Singapore is one of the most globally accessible and competitive countries to do business in. Recently, it has become a well-known regional trading and financial center in Asia because of its robust trade and investment, making it an ideal location for business growth. In fact, it has been rated the best country for "doing business" worldwide over ten times.
You will need to familiarize yourself with business registration rules, ways to hire employees, source capital, and the law around filing and paying your business taxes.
This article will discuss everything you need to know about starting a business in Singapore.
Advantages of Starting a Business in Singapore
Singapore attracts entrepreneurs and companies seeking a conducive environment for growth and expansion. It offers multiple benefits that contribute to its reputation as a business-friendly destination. For instance,
1. A Thriving Economy
Singapore's economy is a dynamic hub for business growth. Its strategic location, trade routes, state-of-the-art infrastructure, and logistics make it a gateway to regional and global markets. A stable political environment, pro-business policies, and a strong rule of law further bolster its appeal to investors.
2. Favorable Tax Conditions
An attractive tax regime is one of Singapore’s most significant advantages. The country offers tax incentives and exemptions to encourage R&D, and international expansion and exempts specific industries like manufacturing, trade, Intellectual Property, and finances from certain taxes. Moreover, Singapore has a competitive corporate tax rate of 17% and a network of double taxation agreements. It reduces the tax burden on cross-border activities.
3. Skilled and Educated Workforce
Singapore emphasizes education and skills development. Its education system produces a highly skilled and adaptable workforce, well-versed in technology and innovation. Additionally, the government also collaborates with industries to ensure the workforce remains up-to-date with evolving market demands.
4. Foreign Ownership for Companies
Singapore is welcoming and fosters international entrepreneurship and investment. Most industries permit 100% foreign ownership and enable entrepreneurs and multinational corporations to establish their presence without local partners. This independence and exclusivity encourage foreign enterprises to build a strong presence here.
5. Centralized Location and Accessibility
Singapore is at the heart of Asia. It provides easy accessibility to major markets in the region. The efficient transportation and communication networks here also facilitate business connections globally.
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How to Set up a Company in Singapore?
Starting a company and hiring in Singapore can be promising and profitable. But first things first - how to open a company in Singapore. Here is a step-by-step process to help you navigate the path to starting your own company.
1. Choose Your Business Entity
Determine and choose the appropriate business entity for your company. Many new businesses opt to register as private limited companies with the Accounting and Corporate Regulatory Authority (ACRA). Shareholders in such companies are not personally liable for debts and losses beyond their invested share capital.
Other common business structures include:
- Sole Proprietorship: A sole proprietor is a single individual who owns and operates the business. While it offers complete control, it also entails personal liability for all business aspects.
- Ordinary Partnership: Ordinary Partnership involves two or more individuals or entities. Partners jointly share profits and liabilities, and the partnership agreement outlines roles and responsibilities.
- Private Company Limited by Shares: A Private Company Limited by Shares (Pte Ltd) is a separate legal entity. It limits shareholders' liability to the unpaid amount on their shares and shields their personal assets.
- Limited Partnership: A Limited Partnership (LP) combines general partners who manage the business and have unlimited liability with limited partners who provide capital with limited liability.
2. Set up Your Company
You must adhere to the requirements set by ACRA and the Inland Revenue Authority of Singapore (IRAS). It involves:
- Company Name: Your chosen name must be approved by ACRA.
- Shareholders: At least one shareholder is required.
- Directors: At least one director must be a resident of Singapore.
- Company Secretary: The appointed company secretary must also be a resident of Singapore.
- Paid-up Capital: A minimum of S$1.
- Registered Address: A mandatory physical office address.
You can get a business profile from ACRA. The electronic report contains essential information about your business, such as the registration number (UEN), registration date, and shareholder details. A business profile is necessary to open a corporate bank account, apply for permits and licenses, and assess potential business partners.
3. Open a Bank Account
Now, you can proceed to open a bank account in Singapore. You can choose from a range of local and international banks for your business. Opening a separate bank account is a legal requirement for businesses to manage their financial transactions. It helps maintain the legal distinction between the business and its owner.
4. Obtain Licenses and Permits
Certain business operations need permits or licenses from governmental bodies. Examples include private schools, video production companies, travel agencies, liquor distributors, money lending enterprises, banks, and financial advisors, among many others. You must check your business requirements to ensure compliance in the country.
5. Registration of Office Hours
You must officially register your business office address and operating hours.
6. Registration Number
Ensure your business registration number issued by ACRA is on all official business documents.
