Header Top Bar

WhatsApp Us +65 8699 8821

Starting a Business in Singapore: A Comprehensive Guide to Entrepreneurial Success

Starting a Business in Singapore: A Comprehensive Guide to Entrepreneurial Success

Starting a business in Singapore? Known as one of the world’s premier hubs for commerce, Singapore offers a fertile ground for both startups and established foreign businesses to flourish.

In this guide, we will explore the ins and outs of launching your enterprise in Singapore. From critical first steps to answering your pressing questions, we have got you covered.


Benefits of Starting a Business in Singapore

Benefits of Starting a Business in Singapore

  • Starting a business in Singapore comes with a host of advantages. The country has a strong economy, competitive tax rates, and a streamlined, rigorous company incorporation process.
  • Singapore’s infrastructure is top-tier, and its workforce is highly skilled, with minimal restrictions on foreign ownership and business operations.
  • Once your business is established, you’ll have access to Singapore’s sophisticated capital markets for financing options like loans and other financial services. Additionally, if you decide to relocate, the country offers an exceptionally high quality of life.

Can Foreigners Open a Business in Singapore?

Yes, foreigners can start and operate businesses in Singapore with minimal restrictions. However, the law mandates that at least one director of the established company must be a resident of Singapore, either a citizen or a legal permanent resident.

Your business must also have a physical registered address within Singapore; PO box addresses are not permissible.

If you prefer to handle things independently, you can become a legal resident of Singapore, allowing you to set up your business without needing another director. Alternatively, if you choose to stay overseas, you can use a nominee local director service. This local director service helps fulfill all the legal prerequisites required to start a business in Singapore.

To ensure compliance with all laws and regulations right from the start, consider incorporating your company with InCorp.


What You Need to Know Before Starting a Business: Essential Tips and Considerations

Make Sure You Are Prepared

Establishing a serious business plan is one challenge; understanding your reasons for doing so is another. Before you delve into the administrative process of registering a business, clarify your new business’ separate legal entity name and the company’s purpose and objectives. This preparation ensures you can hit the ground running.

Capital Requirements

Capital Requirements

Starting a business in Singapore is financially accessible, with the barrier to entry being incredibly low at just S$1. You can register a company with a paid-up capital of S$1, or its equivalent in any other currency.

While many Singaporean companies incorporate with this nominal amount, investing more capital can enhance your company’s credibility and prestige.

Singapore boasts a sophisticated funding infrastructure, with financial institutions offering various financing options. You can issue shares, secure loans, attract venture capital investments, or bootstrap your business to fund its growth.

Lack of Capital? Here are Several Strategies to Boost your Capital:

Fundraising

A popular method to generate funds is by issuing shares of your company. As a limited liability company, this is an option, but be aware that it involves giving up a portion of your business ownership.

Government Schemes

Singapore actively supports the growth of startups and SMEs through various initiatives. Key programs include the Productivity Solutions Grant (PSG) and the Enterprise Development Grant (EDG).

Venture Capital and Angel Investors

Singapore has a robust network of venture capital (VC) and angel investors. The country is home to numerous established VC funds, and angel investors are actively looking for promising ventures. Consider pitching your innovative ideas to them.

Loans

Loans are a fundamental part of funding new businesses. Singaporean banks typically offer two types of loans: working capital loans to assist with cash flow issues, and funding loans intended for long-term investments.

Peer-to-peer Lending

If traditional bank financing is inaccessible, peer-to-peer (P2P) lending can be a great alternative. P2P platforms connect individuals with businesses needing to raise funds together, and this industry is well-established in Singapore.

Additionally, it is important to note that Singapore provides robust employment protections under the Employment Act. Part IV of the Act specifies regulations concerning rest days, working hours, and other employment conditions.


Business Starting Requirements – What Do I Need?

