establish their businesses with relative ease.
4. World-Class Infrastructure: Singapore’s infrastructure is renowned worldwide. From cutting-edge technology to modern transportation networks, businesses benefit from a well-developed environment that facilitates seamless operations and connectivity.
5. Foreign Ownership: Unlike many countries, Singapore imposes minimal restrictions on foreign ownership and operation of businesses. Entrepreneurs from around the globe can establish and run their companies in Singapore, promoting a diverse and vibrant business landscape.
6. Access to Capital Markets: Once your business is established, Singapore provides access to well-developed capital markets. Entrepreneurs can leverage these markets to secure loans and various financial services, supporting business expansion and development initiatives.
7. High Quality of Life: If you choose to relocate to Singapore, you’ll enjoy a high quality of life. The city-state offers excellent healthcare, education, and recreational facilities, ensuring a comfortable and enriching lifestyle for you and your employees.
In summary, starting a business in Singapore opens the door to a thriving economy, low tax rates, efficient incorporation procedures, exceptional infrastructure, global connectivity, financial opportunities, and an outstanding quality of life. With these benefits, Singapore stands as a top choice for entrepreneurs seeking a conducive environment for business success.
Exemptions From Business Registration
Not every business entity is obligated to register with The Accounting and Corporate Regulatory Authority (ACRA) in Singapore. Certain exemptions apply, allowing specific types of businesses to operate without formal registration. Here are the key exemptions to be aware of:
1. Sole Proprietors and Partnerships: If you operate your business under your full name, such as a sole proprietor, or if you’re in a partnership where you trade using your full names, there’s no requirement to register with ACRA. This exemption simplifies the process for individual entrepreneurs and small partnerships.
2. Tax-Exempt Entities: Businesses falling under institutions, authorities, individuals, or funds that enjoy tax-exempt status as designated by the Singapore government are exempt from registration. This exemption aims to facilitate the operations of tax-exempt entities, ensuring they can conduct their activities without unnecessary bureaucratic hurdles.
3. Registered Societies and Co-operatives: Societies or co-operatives that have been officially registered with the government are also exempt from ACRA registration. This exemption recognises the distinct nature of these organizations, allowing them to function without the burden of additional registration requirements.
4. Mutual Benefit Organisations and Trade Unions: Mutual benefit organizations and trade unions are exempt from ACRA registration. This exemption acknowledges the unique roles these entities play in society, safeguarding the rights and interests of their members without imposing additional administrative obligations.
However, it’s crucial to note that if you’re uncertain about your eligibility for exemption from company registration, it’s advisable to seek clarification. Singapore’s regulatory authorities rigorously monitor company registration, and non-compliance could result in penalties, including fines or even legal consequences.
SOAS, a reputable business support service provider, can assist you in navigating Singapore’s registration requirements. While this process may take time, careful planning and understanding the applicable exemptions can streamline the company registration process, helping you avoid unnecessary delays.
Essential Considerations Before Launching Your Business
Preparing for the entrepreneurial journey is paramount. Starting a business requires more than administrative tasks; it demands a profound understanding of your purpose and motivation. Here’s what you need to be aware of before embarking on your business venture in Singapore.
Be Mentally Prepared: Entrepreneurship is a challenging path with its share of hurdles. Being mentally prepared to face setbacks and challenges is crucial. Knowing the reasons behind starting your business acts as a powerful motivator during tough times.
Understand the Complexity: Owning a business involves intricacies and risks. Are you well-acquainted with the long-term challenges that come with being a business owner? Understanding the complexities of your chosen industry and market dynamics is essential for sustained success.
Clarify Your Purpose: Before delving into the administrative tasks of business registration, have a clear understanding of the ‘what’ and ‘why’ of your business. What is your mission? Why does your business exist? Clarifying your purpose provides a solid foundation, enabling you to launch your business with confidence and purpose.
By comprehending the challenges, acknowledging the risks, and having a clear vision for your business, you’ll be well-equipped to navigate the intricacies of starting a business in Singapore. Being mentally prepared and having a profound understanding of your business’s purpose will empower you to overcome obstacles and establish a successful venture.
