Setting up a Company in Singapore

Singapore has emerged as a notable worldwide business hub due to its ease of doing business, robust economic performance, and supportive regulatory framework. Setting up a business here is a tempting option for both domestic and international entrepreneurs. The procedure for incorporation of company in Singapore is simple, with clear recommendations to follow, and numerous services are available to help with the incorporation process.

Conditions for Company Registration

To register a company in Singapore, you will require a Singpass for online registration using Bizfile+. If you don’t have one, a company incorporation service can help walk you through the process. You must meet certain requirements, such as selecting a unique company name, appointing at least one resident director, a Singapore registered address and a company secretary.

Select a Company Name

The first step is choosing a name for your firm. The Accounting and Corporate Regulatory Authority (ACRA) must approve the name using their online platform. A cost of SGD15 applies for name registration. The name should not be a copy of an existing company, and it should not contain offensive or unattractive terms. Along with the name, you must describe your business activities using the Singapore Standard Industrial Classification (SSIC) Code. After receiving name approval, you have 120 days to complete the company registration, or the name will be released.

If the name has already been taken, you can file an appeal by presenting legitimate reasons, which may take 14-21 working days.

Select Your Business Structure

The next option is to select the appropriate business structure, which influences ownership, liability, taxes, and governance. Common business models include the following:

A Sole Proprietorship is simple and inexpensive to set up, ideal for small businesses with low risks. The owner has full control but faces unlimited personal liability and challenges in raising capital. It is taxed at personal income tax rates.

A Private Limited Company (Pte Ltd) is the most common structure, offering limited liability and greater credibility, which helps attract investors. It has more compliance requirements and is taxed at corporate rates, potentially offering tax benefits.

A Limited Liability Partnership (LLP) combines partnership flexibility with limited liability for professionals like lawyers or accountants. It is taxed as a partnership and requires clear operational agreements.

Other options include Public Limited Companies for larger businesses aiming to list shares, General Partnerships where owners share profits and liabilities, and Limited Partnerships with both general and limited partners.

Foreign companies may choose a Branch Office, an extension of the parent company with full liability, or a Subsidiary, which offers a separate legal entity with limited liability and potential tax benefits.

Each structure affects ownership, liability, taxes, and governance. The right choice depends on the business’s needs and objectives.

Appoint Directors

In Singapore, your firm must have at least one director who is a Singapore resident—a Singapore citizen, permanent resident, or anyone with an EntrePass or Employment Pass. The director must be at least 18 years old, a natural person, and free of disqualifying conditions such as bankruptcy or criminal convictions.

If you do not have a local director, you may designate a nominee director who meets the legal criteria but does not operate the firm. Nominee directors have the same legal responsibilities as other directors.

Determine Share Capital and Select Shareholders

Every corporation must issue at least one share with a paid-up capital of SGD1. Private limited businesses can have up to 50 shareholders, with foreign nationals holding 100% of the shares. Shareholders have voting rights and can influence corporate actions, such as appointing directors or changing the bylaws.

You can also select from many sorts of shares:

• Ordinary shares give you one vote at meetings, and there must be at least one of these shares.
• Non-voting shares are like ordinary shares, but you can’t vote with them.
• Preference shares get paid dividends before ordinary shares. They also get priority if the company has financial problems, but they don’t usually have voting rights.

Designate a Corporate Secretary

A company secretary must be chosen within six months of the incorporation. The secretary must be a Singapore resident with the necessary knowledge to ensure compliance with local legislation. This function entails advising directors and submitting essential documentation to ACRA.

Establish a Registered Office Address

Your company must have a physical address in Singapore where all legal documents can be delivered. P.O. boxes are not allowed. You may use:

• Corporate service providers provide virtual office services.
• A Home Office Scheme may be an alternative for small enterprises operating from home, but it must be approved by local authorities.

Determine your Fiscal Year-end

The Financial Year End (FYE) is the last day of your company’s accounting period. It affects key obligations like filing deadlines for your AGM, annual return, and corporate tax return, which must be filed within 6 months of your FYE to avoid penalties. It also influences tax planning, allowing you to defer payments or use tax incentives. Aligning your FYE with your business cycle can improve financial clarity and cash flow management. While any date is possible, common FYE options in Singapore are 31 December (for simplicity) and 31 March, 30 June, or 30 September (for more frequent reporting).

Prepare the Documents and File for Incorporation

Once you’ve decided on a firm name and structure, you’ll need to prepare the following documents:

• Transaction number derived from the name approval process.
• Company constitution.
• Forms of consent from directors and the company secretary.
• Identification data for shareholders and officers.

After obtaining the necessary documents, submit your application via BizFile+. The registration fee is SGD300. Once accepted, your company will be given a Business Profile and a Unique Entity Number (UEN).

Obtain the Necessary Business Licenses

Specific licenses are required for certain commercial activities, such as operating a restaurant or providing financial services. For example, a Food Shop License is necessary for food-related businesses, whereas a Monetary Authority of Singapore (MAS) license is required for financial firms.

Post-Incorporation Responsibilities: Singapore’s corporate income tax (CIT) rate is at flat 17%. New entities can enjoy tax exemptions for the first 3 years. If your company makes more than SGD 1 million in revenue, you must register for Goods and Services Tax.

Open a company bank account to manage finances and keep personal and corporate funds separate. Prepare the necessary corporate documents and personal identity to open the account.

Ongoing Compliance: You must file Annual Returns with ACRA, hold Annual General Meeting, keep proper financial records, and pay taxes to the Inland Revenue Authority of Singapore (IRAS). Companies must also provide ACRA with any modifications to their firm information within 14 days.

Conclusion

Setting up a business in Singapore is straightforward and efficient. By following the processes detailed here, you can guarantee that your business satisfies all regulatory standards, from selecting a company name to registering for taxes and getting relevant licenses. Professional incorporation services can help with registration and continuing compliance requirements for individuals unfamiliar with the process or who want to save time. Singapore’s favorable business environment and solid regulatory structure make it an excellent choice for domestic and foreign entrepreneurs.