Business Structure

Private Limited Company (Pte Ltd)

A Singapore Private Limited Company (Pte Ltd) is one of the most popular and flexible business structures in the city-state. It offers several advantages:

  • Limited Liability and Separate Legal Entity: The liability of shareholders is limited to the amount of capital they have contributed, protecting personal assets in case of financial difficulties.
  • Credibility and Scaleability: This structure is dynamic and scaleable, suitable for meeting the needs of a growing business.
  • Operational and Financial Flexibility: Allows for flexibility in financing, operations, and management.

Limited Partnership: A Limited Partnership is an arrangement that requires at least one general partner with unlimited liability, and one or more limited partners whose liability is limited to their investment. This structure separates management from investment, with the general partner handling daily operations.

Although flexible, a Limited Partnership does not possess a separate legal identity, which means it cannot own assets or sue. Registration with ACRA is mandatory, and drafting a partnership agreement is advised to outline the partnership terms.

Limited Liability Partnership (LLP)

Suitable for professionals in shared fields, an LLP combines partnership flexibility with limited liability similar to a corporation. Establishing an LLP involves selecting a business name and registering with ACRA.

A minimum of two partners is required, with at least one manager who is a resident and at least 18 years old.

Sole Proprietorship

This is the simplest business structure, designed for individuals who will bear unlimited liability as there is no legal distinction between the owner and the business.

Company Limited by Guarantee (CLG)

Often utilised for non-profit activities such as charities and associations, a CLG’s member’s liability is limited to the amount they agree to contribute towards the company’s assets if it winds up. This amount is typically specified in the company’s constitution.

Variable Capital Company (VCC)

The VCC is a novel corporate structure in Singapore designed to boost the country as a hub for fund management. It features a flexible capital structure where shares can be issued and redeemed without altering the company’s constitution. This is especially beneficial for investment funds managing subscriptions and redemptions effectively.

Representative Office

Ideal for foreign companies exploring business possibilities in Singapore, a Representative Office allows for conducting market research and setting up meetings with potential clients and partners without engaging in revenue-generating activities. It benefits from having a local presence with minimal compliance requirements, serving as a low-risk strategy for companies considering long-term investments in Singapore.

Branch Office/Foreign Branch

Operating as an extension of a foreign parent company, a Branch Office allows direct business engagement in Singapore. The parent company is liable for the branch’s actions and debts, which requires careful management. A Branch Office must appoint at least one resident agent for compliance and maintain a registered Singapore address to comply with local regulations.

Activity Type

The Singaporean authorities require detailed information about your industry, not just a description. You will need to select a specific SSIC (Singapore Standard Industrial Classification Code) that describes your business’s activities.

Business Name

Choosing a unique company name is crucial in Singapore. The name must distinctly differ from others, with unique core nouns. Simple modifications like changing articles or adding common terms like ‘corporation’ are insufficient.

Your company’s separate legal entity or name can differ from your trading name, but ensure it does not infringe on existing trademarks or copyrights. To avoid delays in registration, steer clear of regulated terms such as ‘finance’, ‘bank’, ‘school’, ‘media’, or ‘education’, as these require additional approvals.

Ready with a name? Run a quick check now.

Registered Business Address

Every company in Singapore must have a physical local registered address, not a PO box. If you lack a permanent headquarters address, consider renting a virtual office address. Many local companies offer services like mail collection, scanning, and forwarding. You can also use your home office or a co-working space as your local registered company address.

Appointing a Corporate Secretary

A corporate secretary is mandatory for every company. This role involves managing company records, compiling documents, and reporting to the government. You must appoint a company secretary within six months of incorporation, but it’s wise to do so much earlier. Company secretarial services are widely available and can provide valuable support.

Paid-up Capital

Starting a business in Singapore is financially accessible. The minimum paid-up capital requirement is just one Singapore Dollar. Companies must issue at least one share, and although S$1 per share is standard, this amount can be increased or converted into another currency post-incorporation.