Raising Capital: Turning Your Business Vision into Reality
In the intricate journey of business inception, securing adequate funding stands as a pivotal milestone. Your innovative concept and well-thought-out strategy are the foundation, but transforming your vision into reality requires financial backing. Let’s delve into the diverse and nuanced world of raising capital:
Assessing Your Capital Needs: The initial step in securing funds is assessing your capital requirements meticulously. The sum needed varies significantly, contingent upon your business’s size, scope, and nature. A niche service-based enterprise, like private tutoring or web development, might thrive on modest investments, often drawn from personal savings. Conversely, ventures like brick-and-mortar retail establishments or F&B outlets demand substantial capital, often reaching six-figure sums, to cover initial overheads and operational expenses.
Navigating Funding Avenues:
Crowdfunding Platforms: Embracing the digital age, crowdfunding platforms such as Kickstarter, Indiegogo, FundedHere, and Fundnel empower entrepreneurs to garner public support. Craft a compelling pitch, showcasing your business concept, and entice backers from diverse backgrounds.
Government Initiatives: Singapore’s supportive entrepreneurial ecosystem offers avenues like the ACE Startups grant and Startup SG Founder grants. These initiatives provide financial support and valuable mentorship, aiding startups in their initial stages.
Investor Networks: Venture capitalist firms and angel investors are strategic partners for startups seeking substantial funding. In this realm, meticulous research is paramount. Evaluate potential investors, ensuring their values align with your business ethos. Each investor brings not just capital but also expertise and networks.
Personal Network: Family and friends often prove to be the initial backers of budding entrepreneurs. However, transparent communication about the venture’s risks and returns is vital to maintain relationships while securing support.
Traditional Loans: Banks and financial institutions offer business loans, providing immediate access to capital. Careful consideration of interest rates and repayment terms is necessary to avoid long-term financial strain.
Peer-to-peer Lending Platforms: Innovative platforms like MoolahSense and FundingSocieties facilitate direct lending between individuals and businesses. This alternative model offers flexibility and a streamlined application process, simplifying the funding journey.
Strategic Decision-making: Each funding avenue presents unique opportunities and challenges. Thorough evaluation and strategic decision-making are imperative. Consider the terms, obligations, and long-term implications before choosing your funding source. Crafting a persuasive business case, understanding investor expectations, and aligning your vision with financial support are key steps towards securing investment.
By navigating these funding avenues with foresight and precision, you can secure the necessary capital, ensuring your business sails smoothly into the realms of success and innovation.
Choosing the Right Business Structure: A Critical Decision
Selecting the appropriate business structure is a fundamental decision that lays the foundation for your entrepreneurial journey. With five distinct structures to choose from, the path you tread depends on several vital factors. To make an informed choice, consider these essential questions:
1. Investment Capital:
How much capital are you willing to invest in your venture? Your financial commitment plays a significant role in determining the suitable business structure.
How many owners will be involved in the business? The number of stakeholders influences the choice of structure, especially concerning decision-making and profit-sharing.
3. Liabilities and Responsibilities:
What liabilities and responsibilities are you prepared to assume? Different structures offer varying levels of personal liability protection, impacting your exposure to business debts and legal obligations.
4. Risk Tolerance:
What risks are you willing to take on? Assess your risk appetite, considering potential business challenges and uncertainties. Some structures provide more protection against personal liability than others.
5. Ease of Closure:
Will it be straightforward to close the business if needed? Evaluate the ease of dissolution for each structure, as some offer simpler closure processes than others, ensuring you have an exit strategy if required.
Types of Business Structures: Understanding Your Options
In the realm of business, selecting the appropriate structure is a pivotal decision, shaping your venture’s legal framework and operational dynamics.
1. Sole Proprietorship:
A business owned and operated by a single individual or company. In this structure, the sole proprietor enjoys complete autonomy in decision-making and business operations.
