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Full Guide on Starting a Business in Singapore

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Full Guide on Starting a Business in Singapore

Setting up a business in Singapore? Good idea. Singapore is one of the best places 
in the world to start and grow a business. To start a business in Singapore can be easy – if you are well organised.

In this guide, Osome will show you the ropes of setting up a business in Singapore. Our guide will cover all you need to know and those burning questions you need 
to be answered.

If you don't see your question or concerns addressed, get in touch. We'll be happy 
to chat with you.

Benefits of Starting up a Business in Singapore

Benefits of Starting up a Business in Singapore

There are many benefits to setting up a business in Singapore. Namely, the country boasts a robust economy, low tax rates and a smooth (albeit strict) process for incorporating a company.

Singapore’s infrastructure is world-class, its workforce well-trained and few rules limiting foreign ownership and operation of a business in Singapore.

Once you’re set up here, you can access Singapore’s well-developed capital markets to access loans and other financial services. And should you choose to move here, you will enjoy a very high quality of life.

Exemptions From Starting of Business

Exemptions From Starting of Business

Not all businesses are required to register with The Accounting and Corporate Regulatory Authority (ACRA).

If you operate under your full name, for example, you are a sole proprietor. There is no need to register with ACRA. The same is true if you are in a partnership and you trade your full names.

The same exemptions exist for:
  • Institutions, authorities, persons or funds that are tax-exempt (as identified by Singapore's government).
  • Societies or co-operatives registered as such with the government.
  • Mutual benefit organisations.
  • Trade unions.

If you’re unsure about whether your exempt from company registration, it’s worth double-checking. Company registration is strictly monitored, and you could face a fine (or even jail-time).

Osome can help you unpick Singapore’s registration requirements.

This can take time. But by planning ahead, you can speed up the company registration process and avoid delays.

Can Foreigners Open a Business in Singapore

Can Foreigners Open a Business in Singapore

Yes, foreigners can start and operate a business in Singapore. There are very few restrictions on this.

The Singaporean authorities do, however, require at least one resident director. That is, someone based in Singapore. This can be a citizen or a legal resident.

Your business also needs a registered address in Singapore. This cannot be a PO box.

Alternatively, you can become a legal resident in Singapore. This means you can set up a business on your own with no need for another director.

Or you can remain overseas and use a nominee director service. A nominee director service will help you satisfy all the legal requirements needed to start a business in Singapore.

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What Do You Need To Know Before Starting a Business

Make sure you’re ready

What Do You Need To Know Before Starting a Business

To set up a business is one thing. To know why is another. Be prepared for bumps and scrapes along the road as you start your business journey in Singapore.

When things get tough, knowing why you have started a business is a powerful motivator. There is complexity and risk attached to being a business owner. Do you understand the long term challenges?

Before diving into the admin of registering a business, be clear on the what and why of your business. It means you can hit the ground running.

Raise capital

What Do You Need To Know Before Starting a Business

The barrier to entry for business registration in Singapore is low. As in S$1 low. A Singapore company can be registered with paid-up capital of S$1 (or an equivalent in any currency).

Most Singaporean companies incorporate with this nominal value. That said, higher capital is, of course, better and will add to your company’s prestige.

Singapore’s funding infrastructure is highly developed. You can issue shares, get loans, receive investment from VCs, or you can bootstrap your business.

Not enough savings? Here are some ways to increase your capital:

  1. Fundraising

    A common way to raise funds is by issuing shares in your business. As a limited company, you will be able to do this. Although, it means handing over a stake in your business.

  2. Government Schemes

    Singapore's government encourages startup and SME growth through various schemes. Three big ones are the Productivity Solutions Grant (PSG), the Enterprise Development Grant (EDG) and the PACT Scheme.

  3. Venture Capital and Angel Investors

    Singapore is home to a well-established venture capital (VC) and angel investment network. The country boasts numerous well-established VC funds, and angel investors are common. Try pitching your big idea to one of these players.

  4. Family and Friends

    You might be surprised how much capital friends and family have to invest in new ventures. Ask around. Many people will be sitting on substantial savings and be willing to invest in a new idea.

  5. Loans

    Debt funding is a staple of starting up. In Singapore, banks offer two kinds of loan: working capital loans and funding. A working capital loan is to help with tight cash flow, while funding is for long-term investment.