7. Registration with the Singapore Central Provident Fund
Registration with the Singapore Central Provident Fund (CPF) is necessary. CPF is a mandatory pension fund scheme where employers and citizens or permanent resident employees contribute a part of their monthly salary to the fund.
Business Registration and Key Requirements in Singapore
ACRA has an online system for quick registration procedures. All you need to do is log in to the BizFile+ with your SingPass and identification number.
You must follow the given steps to register your business.
1. Choose and Register the Business Name
You must select a name for your company that aligns with the ACRA's specified rules. Run it through BizFile+ to check its availability. The name will be approved in a day except in the following cases:
- The name is identical to other registered businesses.
- It contains vulgar, obscene, or offensive terms.
- The Ministry of Finance has prohibited the name.
2. Register Your Company
ACRA will process the business incorporation documents once they approve the name. Your company will be registered within minutes of paying the $300 upfront ACRA fees.
You will need the following information and documents to incorporate and register your business:
- Name of the company,
- Description of business activities,
- Shareholders' details,
- Directors' details,
- Registered address,
- Details of the company secretary and other personnel,
- Memorandum and Articles of Association.
Singapore does not allow a foreign individual to self-register their company without a local company director. Therefore, you must hire a local professional to file registration if you don’t want to immigrate. In case you are willing to shift, there is no need for a local director or a professional hiring partner.
Compliance Requirements for Setting up a Company in Singapore
Singapore follows a legal framework companies must adhere to when starting a business. Some compliance requirements for a new company include:
1. Annual General Meeting
You must convene an AGM annually. The primary purpose of this meeting is to present financial statements and reports to the shareholders.
2. Annual Return
You must submit the annual returns to the Accounting and Corporate Regulatory Authority (ACRA) within 30 days following the AGM.
3. Accounting and Bookkeeping
Every company operating in Singapore must maintain accurate accounting records and prepare financial statements adhering to the standards outlined in the Singapore Financial Reporting Standards.
4. Employment Laws
You must adhere to specific employment laws, like the Employment Act. These acts govern the employment relationship between employers and their employees. It ensures proper labor standards and practices are maintained.
Also Read: Singapore Work Permits and Visas
How Much Does it Cost to Incorporate a Company in Singapore
Almost every requirement for setting up a company in Singapore requires some money. So, what is the expected cost of setting up a company in Singapore? And which cost should you focus on first?
You first need to pay a stipulated registration fee to the ACRA. Usually, you will be charged a fee at every level during the registration process.
ACRA charges $15 for registering the name of your company. Then, you will have to pay $300 to register your company. While the amount varies depending on the application type, $315 is the standard fee. Further, each process comes with an additional fee you must pay post-registration.
Here is an overview of estimated costs for setting up different entities in Singapore:
You must have a decent idea of what adds up to the company incorporation cost! In addition, you can expect a breakeven cost of $600 - $700 per annum, accounting for the minimal relevant expenses of a proper secretarial firm.
Business Opportunities in Singapore
The World Bank ranks Singapore as the best spot for business. However, business is not merely about capital or location. You must identify where customers' interest lies and how you can translate it into profits.
Singapore brims with opportunities for that as well. Given below are some considerable business ideas and opportunities you can engage in.
1. Online Marketing
Online marketing involves the promotion of brands to connect them with potential customers. It includes Search Engine Optimization, pay-per-click advertising, or other digital marketing services to send traffic to a website. You can provide this high-demand service if you are skilled in converting online prospects and gaining constant engagement.
2. Graphic and Web Designer
Singapore is a tech- and gadget-savvy country. Over 5.81M internet users were recorded early in 2023, with 96.9% internet penetration. Consequently, there is a good scope for digital opportunities like graphic and web designing.
Good marketing requires eye-catching visuals and a robust online presence to attract an audience. That is why graphic and web design is among the opportunities that will always pay off. Further, an appealing and easy-to-use website is the best way to plant a footprint in Singapore.
3. Freelance Accounting Service
Do you have the talent to keep track of numbers and calculate profits and losses? You can provide your services as an accountant to multiple firms. Your job will require you to maintain bookkeeping and organize the finances.
Dropshipping is similar to running an online store. The difference is you do not have to hold any inventory in it; instead, you will be a middleman. It primarily involves taking orders from clients and forwarding them to suppliers. In short, your work is to attract business while suppliers focus on production.
