Start a Business in Singapore The Right Way
As an entrepreneur, you probably have an amazing and unique business idea. And ideation is important. But it is vital to find ways to execute your idea into an actionable and profitable business. You need to find the right way to start a business and then consistently work towards making it better. You have to plan ahead and make quick decisions about when and how to start, register, and incorporate your business. Especially for entrepreneurs wanting to start and operate a business in Singapore, you must set up and manage your corporate entity with care and consistency.
We are here to guide to with the right way to start a business in Singapore!
To start your business in Singapore, you will need to focus on registering or incorporating your business. Incorporation essentially means registering your business, paying a fee to the Accountant and Corporate Regulatory Authority (ACRA) fees, documentation, annual general meetings, opening bank accounts, and tax return filing, amongst other things. Yes, it sounds like a lot. But if not done correctly, it can lead to long-term issues for you and your business. Which is why you should incorporate early and cover all your bases when you start a business in Singapore.
Why Should you Start (& Incorporate) your Business Early in Singapore?
Although your idea and company name following it may be super unique, it is important to protect them. Incorporating early protects your company name and makes sures it remains yours while creating an opportunity to further secure it by registering the name as a trademark, so no one can steal it. It is safe to assume that as an entrepreneur, you would be interested in raising capital and networking. Raising funds can be difficult if a new business isn’t incorporated correctly and investors may not agree to provide funds before your company is legally registered in Singapore. It is also easier to get loans from banks for companies as compared to individuals. Even while renting office spaces, it will be possible to do so only after your company name has been registered. Given that offices are opening up again and a lot of us can go back to work physically, it makes sense to register and start your business the right way (& quickly) to do amazing things!
What Do You Need Before You Start (& Incorporate) a Business in Singapore?
Let's dive into all the things you should be aware of and prepared for before starting your business in Singapore.
Know Your Why Before You Start a Business
Running a business is tough. Setting it up will take just a few clicks. But being able to run it successfully will take far more. Remember why you want to start this business in the first place. Being in touch with your passion will help you figure out the right way to start a business in Singapore. Focus on the customer problem you are trying to solve and constantly improve your product to become the only logical solution in the market. Before you start all the documentation and admin headaches take over, remember why you are doing this and then put in the effort.
Have Capital & Funds Before You Start a Business
As simple as this sounds, remember to have capital, resources, and enough funds to start your business. In Singapore, all you require is $1 as paid-up capital to register your business. However, registering and running a business are separate things. Make sure you have enough funding before you start your business and to help you survive the first few months until you start earning revenue or even profits! The right way to start a business is to plan and have contingency solutions ready after you launch.
How to Get Funding When You Start a Business in Singapore?
There are many ways to raise funding and get capital for your business before and after you register your business in Singapore.
Funding Rounds: Funding rounds are manufactured timeframes/attempts for companies to seek outside investment at different stages of valuation. Each round will signify the size and value of the company whilst indicating risk levels, expected use, and growth to potential investors. Some of the rounds may include Seed, Angel, Series A, Series B, and Series C rounds.
Venture Capitalists (VC) & Investors: Singapore is a hub for venture capital and investors looking to invest in innovative and disruptive ideas. Before and while you start a business in Singapore, make connections with VCs, funds, and investment accelerators to pitch your ideas and get your kickstart!
Government Aid: Singapore’s government encourages entrepreneurship, and many organizations provide various schemes to help startups and small & medium enterprises. There are specific schemes available if you want to register and start a business in Singapore as well:
- Enterprise SG
- Economic Development Board (EDG)
- Singapore Centre for Social Enterprise (raiSE)
- Workforce Singapore
- Singapore Tourism Board
Family & Friends:
Many businesses start because the founders have supportive friends and family. Before you register a business in Singapore, take a look around to get assistance from personal resources. Not just due to the personal connection, but many individuals in our lives can be interested in investing in ideas they connect with. Ask around and see who all have substantial savings and similar goals to you!