  6. Peer-to-peer lending

    Peer-to-peer (P2P) lending is an excellent option if you can't access bank finance. P2P platforms connect the public with businesses in need of funding. Singapore has numerous P2P marketplaces, and it's a well-established industry.

Osome will help you register your Company in Singapore

We do full registration on your behalf and advice on all basic tax-related matters

Osome will help you register your Company in Singapore

Business Starting Requirements - What Do I Need?

  1. Business structure

    Business structure

    Private Limited Company

    The most common type of business entity for serious entrepreneurs. This structure limits your liability, makes it easier to raise finance and gives your business credibility.

    Sole Proprietorship

    Sole proprietors trade under their own name. These people do not need to register, and tax is simpler. But liability is unlimited, i.e. the person and the company are not separate.

    Partnership

    A partnership lets two or more people co-own a business. Like sole proprietors, there is no legal distinction between people and business. And a partner can end the partnership at any time.

  2. Activity Type

    Activity Type

    The Singaporean authorities need to know what industry you’re in. It’s not enough to just tell them. There is a specific code (a SSIC or a Singapore Standard Industrial Classification Code) for different industries.

    ACRA will ask you to pick and submit a SSIC code. This code will tell them what you do and what industry you operate in. Not sure what SSIC code you are? Use our SSIC code checker below!

    Choose your Business Activity type with SSIC Code

    Use our free search to find the code that best describes your business activities

  3. Business Name

    Business Name

    Just like your business, your company name must be unique! The first step in your Singapore business journey is to choose a company name and validate it with ACRA.

    In Singapore, two companies have to be unique. ’Unique’ means the core noun(or nouns) of the name must be different from another business. In other words, changing the definite article or adding a generic word like ’corporation’ to the title won’t cut it.

    Look for a unique word or word combination. And remember: your company’s legal name can actually be different from your trading name. Just ensure that your trading name doesn’t infringe on copyright or create trademark issues. Google is your friend with this one.

    Tip

    If you don’t want your company registration to get slowed down, avoid words like ’finance’, ’bank’, ’school’, ’media’, or ’education’.

    These types of businesses are regulated by agencies other thanACRA. The relevant agency will have to approve your application. This takes several weeks (compared to one day for normal company registration).

    Have a name? Check it now

    Type in any company name you have in mind and see if it’s available with our free tool

  4. Registered business address

    Registered business address

    Every Singaporean company must have a registered address. This can’t be a PO box. It needs to be an actual address.

    If you don’t have a permanent HQ, you can rent a registered address. Singapore has a wealth of companies offering virtual office addresses for entrepreneurs. They collect your correspondence, scan it, and then send it to you.

    Any address can be used as a registered address. This includes your home office or even a co-working space.

  5. Assemble the team

    Assemble the team

    A business needs people, right? So let’s look at what people you need to start a business in Singapore:

    Shareholders

    All Singaporean business needs at least one shareholder (with a maximum of 50). There is no limitation on who can be a shareholder. Indeed, Singaporean law allows for complete foreign ownership of Singaporean companies.

    Directors

    It’s here where resident requirements become a bit more strict. All Singaporean businesses require at least one locally based director. That doesn’t mean ’citizen’, however. This requirement can be met by a legally resident foreigner in Singapore. If you prefer, you can appoint a Nominee Director. A nominee director has no say and is only there to meet the requirements. It’s common practice in Singapore to use the nominee services.

    Corporate secretary

    Every company is obliged to have this officer. Your company secretary tracks changes in your company compiles papers, and reports to the government. The law demands that you appoint a secretary within 6 months after the incorporation, but you may need one way earlier. Company secretarial services are commonplace in Singapore. If you’re unsure, that’s a good place to start.

  6. Business bank account

    Business bank account

    Singapore offers entrepreneurs an array of banking options. As a regional finance hub, the country is home to large, legacy banks and new innovators. More established banks may wish to do their KYC checks in person. That is, you will need to come to Singapore.

    There are no restrictions on foreigners opening business bank accounts in Singapore. As long as all the correct legal procedure is followed.

    Not all banks require you to do KYC in person. Some banks can do that online, if you don’t wish to travel. If you have an adviser in Singapore, ask them for a referral to a bank like this.

Hiring Employees for Business

Singapore workers enjoy extensive protection by the Employment Act. Part IV of the Act outlines the rest days, hours of work, and other conditions of service.

