Singapore is one of the easiest countries in the world to start a business. Research also shows that Singapore has one of the fastest-growing business environments globally with start-ups doubling to a remarkable 55,000 in 10 years.
Reported to be the freest economy in the world, it’s never been easier to start a business in Singapore. Analysts believe that Singapore has one of the world’s simplest and most rational tax systems. No tax levy is placed on capital gains or any dividends received from businesses. A very stable political environment also adds to the reasons why Singapore is such a good idea for a place to start your new business in.
We’ve decided to create this simple guide to show you just how easy it is! Follow the steps in the guide, and you’ll easily be able to start a small business in Singapore.
10 Steps to Starting a Business in Singapore
Starting a business in a foreign country can be very daunting if you don’t know where to start. Fortunately, I’ve done the research for you and narrowed it down to 10 simple steps that will simplify starting a business in a new country.
Other than an internet connection and a PC or other connected device, there’s not much else you’ll need to follow my simple tutorial on starting a small business in Singapore. Just have your documents on hand as well, as stipulated below.
Let’s have a look at the easy steps that will provide you with all the information you need to start the process of creating a company in Singapore.
1) Decide on Business Entity
Once you’ve got your business idea all figured out, it’s time to decide on your business entity. A business entity quite simply refers to the form of incorporation your new business needs to follow.
Essentially, the four different types of business entities in Singapore can be listed as follows:
- Sole Proprietorship (one owner) or Partnership (two or more owners): Quick to set up and cheaper than setting up a company. To set up a proprietorship or partnership you need to be a Singapore citizen, permanent resident, or an EntrePass holder. You’ll also need an employment pass to run your business as a foreigner. This work pass needs to be approved by the relevant government agencies such as MOM. The ministry of manpower (MOM) has an online portal through which applications can be processed.
- Limited Partnership (LP): This can be set up by foreigners not residing in Singapore, provided they appoint a Singaporean resident manager.
- Limited Liability Partnership (LLP): LLP businesses are seen as a body corporate and are legally separated from their partners. Foreigners will have to appoint a local resident manager.
- Company: There are different criteria for different sized companies. The size of the intended company will determine the required minimum shareholders. Minimum shareholders vary between 20 and 50.
The type of business entity that you choose will be determined by the type of business you’ll be doing. It’s important to note that to find the most relevant business activities and entities. I recommend you check the bizfile website for all the additional information and explanations needed.
2) Choose Your Company Name
Deciding on a name for your business is as important as drawing up a business plan and preparing your marketing plans. A few criteria surround choosing a company name. Here’s a guideline:
- A business name may not have the same name as an existing company, or any other reserved business name.
- The name may not contain any obscene, offensive or vulgar words.
- There may also not be any words that are prohibited by order of the Minister of Finance.
- These criteria also apply to any website names and email domain names.
- Any social media accounts that bear the company name should also follow these regulations.
The ACRA website is the best place to research all the guidelines needed to ensure your company name is compliant. ACRA is the Accounting and Corporate Regulatory Authority and they are responsible for company incorporation. They’re the leading authority of Singapore concerning business dealings.
3) Who are the People in Your Business Team?
It’s important to identify all parties involved in your business. This will be your official business structure. You’ll have to provide detailed information about the number of shareholders and directors that form part of your company. Ensure that at least one shareholder or director resides in Singapore permanently.
Appoint a company secretary to oversee the administration and compliance of your company. It will be the company secretary’s responsibility to ensure that the company’s regulations and practices are within the legal guidelines of the Singapore laws. The company secretary also needs to be based in Singapore since that person will be the primary source of advice on the business’s conduct.
4) Setting Up the Paid-Up Capital
Paid-up capital generally refers to the money that has been paid-up on shares that have been issued to the company. These shares can be in the form of ordinary shares, share capital, or preference shares. Paid-Up capital must be deposited directly into the bank’s corporate bank account and must be a cash deposit.
Paid-up capital is used for the company’s daily business purposes and should the company become insolvent, the capital is used to pay any creditors.
5) Setting Up a Corporate Bank Account
To operate a business in Singapore, it’s necessary to have a corporate bank account. The most popular banking institutions to choose from including DBS, OCC, and UOB. To open a corporate bank account, the following documents are required:
- A resolution issued by the board of directors: This document is a formal and legal record of certain decisions.
- Certificate of your company’s incorporation: A legal document or license relating to the formation of your company. It’s issued by a government agency and in essence, allows you to trade.
- The company’s business profile: This is an introduction to your business and tells customers about your services.
- Copy of the company’s Memorandum: This is the document that regulates the company’s external affairs.
