Singapore is an economic powerhouse not only in Asia but also across the globe. It’s also one of the safest countries to start and run a business both for residents and foreigners.
Most people think it’s challenging to start a business in Singapore. The truth is, with the right amount of business funding and effort, it’s easy especially with professional guidance.
Before looking at how to start a business in Singapore, there are reasons why Singapore is an attractive investment spot.
- Low rate of corporate tax, which is currently at 17 percent
- No withholding tax on non-resident shareholders’ dividends
- Tax exemption on a company’s foreign sourced income
- Ranked third as the world’s most competitive economy
- Ranked seventh among the most innovative nations in the world
- Ranked the second-best country in terms of the ease of doing business
- Ranks top in Asia and fourth in the world for intellectual property protection
- Has more than 80 Double Tax Avoidance agreements
Requirements for incorporating a business in Singapore
Before incorporating a company in this great nation, one should:
- Be at least 18 years
- Have the right working pass like the EntrePass or Employment Pass for foreigners. However, this is not necessary if one has no plans to relocate to Singapore to run the business. In that case, a local nominee can register it.
How to start a business in Singapore
1. Choose a business structure
One can select from an array of legal entity forms such as partnership, sole proprietorship, branch office, subsidiary, representative office and more. Entrepreneurs should not choose a business structure randomly as this choice will affect the business in different ways such as the ability to get loans and grow the business, credulity in the eyes of customers, attitudes of banks and much more.
For example, when venturing into business with a friend, choose a partnership. On the other hand, if the small business has few risks and less likely to cause legal trouble with anyone, then sole proprietorship would do. These two structures aren’t subject to corporate taxes.
A private limited company is the most preferred form of entity in Singapore. It offers flexibility and sustainability due to the many options for growth and transfer of ownership. Besides, the government gives new private limited companies tax discounts such as not paying corporate tax on the first S$100,000 and halving the tax (to 8.5 percent from 17 percent) to the next S$300,000.
2. Name the business
The business name should be unique from existing business names, reflect the philosophy of the company and not sound obscene. Conduct a name check with the Accounting and Corporate Regulatory Authority (ACRA) to establish the availability of a proposed business name.
3. Get the right address
To register a business, an entrepreneur will need to provide a local address in Singapore where the company will be based. The address is essential because all official documentation will be sent here. After finding the right premises, ensure the Urban Redevelopment Authority (URA) approves them.
If one thinks their business structure won’t employ many people, and would, therefore, want to save costs, they may opt to use a house address to register it. If one rents an HDB flat for business, they must get the Housing development Board’s approval.
If, on the other hand, one will be working from a house, then they should get approval through the House Office Scheme (HOS). After seeking permission from HOS to register an office in a private residence, one can neither hire more than two foreign employees nor use signposts to reveal the firm’s presence.
4. Incorporate the business
Before the incorporation, entrepreneurs should ensure that:
- The business name is ACRA-approved
- The business has at least one shareholder
- One of the company directors is a permanent resident, a citizen of Singapore, or a holder of the EntrePass, Dependent Pass or Employment Pass.
- They have paid-up capital of at least S$1
- The business has a registered and local company address
- They have appointed a company secretary – a resident of Singapore
The documents that ACRA requires for company registration
- Name of the business
- A brief description of the business activities
- Registered address
- Company constitution
- Details of the director(s)
- Details of the shareholder(s)
- Company secretary’s details
The process of company registration
ACRA has fully computerized the registration of companies in Singapore. Incorporating a company within two days is possible. After completing incorporation, the company owner can buy a business profile from ACRA. The business profile comes handy when applying for a business license or bank account.
The business profile has these details:
- Registration number
- Registration date
- Shareholders, etc
5. Open a bank account
Other than being competitive in economic performance, Singapore has a robust financial sector. From local banks like DBS bank and OCBC bank to foreign ones like SCB bank, entrepreneurs have many options to choose from when opening a bank account. Business loans and SME funding are also provided by numerous financial institutions to help startups and SMEs grow.
After registering your company and want to grow it, you can seek help from government agencies such as Enterprise Singapore, Economic Development Board, Accounting and Corporate Regulatory Authority and SMEPortal.sg.
In most cases, it may be difficult for startups or SMEs to acquire business loans from banks due to their experience and size. Companies will require funds for bill payments, supplier payments, rent, promotional and marketing activities, equipment purchase and more. Worry not as there are licensed moneylenders in Singapore who offer loans and financial help to companies who need them. Licensed moneylenders tend to be less stringent on their requirements and will be able to process the loan application within an hour.
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