The Ultimate Checklist for Starting a Business in Singapore

Singapore is widely recognized as one of the best places in the world to start a business, thanks to its strategic location, robust economy, and business-friendly regulatory environment. The city-state offers numerous advantages, including low corporate tax rates, a highly skilled workforce, and excellent infrastructure. Additionally, Singapore's pro-business policies and strong legal framework provide a secure and supportive environment for entrepreneurs.  

Understanding the process of starting a business in Singapore and having a comprehensive checklist is crucial for navigating the requirements smoothly and setting up a successful enterprise. This guide aims to simplify the journey, ensuring that you are well-prepared for every step.

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How to choose the right Business Structure in Singapore

Selecting the appropriate business structure is a crucial decision that can impact on your company's legal obligations, tax liabilities, and operational flexibility. In Singapore, you can choose from several business structures, each with its own advantages and considerations:

Private Limited Company (Pte Ltd)

A Private Limited Company is a separate legal entity from its owners, providing limited liability protection to its shareholders.

Advantages:

• Limited liability for shareholders, protecting personal assets from business debts.

• Greater credibility and access to funding from investors and banks.

• Perpetual succession, meaning the company can continue even if the shareholders change.

Considerations:

• More complex and costly to set up compared to other structures.

• Requires compliance with regulatory requirements, including annual filings and audits.

Sole Proprietorship

A Sole Proprietorship is the simplest form of business structure, owned and operated by a single individual.

Advantages:

• Easy and inexpensive to set up and maintain.

• Full control over business decisions and profits.

• Fewer compliance requirements compared to a Private Limited Company.

Considerations:

• Unlimited liability, meaning personal assets are at risk if the business incurs debt.

• Limited access to funding and less credibility with potential clients and partners.

• Business ceases to exist upon the owner's death or incapacity.

Partnership

A Partnership involves two or more individuals or entities sharing ownership and management responsibilities.

Types:

1. General Partnership: All partners have unlimited liability.

2. Limited Partnership: Includes both general and limited partners, with limited partners having liability restricted to their investment.

Advantages:

• Relatively simple to establish, with shared resources and expertise.

• Shared decision-making and risk distribution among partners.

Considerations:

• General partners have unlimited liability for business debts.

• Potential for conflicts between partners, requiring clear agreements and communication.

• Limited life span, as changes in partnership (e.g., a partner leaving) can dissolve the business.

Limited Liability Partnership (LLP)

An LLP combines elements of partnerships and companies, offering flexibility and limited liability protection.

Advantages:

• Partners are not personally liable for business debts beyond their investment.

• Flexible management structure, allowing partners to manage the business directly.

• Tax benefits, as profits are taxed at the individual partner level, avoiding corporate taxes.

Considerations:

• More regulatory requirements than a Sole Proprietorship or General Partnership.

• Requires a partnership agreement to clearly define roles, responsibilities, and profit-sharing.

Understand the Company Incorporation Process in Singapore

Registering a business in Singapore is a streamlined and efficient process, thanks to the city-state's pro-business policies and advanced online systems. Here’s a step-by-step guide to help you navigate through the business registration process:

Step 1: Choose a Business Name

• Guidelines: Your business name must be unique, not identical to an existing entity, and should not infringe on trademarks. It should also not be obscene or inappropriate.

• Checking Availability: Use the Accounting and Corporate Regulatory Authority (ACRA) online portal to check if your desired business name is available.

• Reservation: Once approved, the name is reserved for 120 days, during which you must complete the registration process.

Step 2: Decide on a Business Structure

Choose the most suitable business structure for your needs. The options include:

• Private Limited Company (Pte Ltd)

• Sole Proprietorship

• Partnership

• Limited Liability Partnership (LLP)

Step 3: Registering with ACRA (Accounting and Corporate Regulatory Authority)

• Online Registration: Most businesses can be registered online via ACRA’s BizFile+ portal.

• Required Information and Documents:

• Proposed business name

• Description of business activities (based on the Singapore Standard Industrial Classification code)

• Registered business address in Singapore

• Details of shareholders, directors, and company secretary

• Passport and residential address of foreign individuals involved

• Constitution (for Private Limited Companies)

Step 4: Set Up a Corporate Bank Account

• Choosing a Bank: Select a bank that suits your business needs. Major banks in Singapore include DBS, OCBC, and UOB.

• Required Documents: Typically, you will need your ACRA business profile, company constitution, and proof of identity and address for the directors and signatories.

Step 5: Obtain Necessary Licenses and Permits

• Industry-Specific Licenses: Depending on your business activities, you might need specific licenses. For example, a food and beverage business requires a food shop license.