Part IV of the Act only applies to:
  • A workman (i.e. someone manual labour) who earns a basic monthly salary of less than S$4,500.
  • Any employee - that is not a manager - who earns a monthly salary of less than S$2,600.

The provisions of the Employment Act must be complied with.

The Act covers the usual conditions:
  • The statutory paid leave entitlement.
  • The regularity of breaks.
  • The length of the work week (among other things).

Familiarise yourself with the Act if you plan to employ workers in Singapore. This includes any foreign workers (who are also afforded protections by Singapore’s Ministry of Manpower).

File Corporate Income Tax

Singapore’s corporate tax regime is regarded as one of the most business-friendly in the world. The rate is a flat 17% for all businesses.

Your corporate tax filing is completed in December. The process is entirely done online via IRAS’s e-filing portal.

If your annual revenue is less than S$5m and you have no chargeable income for the year, there is no need to file. If you are exempt, be sure to keep a close eye on when things change. IRAS can and will charge late payment penalties.

What Taxes Will I Pay?

Singapore has double taxation agreements with many countries, so you avoid being taxed twice on the same income. Here are Singapore rates:

  • Corporate tax for SME is effectively progressive: from 4.25% on the first S$100,000 to 17% after S$10,000,000
  • Once turnover grows over S$1,000,000 you’ll have to register and pay a 7% GST. Unless you export your goods abroad, then GST is 0%
  • Tax on dividends is 0%
  • Personal income tax is progressive from 0% to 22%. For example, on salary of S$120,000 it’s S$7,950 (6.6%), on S$250,000 it’s S$30,700 (12.3%).
See detailed calculation below.

Corporate tax rate for SME eligible for the start-up tax exemption (SUTE) scheme

Chargeable income, S$Estimated tax, S$Effective tax rate
100,0004,2504.25%
200,00012,7506.38%
300,00029,7509.92%
400,00046,75011.69%
500,00063,75012.75%
1,000,000148,75014.88%
2,000,000318,75015.94%
3,000,000488,75016.29%
5,000,000828,75016.58%
10,000,0001,678,75016.79%

Personal tax rate

Chargeable income, S$Estimated tax, S$Effective tax rate
First 20,00000%
Next 10,0002002.0%
Next 10,0003503.5%
Next 40,0002,8007.0%
Next 40,0004,60011.5%
Next 40,0006,00015.0%
Next 40,0007,20018.0%
Next 40,0007,60019.0%
Next 40,0007,80019.5%
Next 40,0008,00020.0%
Over 320,00044,55022.0%

Business Processes That Follow the Setting up Business

Once your business is set up in Singapore, you may need to fulfil some additional requirements.

  • Licenses and permits: Certain businesses must get approval from the relevant government body. For instance, private schools must receive approval from the Ministry of Education.
  • Office hours: ACRA needs to know your registered office address and its opening hours. These opening hours cannot be less than 3 hours per workday.
  • Customs: If you export from or import into Singapore, your business must register with Singapore Customs.
  • Goods and Services Tax (GST): GST is the tax levied on the supply of goods and services in Singapore. GST also applies to imported goods. All businesses with a revenue over S$1m must apply GST.
  • Singapore Central Provident Fund (CPF): This is Singapore's national pension fund. All employers and employees must contribute some of their income to the fund.

Useful Resources for Business Owners

Here are some good places to research starting a business in Singapore. Click on the links to find out more.

Business registration FAQs

  • How long does it take to start a business in Singapore?

    It mostly depends on when you are comfortable with providing all the details, as well as the service hours of the authorities. Once all the documents are ready, it takes us less than an hour.

  • Who can set up a Singapore company?

    Anyone can open a Singapore business, be it a foreigner or a local. This is according to the Singapore Companies Act. You just need a local registered address, a corporate secretary, a shareholder, and a resident director. You’ll also need a paid-up capital of at least $1. It is possible to increase the share capital after registration of your business. Foreigners would need to appoint a nominee director who is a local resident of Singapore, that is either a citizen or Permanent Resident.

    As one of the world's top countries when it comes to tax benefits, favorable government policies, central location, and ease of the process of setting up your business, Singapore has continued to be a popular choice for entrepreneurs and directors to start or expand businesses.

  • What do I need to start a business?

    Our top tip is to do some calculations. While many people wonder how to start a small business in Singapore, their main concern is economic feasibility. Small businesses not planning to scale up may find the company maintenance in Singapore quite costly, especially if they use a nominee service. Yet we still advise comparing Singapore’s tax rates to your home state’s. For certain businesses, the tax savings may cover the registration and maintenance expenses.