Loans:
Taking a loan from a bank is one of the commonly known ways of starting up. From “Smart Funding” to “Microloans,” you can start a business in Singapore with its banks and their provisions for your needs.
Prepare Yourself Before You Start a Business
Since you can now get help, registering your business can seem extremely simple. But remember to brace yourself for all the bumps along the way and don’t give up even when times get tough. Perseverance is a major factor when seeking success!
How to Start (& Incorporate) Your Business in Singapore?
Before you completely start a business in Singapore, the process of incorporation will come into play. You will need to be sure of particular details when incorporating your business:
- Company Name
- Business Structure
- Company’s Principal Activities (up to 2)
- Members of the Team
- Registered Office
- Bank Account & Capital
- Documentation & Singpass
Company Name
Even if your business is disruptive and unique, it will be forgotten if it does not have a memorable name. You will need to think of a few names (have a buffer stock, just in case) and check with the Accounting and Corporate Regulatory Authority of Singapore (ACRA). You will have to follow several guidelines and rules about what can or cannot be a part of your company name.
Remember: Your company name cannot be identical to an existing business OR contain words that are prohibited. Adding a “The” at the beginning or a “Corporation” at the end of your name will not suffice if the main nouns are the same as another business.
Business Structure
To start your business, you will need to know what kind of structure it will have. This will depict what kind of company you are registering or incorporating in Singapore. You can choose from a variety of options depending on the number of founders, directors, or members you have when registering the business in Singapore.
- Sole Proprietorship: The owner trades under their own name with just them having control over the business. However, the business and owner do not have separate legal identities. So, you must register your business knowing that it will be a part of your identity, instead of having its own.
- Limited Partnership: This partnership includes two or more partners that work together and form the root of the business. When you register your business, you will have to include all the names involved.
- Limited Liability Partnership: Like a private limited company, this partnership provides the business with its own separate legal identity. Foreigners who wish to register limited liability partnerships in Singapore must appoint resident managers (citizen, permanent residents, work pass holders) in the city.
- Company: This kind of company gives the business a separate legal identity and makes funding easier as well. The types of companies can include Exempt/Unlimited/Unlimited exempt Private companies, Private/Public companies limited by shares, Unlimited public companies. When you register your business, you must know what kind of company you have as well as include it in the necessary paperwork.
Company’s Principal Activities (up to 2)
Your company will need to include its principal activities when you register your business in Singapore. This will be related to the industry you are about to operate in. To do so, you will have to choose an industry from a premade list and submit a Singapore Standard Industrial Classification (SSIC) code when you start a business in Singapore.
Members of the Team
This will include all the team members you are required to have before and during the registration of your business in Singapore.
- Directors of the Company: This will include all the directors of the company. In Singapore, you will be required to have at least one locally based director. They need not be citizens; however, they must be legal residents in the country. So, when you start a business in Singapore, you will need to have a legal address here and reside here, even if you are not a citizen.
- Shareholders of the Company: This will include any of the existing shareholders of the company, including investors who have partial ownership, other individuals, companies, or partnerships themselves.
- Corporate Secretary: They are a member of your team who take care of administrative and compliance tasks company wide. From fulfilling statutory obligations and filing taxes to completing documentation and preparing for the Annual General Meeting (AGM, they take care of all administrative tasks for the company. Remember to hire a corporate secretary within 6 months of registering the business or you may have to face legal consequences! So, when you start a business in Singapore, make sure to include hiring a corporate secretary on your list, right after you register and incorporate your company.
Registered Office
To register your business, your company will require a registered address and office space to work out of. So, when you start a business in Singapore, you will need to operate from a designated workspace.
Key Requirements:
- Physical address located in Singapore
- Cannot be just a P.O. (Post Office) Box
- Must be open at least five hours every working day
Options for offices:
- Coworking spaces
- Renting an office space
- Getting a license for a home office
Bank Account
Just like you need funding and finance to register and start your business, you need a bank account to keep all those funds in, as well. As an entrepreneur in Singapore, you will have a variety of options with the multiple banks present here. However, be aware that if you want to start a business in Singapore, you may need to do your KYC (Know your Customer) identification checks in person.
