Studies Show That Forming a Business in Singapore is Competitively Feasible
People have always given Singapore the moniker “Lion City”, and it certainly lives up to the name. As an economic giant in Asia (despite its tiny size), this country opens a whole lot of commercial and corporate opportunities. In fact, the perfect time for forming a business in Singapore is now, as its progressive economy continues to escalate further.
To expound why Singapore is a definite financial hotspot, here are some of the most recent factors:
Strong global trading networks and influences
First-world countries regard highly of its commercial, financial, infrastructure, and transportation advancements
A World Bank study states that this country is the easiest place to start a business
Home to some of the best technologies in the world, even rivaling Korea and Japan
Third biggest foreign exchange center globally
The country has the third main oil refining and trading center in the world
Has one of the busiest container ports since the 90s
Most influential city and 4th in the world, according to Forbes
The nation provides the most efficient tax structure
Many experts say that a private limited liability company is the most common way of forming a business in Singapore. Being a separate legal entity, it protects shareholders from debts arising from excessive capital contribution. However, you must still be responsible for your actions.
The Singapore Companies Act indicates that anyone above 18 can commence in forming a business in Singapore. Small businesses are on the rise, from online retailing to digital marketing to catering. But before you shell out the cash, here are some essential ideas you need to know.
Registration Process For Forming a Business in Singapore
We have stated earlier that Singapore has some of the most groundbreaking technologies in the world. You’ll be delighted to know that the Singapore Registrar of Companies is fully computerized, speeding up the usually lengthy procedure. What’s even more surprising is that it can even get faster than that. By partnering with a local business service, it’s possible to submit your application in less than an hour. With this, you can incorporate your company on the same day. Here are the detailed steps you have to follow in your business journey.
Step 1: Reserving Your Company Name
Before forming a business in Singapore, it’s natural to have a name that represents your company and brand. You’d want your name to be original, unique, and catchy. Check the Singaporean Company Registrar to see whether your name has been existing or has been reserved already. Also, make sure that the name does not infringe with any trademark or brand. Lastly, exercise decency in naming your company. There’s a high probability that the government will reject your application due to a disrespectful and obscene company name.
After reserving your name, just wait for the Singapore Government for approval. While you can get the notice immediately, there may be factors that can slow down the process. Putting words like law, media, bank, and finance along your name may trigger the government’s attention. They take such matters seriously, so the worst-case scenario would be a delay in the process for days or weeks.
All things considered, your name will stay on reserve for 60 days if you’re not rushing the incorporation process. You can file an extension for an additional 60 days.
Step 2: Fulfilling All Requirements to Register Company
Aside from the company name, there are other requirements you need to fulfill:
If you’re forming a business in Singapore under a foreign banner, you must still have at least one Resident Director. This individual can be a citizen, permanent resident, or someone with a legal employment or dependent pass. The law does not prohibit you from appointing as many directors as you want. You also have the privilege of choosing your local and foreign roster. However, they must be of legal age, which in this case is 18 years old and above. Additionally, they should have a spotless criminal and financial track record. Generally, directors may not be shareholders as well.
The numbers of shareholders will depend on how you’re forming a business in Singapore. If you’re starting up a Private Limited Company, you can have a minimum of one to a maximum of 50 shareholders. Meanwhile, an Exempt Private Company (EPC) can have at least one shareholder to a maximum of 20.
Speaking of EPC’s, the law states that no corporation has direct or indirect control over any beneficial interest in its shares. An EPC shall be exempt from audit if it accomplishes the requirement of being a small company. Furthermore, foreigners can fully own the company.
Shareholders can be persons or entities, resident or foreign. After incorporation, you can instantly issue or hand over stocks to shareholders.
The Singapore Companies Act, Section 171 mandates that you have six months to assign a competent company secretary after incorporation. The individual must be a natural person and a Singaporean resident. A single director or shareholder can’t also be the secretary.
When forming a business in Singapore, your company should have at least S$1 in paid-up capital. You may augment the amount at any time after incorporation. Typically, Singaporean companies do not utilize authorized capital. They usually have ordinary, preference, or other shares.
You need to register a local business address. It must be a physical address, regardless of whether it’s residential or commercial. The authorities don’t allow a post office box. Under the Home Office Scheme, homeowners may conduct small-scale industries with their residential properties. This also applies to both the Housing and Development Board (HDB), as well as private properties. You can submit the application for approval for the Home Office Scheme to the HDB or to the Urban Development Authority.
Step 3: Issuance of The Certificate of Incorporation
The Company Registrar will send an email confirming that you have already incorporated your company. You will also receive a Company Registration Number. Paper certificates are already outdated in Singapore but you can secure a physical copy for S$50. The processing time for this document is usually 3 to 5 days.
Step 4: Post-Incorporation Procedures
In this step, you can complete all legal and contractual obligations that come along with forming a business in Singapore. As soon as possible, open a bank account, rent an office space, or install your utilities.
You can find a variety of excellent banks in Singapore. Choose from HSBC, Standard Chartered, Citibank, DBS, OCBC, and UOB. Certain banks may not require your personal attendance. However, the options are wider and better if you show up personally and regularly. Evaluate these banks facilities and find which one suits you the most.
Step 5: Applying for Business Licenses
You might need a special license when forming a business in Singapore. This applies to companies that perform operations associated with:
- Restaurants or any food establishments
- Employment agencies
- Educational institutions
- Financial companies
- Travel agencies
- Trading of goods
Considerations for Foreigners in Forming a Business in Singapore
These are certain factors you need to ponder on if you’re a foreign business:
For a fee of S$5.50, you can publicly access director and shareholder records.
Foreigners are barred from self-registering their companies Singapore. To avoid this, enlist a local service provider to guide you through the process.
A Singapore visa is not necessary when handling business affairs. You can run the company from anywhere in the world with a visitor visa.
You need to secure an Employment Pass or Entrepreneur Pass if you’re planning to operate locally.
On your first S$300,000 of annual profits, you need to pay a maximum of 8.5 percent tax. This will increase to 17% during the subsequent period.
There are no dividend or capital gains taxes in Singapore.
Employ A Company Than Ensures Hassle-Free Services
Forming a business in Singapore could be tough, but you’ll be gaining the advantages in the long-run. Taking the first step seems the hardest, but with 3E Accounting’s direction, you’ll never get lost along the way. We guaranteed a quick yet thorough incorporation process while complying with all prevailing statutes, laws, and regulations. Upon entrusting your affairs to us, you can dedicate your time and effort to planning, marketing, financing, and other business operations. Please contact us for free if you have any queries or concerns. We are more than pleased to offer our expert advice on the matter.