• General Permits: Ensure compliance with general permits, such as fire safety certificates and environmental permits.

Step 6: Register for Taxes

• Corporate Tax: All companies must register for corporate tax with the Inland Revenue Authority of Singapore (IRAS). The corporate tax rate is a flat 17%.

• Goods and Services Tax (GST): If your business’s annual turnover exceeds SGD 1 million, you must register for GST.

• Other Taxes: Depending on your business activities, you might need to comply with additional tax obligations.

Step 7: Compliance with Employment Laws

• Hiring Employees: Familiarize yourself with the Employment Act, which governs labor practices in Singapore.

• Work Visas: If you intend to hire foreign workers, ensure they have the appropriate work passes, such as Employment Pass, S Pass, or Work Permit.

Closing Thoughts on Starting a Business in Singapore

The business registration process in Singapore is designed to be straightforward and efficient, reflecting the country’s commitment to being a top destination for entrepreneurs. By following these steps and utilizing the resources available, you can establish your business with ease. Ensuring compliance with all legal and regulatory requirements will set a solid foundation for your enterprise's success.

Frequently Asked Questions on Singapore Company Incorporation

What is the minimum capital required to start a business in Singapore?

The minimum paid-up capital required to start a business in Singapore is SGD 1. This low threshold makes it easy for entrepreneurs to set up their businesses without significant initial capital outlay. However, depending on the nature and scale of your business, you may need more capital to cover operational costs and other expenses.

How long does it take to register a business in Singapore?

The business registration process in Singapore is highly efficient. If all the required documents are in order, registering a business can take as little as 1 to 2 days. The actual time can vary depending on the complexity of the business structure and whether any additional approvals or licenses are needed.

Can a foreigner start a business in Singapore?

Yes, a foreigner can start a business in Singapore. The process is straightforward, and foreigners can fully own a Singapore-based company.  

However, it is required to appoint at least one local resident director who is a Singapore citizen, permanent resident, or holder of an EntrePass, Employment Pass, or Dependent Pass. Foreign entrepreneurs might also consider obtaining an EntrePass if they plan to relocate to Singapore to run their business.

What are the costs involved in starting a business in Singapore?

The costs of starting a business in Singapore ranges from S$2,000 to S$5,000 depending on the sector, shareholder nationality and operational costs. It can include the following components:

• Business Registration Fee: The fee for registering a Private Limited Company with ACRA is SGD 300.

• Name Reservation Fee: Reserving a business name costs SGD 15.

• Nominee Director Fee (in case of a foreign owned company)
  
  

• Corporate Bank Account Setup: Banks may charge a fee for setting up a corporate account.
  
  

• Office Rental: Costs vary depending on location and size.
  
  

• Licenses and Permits: Fees for specific licenses depend on the industry and type of business.
  
  

• Professional Services: Fees for hiring services such as accounting, legal, and corporate secretarial services.
  
  

• Operational Costs: Initial operational expenses such as equipment, marketing, and salaries.
  
  

• Overall, the total cost can range from a few hundred to several thousand dollars, depending on the business’s needs and industry requirements.

What support is available for startups in Singapore?

Singapore offers extensive support for startups through various government agencies and initiatives. Key resources include:

• Grants and Funding: Schemes like the Startup SG grants provide funding and support for early-stage startups. The Productivity Solutions Grant (PSG) and the Market Readiness Assistance (MRA) grant are also available for specific needs.
  
  

• Incubators and Accelerators: Programs such as SGInnovate, Block71, and other incubators and accelerators offer mentorship, networking opportunities, and resources to help startups grow.
  
  

• Tax Incentives: Schemes like the Startup Tax Exemption (SUTE) and the Angel Investors Tax Deduction (AITD) provide tax benefits to encourage investment in startups.
  
  

• Enterprise Singapore: This government agency offers a range of services to help businesses expand locally and internationally, including business advisory services and international trade assistance.

What are the key compliance requirements after registering a business in Singapore?

After registering a business, companies must adhere to several ongoing compliance requirements:

• Annual Returns: Companies must file annual returns with ACRA, including financial statements and other relevant documents.
  
  

• Corporate Tax Filing: All companies must file an annual tax return with IRAS, detailing their income and expenses.
  
  

• GST Filing: If registered for GST, businesses must file quarterly GST returns.
  
  

• Employment Regulations: Compliance with the Employment Act, including providing fair wages, work hours, and employee benefits.
  
  

• Annual General Meeting (AGM): Private limited companies are required to hold an AGM within six months of their financial year-end.
  
  

• Financial Reporting: Depending on the size and nature of the company, audited or unaudited financial statements must be prepared and filed.

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