This structure accommodates up to 20 partners. Beyond this limit, the partnership must be registered as a company under the Companies Act, Chapter 50. Once registered, the partnership gains its legal identity, enabling it to own properties, have perpetual succession, and sue or be sued in its own name. Typically, such companies include ‘Pte Ltd’ or ‘Ltd’ in their names.
3. Limited Liability Partnership (LLP):
LLP offers the flexibility of a partnership while providing a separate legal identity akin to a private limited company. Partners in an LLP are shielded from personal liability related to business debts, except for liabilities arising from their own wrongful actions. Other partners’ actions do not hold individual partners personally liable.
4. Limited Partnership (LP):
Comprising a minimum of two partners, LP includes at least one general partner and one limited partner. Unlike other structures, LP does not possess a distinct legal entity separate from the partners. General partners share responsibilities and liabilities, while limited partners enjoy protection from personal liability beyond their investment.
Each structure presents unique advantages and considerations, catering to different business needs and goals. Understanding these options is crucial in making an informed decision that aligns with your vision and aspirations for your business.
Activity Type: Identifying Your Industry
When establishing your business in Singapore, specifying your industry accurately is vital for regulatory purposes. The Singaporean authorities require precise information about your business activities. Instead of just providing a general description, you must assign a specific code known as a Singapore Standard Industrial Classification Code (SSIC) corresponding to your industry.
ACRA, the regulatory body, will prompt you to select and submit an SSIC code. This code functions as a categorization tool, indicating your business activities and industry sector. If you’re uncertain about the appropriate SSIC code for your business, you can utilise our SSIC code checker tool for assistance.
Business Name: Ensuring Uniqueness
Choosing a unique business name is a crucial initial step in your Singaporean business venture. The name you select for your company must be distinctive and not duplicated by any other business entity. In Singapore, uniqueness is defined as having a core noun (or nouns) in the name that differentiates it from other businesses. Mere alterations like changing definite articles or appending generic terms like ‘corporation’ won’t suffice.
When selecting a name, focus on finding a distinctive word or word combination that sets your business apart. It’s important to note that your company’s legal name can differ from your trading name, although the trading name should not violate copyright or trademark regulations. Conduct thorough searches and utilise resources like Google to ensure your chosen name is unique and free from legal conflicts. Remember, a unique and distinct name is your gateway to establishing a strong and memorable brand identity.
Registered Business Address: A Fundamental Requirement
In Singapore, having a registered address is a mandatory requirement for every business entity. However, this cannot be a mere PO box; it must be a physical location, a genuine address where official correspondence can be received.
If your business doesn’t have a permanent headquarters, there’s a viable solution – you can opt to rent a registered address. Singapore offers a plethora of companies providing virtual office addresses tailored for entrepreneurs. These services go beyond merely providing an address; they collect your correspondence, scan it for you, and then forward it electronically.
Interestingly, your registered address isn’t limited to traditional office spaces. You have the flexibility to choose any address, be it your home office or a co-working space. This adaptability ensures that even startups and small businesses without a fixed physical location can comply with the regulatory requirement, facilitating seamless communication and official documentation receipt.
Business Team: Vital Roles in Singaporean Business Setup
Building a successful business requires the right people. Let’s explore the essential roles you need to establish a business in Singapore:
Every Singaporean business must have at least one shareholder, with a maximum limit of 50 shareholders. Interestingly, Singaporean law allows for complete foreign ownership of local companies. There are no restrictions on who can be a shareholder, providing businesses with the flexibility to structure their ownership as needed.
Singaporean businesses require at least one locally based director. However, being a ‘resident’ doesn’t necessarily mean ‘citizen’. A legally resident foreigner residing in Singapore can fulfill this requirement. Alternatively, businesses often choose to appoint a Nominee Director. A Nominee Director has no decision-making power and is solely in place to meet the legal requirements. Utilising nominee services is a common practice in Singapore, ensuring compliance with regulatory mandates.
3. Corporate Secretary:
Every company in Singapore is mandated to have a corporate secretary. This officer plays a vital role in tracking changes within the company, compiling necessary documents, and submitting reports to the government. According to the law, a corporate secretary must be appointed within 6 months after incorporation, although businesses may require one earlier. Company secretarial services are readily available in Singapore, offering expert assistance in navigating the regulatory landscape.