  • What is required information for the online application to register my business?

    When registering your business in Singapore, ACRA will require quite a few different documents. You need the following documents to register:

    • Your company name (this name must be available for use).
    • A brief description of activities and your SSIC Code.
    • Details of shareholders and KYC information.
    • A registered business address in Singapore.
    • Share capital information.
    • The company’s constitution.

    You cannot complete your company registration without providing these details.

  • How to open a corporate bank account in Singapore?

    Each bank has a different process to open a corporate bank account. It also depends on the passport and the nature of your business. Usually Singapore citizens and Permanent Residents can open a bank account without any documents and signatures, but usually you’ll need certified true copies of important documents such as passport or identity card, residential address proofs, certificate of incorporation, certified copy of the company business profile from the Registrar of Companies, a Board of Directors Resolution, and a certified copy of the Company Constitution.

    Bank accounts can be opened for Singapore citizens and PRs remotely. Certain banks will now let foreigners apply for business account opening and pass the bank interview remotely.

  • What are fees for registration of businesses in Singapore?

    Registering a company in Singapore is pretty affordable. Your name application (if it is available for use) will cost you S$15. Once that’s settled, your registration fee is S$300. Both of these fees are payable to ACRA.

    Every year following, you must pay S$60 to file your accounts to ACRA. And if you want to change your company type and structure, it will be S$40.

    All of these payments and fees can be handled electronically. You do not need to do them in person.

  • Why do I need a Corporate Secretary?

    The law demands that every business appoint a secretary within 6 months after the registration and ever has this position vacant. A good secretary is an indispensable part of your team, but you don’t have to hire an in-house one unless you have a big business entity.

  • Why do I have to report about my business activity type?

    It’s the legal requirement. Every Singapore-registered company must have a local registered address – a material mailbox that is available for at least 5 hours on working days. Your registered address goes on all legal documents, i.e. on whatever letter ACRA or IRAS or other agency may send to you. Osome handles your incoming letters, scans and stores them in your account so you have easy access to all your documents.

  • Who can become a shareholder of a Singapore company?

    To start your business in Singapore, you will need 1-50 shareholders. Shareholders can be a natural person or a company. The shareholder can be a Singapore resident or a foreigner.

    The Singapore Companies Act allows 100% foreign ownership holding shares in the company. Most small private limited companies have the same shareholders and directors. The ownership of the company resides with the shareholders, so appointing a nominee Director to fulfill the requirement to set up your business will not affect your shareholding.

  • Can I move to Singapore if I start a business there?

    Of course. There’s a special visa called Employment Pass. The family members may relocate under Dependant Passes. You can get the visas in about 6 months. However, there are some requirements to meet. For example, the salary you’ll be paying yourself should be about S$6,000 ($4,500). Check out our explainer to learn more.

  • What is the easiest way to complete a business setting up in Singapore?

    The easiest way, by far, is with an adviser that specialises in company registration in Singapore. These services – like Osome’s – are commonplace, affordable and slick.

    If all the paperwork is ready, you can register your business within one working day. Your adviser will also be able to help you set up a bank account, stay compliant and even sort out your accounting.

  • Can a foreigner act as a local director of a company?

    A foreign entrepreneur may find it a challenge to appoint a local person as a nominee director as one of the company directors. More often than not, the foreign entrepreneur will not have someone in Singapore who they can appoint as the Local Director for the company.

    You can act as a local director of your company if you are planning to relocate to Singapore and manage your company from there. It will be best for you to obtain an Employment Pass if you plan to relocate and directly manage your business from Singapore. After that, you can act as the Local Director for your company.

    However, if you do not plan to relocate to Singapore, you have two other options to satisfy the Local Director requirement, either by engaging a Nominee Director service, or if you are planning to hire local staff, appointing one of the staff members as a Local Director of your company.

  • What happens if the business closes down?

    You can swap your business to a dormant company. Just let IRAS and ACRA know. A dormant company is a business that’s not receiving any form of income or is actively trading. The filing requirements for a dorman company is less stringent.

    If you maintain a dormant company, you can recommence at any point. Just let IRAS know within 1 month of resuming your business.

    Otherwise, if you have no intention of keeping the company or restarting it in future, you can wind up your business. Sell your assets and settle your debts, and then you can move on.

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