- Proof of residential addresses of the nominee director: This needs to be the Singapore address of the elected official living locally.
- Copies of passports or Singaporean identification card: These identification documents are for the person for whom the proof of address is. This is the person who will be responsible for all the local correspondence.
6) Register Your Business Address
Part of the application process involves registering an office address in Singapore. A registered office address refers to the place where the company’s register, records, and correspondence are kept. The office at this address must be operational and accessible during normal business hours.
Small start-ups and solo entrepreneurs can avoid the costs associated with fixed offices or services by opting to use co-working spaces. Here is some information on the co-working options in Singapore.
7) Decide on a Financial Year-End
Deciding on the first financial year-end of your company determines when your taxes and corporate filings are due. You’ll have to decide if you want your accounting period to cover 12 months or 52 weeks. Common year-end choices for a Singapore company include 31 March, 30 June, 30 September, and 31 December.
8) Submitting Your Business Application
Once you have gathered all the relevant information and documentation needed, you simply log into the Bizfile+ portal via the ACRA website. Submit your application using the business registration number of your approved company name application. Business registration is that simple!
9) What Documentation Needs to be Filed Each Year
Singapore law requires certain documents to be filed with every financial year-end. These include the following:
- A statement of financial position
- A statement of comprehensive income
- A statement of changes in equity
- A statement of cash flows
- Notes on significant accounting policies
- Comparative information
10) Outsource Your Filing
When it comes to your filing, Singapore law requires that foreigners will have to make use of an authorised filing agent to incorporate a company in Singapore. A filing agent is an accounting firm, law firm, or corporate secretarial firm that submits the online application on your behalf. A Singaporean citizen or PR can do their own filing. Finova has experienced staff who are accounting & corporate secretary trained and are well versed in filing.
Why is Singapore a good place to start a business?
For 10 consecutive years, Singapore has been voted as the most business-friendly economy world-wide. The main reason is the regulatory environment in Singapore is highly beneficial to entrepreneurs. Other factors that make Singapore an attractive choice for a start-up business is the skilled labor force, advanced technology, and favorable government policies.
How much does it cost to start a business in Singapore?
Once you have registered your business with ACRA, you’ll have to pay a name approval fee of $15 and a registration fee of $300.
Can foreigners open a company in Singapore?
To register a business in Singapore, a foreigner will have to make sure they use the services of a registered filing agent to submit the online application on your behalf. You’ll also have to employ a director who permanently resides in Singapore.
Can a foreigner be self-employed in Singapore?
In Singapore, it’s only possible to be legally self-employed if you’re a permanent resident or citizen. You’ll also need to pay income tax.
Can I run a business without registering in Singapore?
Singapore company registration laws dictate that all types of businesses must be registered with the Accounting and Corporate Regulatory Authority (ACRA). For more information on this, you can read Section 5 of the Business Names Registration Act (BNRA).
Is it easy to start a business in Singapore?
Starting a business in Singapore is very easy. With the necessary documentation, information, and certifications it can be done in one day. Depending on the documents you submit, your application might be referred to the relevant government agency for approval. This could also be to verify background information. This could take anywhere from 14 days to two months.
What are the different entities to choose from?
- Sole-Proprietorship (one owner, for PR & citizen only) or Partnership (two or more owners): This is the most basic entity, with little or no risk.
- Limited Partnership (LP: This type of company is a partnership made up of a minimum of two partners. There has to be at least one limited partner and one general partner.
- Limited Liability Partnership (LLP): Also known as a private limited company. Shares are held by less than 50 people and not available to the general public.
- Company: A business entity incorporated under the companies act has the words “PTE Ltd” or “Ltd” as part of its name. This is largely for taxation purposes.
What are the requirements to start a business in Singapore?
To start a business in Singapore, the company owner will have to comply with the following:
- Be at least 18 years old.
- At least one person must permanently reside in Singapore.
- Comply with all post-registration requirements.
- Adhere to all registration requirements and regulations.
- For business, LLP & LP, the owner or partner’s Medisave needs to be up-to-date.
I trust you’ve found this tutorial helpful in getting a clearer insight into what’s needed to start a business in Singapore. Following the guidelines we laid out will prevent you from encountering any unexpected delays in the process.
The more concise and accurate the documentation provided is, the faster the process will be. Starting your own small business in Singapore will help you realize your dream of being your own boss!
Have you found this guideline helpful in providing you with the information needed to start a new business in Singapore? Please share this article with family, friends, and acquaintances that could benefit from the information provided! Do contact us if you like to outsource your business setup to us.