Business Bank Account

Singapore, a major financial hub, offers a plethora of banking options ranging from large, established banks to modern fintech firms. While most traditional banks might require KYC (Know Your Customer) processes to be completed in person, some banks offer online verification. This is beneficial if you are unable to travel to Singapore. Consulting with a local adviser can help you find a bank that meets your needs and offers remote account opening services.


Filing Corporate Income Tax

Filing Corporate Income Tax

Singapore is known for its business-friendly corporate tax regime, with a flat rate of 17% for all businesses. Corporate tax filings are due in December and must be completed online through the IRAS’s e-filing portal.

Companies with annual revenues below S$5 million and no chargeable income for the year are exempt from filing. However, it is crucial to monitor your business’s financial status closely, as IRAS enforces late payment penalties for overdue taxes.

Understanding the Tax Landscape

Singapore has established double taxation agreements with numerous countries, preventing double taxation on the same income. Here’s a breakdown of the tax rates in Singapore:

Corporate Tax: For SMEs, the rate is effectively progressive, starting at 4.25% on the first S$100,000 and reaching 17% for income over S$10,000,000.

Goods and Services Tax (GST): Businesses must register for and pay 9% GST on turnovers over S$1,000,000, unless the goods are exported, in which case the GST rate is 0%.

Dividend Tax: There is no tax on dividends in Singapore.

Personal income tax is progressive from 0% to 22%. For example, on a salary of S$120,000 it’s S$7,950 (6.6%), on S$250,000 it’s S$30,700 (12.3%).

Business Processes to Follow After Setting Up a Business in Singapore

After establishing your first business structure in Singapore, there are several ongoing business structures and requirements you’ll need to manage:

Licences and Permits: Depending on your business type, obtaining specific licences or permits from the appropriate government body is crucial. For example, private schools require approval from the Ministry of Education.

Office Hours: The Accounting and Corporate Regulatory Authority (ACRA) mandates that your registered office address be open for at least three hours each workday, within normal business hours.

Customs Registration: If your business activities involve importing from or exporting to Singapore, you must register with Singapore Customs. This is essential for managing duties and compliance with trade regulations.

Goods and Services Tax (GST): GST applies to the supply of goods and services in Singapore and on imported goods. Businesses generating over S$1 million in revenue are required to register for GST and charge this tax accordingly.

Singapore Central Provident Fund (CPF): The CPF is Singapore’s national pension scheme. Both employers and employees are obligated to contribute a portion of their earnings to CPF, which provides for their healthcare, retirement, and housing needs in Singapore.

FAQs on Starting a Business in Singapore

  • The timeline for starting a business in Singapore primarily depends on how quickly you can provide the necessary details and the operating hours of the relevant authorities. Once all documents are prepared, the registration process can take less than an hour.
  • The procedure for opening a corporate bank account varies between banks and depends on factors such as the passport holder's nationality and the nature of your business. While Singapore citizens and Permanent Residents can often open a corporate bank account with minimal documentation, foreigners typically need to provide:
    • Certified copies of the passport or identity card,
    • Proof of residential address,
    • Certificate of Incorporation,
    • Certified copy of the business profile from the Registrar of Companies,
    • A Board of Directors Resolution,
    • A certified copy of the Company Constitution.
  • Singaporean law mandates that every company appoint a corporate secretary within six months of registration and ensures this position is never vacant. A corporate secretary plays a crucial role in managing compliance with local regulations and administrative duties. For smaller companies, it's common to hire a secretary from a service provider rather than hiring employees rather than employing someone in-house, especially if the business or legal entity itself is not large.

Contact Us

Setup your Company in Singapore

About the Author

Eric Chin

Eric Chin is the Group Chief Commercial Officer at InCorp Global, leading sales, marketing and consulting teams in 8 countries. With 11 years of corporate banking experience with HSBC and OCBC, Eric is highly skilled in creating market-entry strategies and structuring operations for diverse industries in the Asia-Pacific. He also advises fund managers and family offices on corporate structuring and tax incentives and has set up VCC structures for licensed fund managers.

More on Business Blogs

Contact Us