5. Service Business
Homeowners consider service businesses like home cleaning and pet grooming. You can conduct promotions online and provide such services to improve homes or offer assistance and convenience.
These are only a handful of options to consider. A good workforce and business environment present endless opportunities in Singapore. Conducting market research and networking within the local business community can help you identify specific opportunities that align with your expertise and interests.
Various Ways to Raise Capital in Singapore
Opening a company in Singapore requires initial funding to give it the boost necessary to take your business to the next level. Here are some sources of capital you can tap into
1. Government Schemes and Grants
The Singapore government has initiated schemes and offers grants to help companies grow. Government grants can range from receiving a straight up $10,000 or a percentage of incurred costs.
You can apply for the grants on the Enterprise Singapore website. Check the eligibility criteria, qualifying periods, and other application details.
2. SME Business Loans
You can borrow business loans from banks and financial institutions when setting up a company in Singapore. Loan amounts can be anything between $100,000 to $1 million.
You can also apply for business loans online from financial institutions or banks. The quick application is easy and requires only a few minutes for approval. However, you must meet the eligibility criteria banks set to apply for a loan.
Bootstrapping means funding the business from your own pocket. You need not take a debt with an interest-incurring loan or give up equity to raise capital.
You can pull all the money from your financial resources to accumulate capital. It can be from your savings account, using credit cards or lines, or liquidating assets. However, this puts your personal assets at risk.
4. Angel Investors
An angel investor provides capital for a startup or a business at an early stage. It is typically in exchange for ownership equity in the company. The initial funding helps companies to get off their feet.
It is where your social networks come in handy. Angel investors can be your family members or friends. They can also be net-worth individuals looking to invest in a startup.
5. Venture Capital
Venture capital is a kind of private equity investment banks, financial institutions, and investors provide to companies. Startups and small businesses usually receive funding in exchange for equity in the company.
It is suitable for businesses with high growth potential. You will have to pitch your business idea, acquaint yourself with venture capitalists or fund the capital from your known network of investors and entrepreneurs.
Setting up a Company vs. Partnering with an Employer of Record in Singapore
Setting up a company in Singapore allows you to harness a well-educated workforce in a politically and economically stable country. In addition, you can easily access government funding and grants to flourish your business. However, the endeavor brings some challenges.
High capital costs, complex employment laws, and compliance complicate the process of starting a business in Singapore. Here’s where Skuad can help. Our Employer of Record platform, streamlines onboarding, compliance, and payroll operations, enabling you to perform a global business from home.
Here is a comparison between setting up a company in Singapore and partnering with Skuad as your Employer of Record platform.
Ultimately, using an Employer of Record (EOR) platform and opening a company in Singapore are two different approaches.
However, partnering with an EOR easily navigates the compliance roadblocks and lets you engage in business. As an EOR handles all HR and related functions, from performance management to payroll, you can focus on more significant challenges and expand your business across borders.
Related Read: What is a foreign subsidiary and do you need one?
How Skuad Can Help
Starting a new business can be equally rewarding and daunting. Knowing how to register a company in Singapore and adhering to regulatory demands can help you establish a company, but the process is cumbersome and time-consuming. Furthermore, the administrative workload involved in the set-up may divert your attention from what truly matters – your business.
To expand your business in Singapore without setting up a subsidiary, partner with Skuad.
Skuad, a unified EOR platform, helps you with onboarding, compliance, and payroll in over 160 countries. We can shoulder the administrative, legal, and human resources responsibilities while you focus on core business processes.
Book a demo to expand your business to Singapore and in over 160 countries globally.
Q1. Can anyone open a company in Singapore?
Singapore allows residents, foreign individuals, companies, entrepreneurs, and investors to open companies. Foreign individuals can establish private limited companies, while foreign companies can register subsidiaries or branch offices.
Q2. Can a foreigner set up a company in Singapore?
Yes, foreign individuals can establish private limited companies. However, they must have at least one local director who is a Singapore citizen, permanent resident, or Employment Pass holder. Similarly, foreign companies can register subsidiaries or branch offices to establish their presence in Singapore.
Q3. How much is corporate tax in Singapore?
The corporate tax rate in Singapore is around 17%.
Q4. Do foreigners pay taxes in Singapore?
Yes, foreigners are not entitled to any reliefs and deductions. They will be taxed on all income they earn in Singapore.
Q5. How are US citizens taxed in Singapore?
US citizens or expats do not pay tax on income earned outside Singapore. However, employment income is taxed at a 15% flat rate or the tax rates for residents, depending on whichever is greater.