Documentation & Singpass
Just make sure to have all the documentation ready and ensure that the information on your national identity cards/work passes matches with the documents. Also, remember to set up your Singpass profile to complete your documentation and other administrative tasks. Documentation should not be the reason for your delay when you want to start your business in Singapore, as it can become an additional headache for you and your team.
How to File your Taxes After you Start A Business in Singapore?
When you register a business in Singapore, just like any other nation, you must pay your tax. Taxes in Singapore are easy to understand and pay as well. After you start a business here, you will need to know about corporate and personal income tax in the country. You will be paying the given amount to the Inland Revenue Authority of Singapore (IRAS).
Corporate Income Tax
Corporate Income Tax in Singapore will have a flat 17% rate for all your chargeable income. This will be the same for both local and foreign companies in the country. However, for startups, there are tax exemptions scenes for tax relief. If your company qualifies, you will get the following exemption for the first three years after you start a business in Singapore:
- 75% exemption on the first $100,000 of normal chargeable income
- A further 50% exemption on the next $100,000 of normal chargeable income
Personal Income Tax
Personal income tax, as explained by its name, is a tax or a certain amount you pay to the government (of the country you earn in), based on your personal income. In Singapore, income tax is paid in a progressive manner (pun intended!) based on the income level of every payer. The rates range from 0% to 22%. Even if you do not start a business in Singapore, you will need to pay income tax as an employee or wage-earner.
What Happens if You Don’t Start (& Incorporate) your Business Properly?
Besides the basics of missing out on name security, intellectual property rights, and funding, you can also end up falling in legal trouble if incorporation has not been done correctly and is not followed through. There is a right way to start a business in Singapore and if not followed, it can cause major issues for you and your company.
According to Singapore's Companies Act 1967, there are a list of strict rules companies must follow from the point of inception and missing those can create severe financial and legal blunders. Companies need to adhere to requirements set by the Inland Revenue Authority of Singapore (IRAS) and the Accountant and Corporate Regulatory Authority (ACRA). If not followed, these bodies can penalize companies and charge hefty fines:
- Annual General Meetings not held/held late – Lodgment fine of $300-600
- Non-filing/filing late taxes – Fined up to $5000
The Companies Act 1967 can also directly penalize companies for breaking laws intentionally and unintentionally:
- Section 142(1): Failure of a company to have a Registered office address
- Section 144: Failure to publish Company’s Name and Registration Number
- Section 175 Failure to hold the Annual General Meeting within the stipulated time frame
- Section 197: Failure to lodge the Annual Return of the company within the stipulated time frame
- Section 405 – Penalty for carrying business without registering a corporation and for improper use of words “Limited” and “Berhad” (Unregistered entity)
Beware!
Business firms, Data Register and Singapore Data Register, were recently fined more the $4000 for not holding an annual general meeting in time while Data Register previously faced more then 1100 charges for failing to display the company name and registration number on business letters. Alongside other charges, the company pleaded guilty and was fined a total of $200,000. Although it seems like tiny inconsistencies, they can create issues companies cannot come back from.
We don’t mean to scare you...
However, you must make sure you are prepared if you want to follow the right way to start a business in Singapore. From documentation to corporate obligations and consistency, you will have a lot of responsibility when you register and start a business.
But, you don’t have to worry about doing it all alone!
At Doerscircle, we have a single solution for all the headaches you have to face during the incorporation journey. Our solution will help you start a business in Singapore quickly and in the right way, with straightforward and stress-free company incorporation. From name registration to documentation and banking to board meetings, you can give all your hassle work to us.
It can be incredibly difficult and stressful to find the right way to start a business.
But we are here to make it easier for you.
Other Useful Resources:
Here are some other resources you can use to start a successful business in Singapore!