Navigating these roles is critical to the seamless setup of your business in Singapore. Whether you opt for local directors, shareholders, or corporate secretarial services, ensuring compliance and efficient management of these roles is key to the success of your business venture.
Paid-up Capital: A Minimal Requirement for Business Setup
In Singapore, starting a business doesn’t require a substantial capital investment. In fact, you can initiate your venture with just one Singapore Dollar. Every Singapore company is mandated to issue at least one share, and in most cases, a nominal value of S$1 per share is sufficient.
Furthermore, paid-up capital can be denominated in various currencies. Even after your company is incorporated, you have the flexibility to increase the capital amount and change the currency. While it’s advisable to consider increasing the capital eventually, the initial barrier to entry for launching a company in Singapore remains exceptionally low. Therefore, lack of capital should not be a deterrent in starting your business journey.
Business Bank Account: Seamless Banking Solutions
Singapore offers entrepreneurs a diverse range of banking options. Being a regional finance hub, the country hosts both established legacy banks and innovative newcomers in the financial sector. While some well-established banks might require in-person Know Your Customer (KYC) checks, there are no restrictions on foreigners opening business bank accounts in Singapore, provided all necessary legal procedures are followed.
It’s worth noting that not all banks necessitate in-person KYC checks; some institutions allow online verification processes, eliminating the need for physical travel. If you have an advisor in Singapore, seeking their guidance can lead you to a bank that offers convenient online KYC verification, streamlining the process and saving you time and effort.
FAQs About Setting Up a Business in Singapore
How long does it take to start a business in Singapore?
The duration primarily depends on your readiness to provide all necessary details and the service hours of the authorities. Once all documents are prepared, the process can be completed in less than an hour.
Who can set up a Singapore company?
Anyone, whether a foreigner or a local, can establish a Singaporean business. The Singapore Companies Act permits complete foreign ownership. You need a local registered address, a corporate secretary, a shareholder, and a resident director. A paid-up capital of at least $1 is required, and this amount can be increased post-registration. Foreigners may appoint a nominee director who is a local resident of Singapore.
What is required to start a business?
Calculate your economic feasibility. Consider Singapore’s tax rates in comparison to your home state’s. Small businesses, especially those not planning to scale up, should weigh the cost of company maintenance, especially if using a nominee service.
What information is needed for the online application to register my business?
Essential details include your company name, a brief description of activities and your SSIC Code, shareholder and KYC information, a registered business address in Singapore, share capital information, and the company’s constitution.
How to open a corporate bank account in Singapore?
Different banks have varying processes based on your passport and business nature. While some banks require in-person KYC checks, certain institutions permit remote application and bank interviews for both citizens and PRs. Certified copies of important documents are typically needed.
What are the fees for business registration in Singapore?
The registration fee is S$300, and the name application (if available) costs S$15. Additionally, you must pay S$60 annually to file your accounts to ACRA. Changing your company type and structure incurs a fee of S$40.
Why do I need a Corporate Secretary?
It’s a legal requirement. A corporate secretary tracks changes in your company, compiles papers, and liaises with government agencies. Appointing a secretary within 6 months of registration is mandatory.
Who can become a shareholder of a Singapore company?
You need 1-50 shareholders; they can be individuals or companies, residents or foreigners. The Singapore Companies Act allows 100% foreign ownership.
Can I move to Singapore if I start a business there?
Yes, under the Employment Pass, and family members can relocate under Dependant Passes. Visa processing takes about 6 months, and certain salary requirements need to be met.
What happens if the business closes down?
You can convert your business into a dormant company or wind it up. For a dormant company, inform IRAS and ACRA. If winding up, settle debts, sell assets, and notify the authorities.
Can a foreigner act as a local director of a company?
Yes, if planning to relocate and manage the business from Singapore. An Employment Pass is advisable. Alternatively, engage a Nominee Director service or appoint a local staff member as a Local Director.