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How to set up a company in Singapore

Thanks to the pro-business policy, a company can be set up in Singapore without much hassle and formalities. That being said, an entrepreneur penetrating this potential market for the first time more than usual does not know where to begin and can err at times.

If you find yourself in that predicament, this article can help you out.

The registration process of a Singapore company

Setting up a company is rather simple and straightforward if you have a firm grasp on each of the requirements and formalities.

As we see it, the process of registering your business should play out in 3 phases, and in this exact order: pre-registration, registration, and post-registration or maintenance.

1. Pre-registration

First thing first: you need to decide the one type of business form that is the best suited for your needs and situations. Of all the viable options, we advise that you should narrow your choices down to private limited company among other types as presented below:

Private Limited Company (Pte. Ltd) is the number one pick in the community of entrepreneurs and investors. The rationale behind this particular preference is the favorable tax rate capped at a flat 17%. This form of business exists as a separate entity, so you can rest assured that its debts and liabilities would not extend to you and other shareholders. A private limited company also allows you to enjoy a multitude of tax incentives and relief that are meant for a locally incorporated company. The maximum number allowed of shareholders is also a mass of 50 for a typical private company and 20 for an exempt private company.

The sole proprietorship is the most simple business form to set up, and also the riskiest one. The reason being that it is treated as one and the same as its owner, so as its debts and liabilities. By the same token, a sole proprietorship is subject to a comparatively high rate of personal income tax, which ranges from 0% to 22%.

Limited Liability Partnership is deemed a separate legal entity while sharing some similar characteristics of a partnership: it is taxed either at the rate of personal or corporate income tax depending on its partners’ status. Nevertheless, there generally is no cap on the number of partners in a limited liability partnership.

Now that you have had in mind an informed choice of business type that you prefer the most, you should proceed to prepare a number of pertinent documents. According to ACRA, these documentary requirements include the following:

  • Company name registered with ACRA
  • A brief description of business activities
  • Details of Singapore registered address of the company
  • Particulars of shareholders
  • Particulars of directors of which at least one is ordinarily resident in Singapore
  • Particulars of a local company secretary
  • Memorandum and Articles of Association (MAA). Singapore Company Registrar provides a standard MAA document that is suitable for most instances.
  • Foreign Entrepreneurs: a copy of passport and residential address proof (overseas)
  • Singapore Residents: a copy of Singapore identity card
  • Corporate entity shareholder: Copy of registration documents such as Certificate of Incorporation and Memorandum & Articles of Association.

2. Registration of the business

The registration process typically consists of only 2 steps: reserving the company name and registering the company.

2.1. Company name reservation

A company name is instrumental in setting up a Singapore company.

Once you have come up with a good name for your business, you should put it forward for approval. Let us assume for now that ACRA signs off on the name you registered, then you would have it reserved for a period of 4 months from the date in which you apply for it.

In order to get the green-light, the registered name might as well have the following qualities:

  • It is unique – i.e it is not identical or way too similar to other business names, and it must not be already reserved
  • It has no copyright-related matters – i.e. it does not commit any trademark infringements.
  • It does not connote any vulgar or obscene sense, implicitly or otherwise.

Provided that these minimum qualifications are fulfilled, you should expect the outcome in less than a day.

However, it may take a lot longer, up to weeks, to get approval if your business’s name and nature call for the referral of further relevant authorities. Such instances apply to companies that render services in sectors such as banking, finance, media, education and so forth.

2.2. Company registration

Upon approval of the registered business name, you are all set to open your company. You can apply online by logging in to BizFile Portal using your SingPass account. If you are a foreigner and don’t have such an account, you can engage with the service of a local registered filing agent to have them submit application on your behalf.

Thanks to the high processing speed of e-filing, it would not take longer than a few hours from them to vet and assess your application. As soon as this process is completed, you will be notified of the outcome via email.

The notification email, aside from authorizing your right to start your business, also attaches a company registration number, which serves as the official certificate of your company’s incorporation.

3. Post-registration

Once you have had the go-ahead from the relevant authorities to start your business, you should reflect on how to effectively manage it in order to avoid unnecessary litigations and penalties.

In what follows, we would like to offer some suggestions as to ensure the maintenance of your newly-founded company.

3.1. Opening a bank account

Singapore offers a wide selection of banks for you to choose from. And all of which are reputable for their creditability. They also compete vigorously for customers so you can benefit from an array of incentives and benefits. Some prominent banks to consider are DBS, OCBC, and UOB as local choices or Citibank and Standard Chartered if you prefer international banks. One inconvenience is that most of them, under the law of Singapore, require your physical presence to have the account opened.

3.2. Business license and permit

Certain business sectors would demand you to obtain business licenses or permits well before you are allowed to commence any business activities. You know that your company is subject to this requirement if it engages in the following business activities:

  • Restaurants
  • Educational institutes
  • Travel agencies
  • Financial services
  • Import/export of goods
  • Employment agency

3.3. Goods and service Tax (GST) registration

GST is simply the indirect tax that is levied as and when your customers buy your products/services. If you estimate that your taxable turnover for the next 12 months would exceed S$1 million, you might as well go register for this form of tax. Upon registering for GST, you are in charge of filing GST tax return and making payment in one month following every end of your accounting period (monthly or quarterly). The current rate of GST is flat at 7%.

3.4. Central Provident Fund (CPF) registration

Central Provident Fund is a scheme aiming to encourage employees to fund their future needs, including retirement, healthcare, and housing. Under the Central Provident Fun Board – the one responsible for the regulation and implementation of CPF, this saving plan is an obligation. And all local citizens or permanent residents who are employed with a salary of more than S$50 a month must register for it. The rest – i.e. foreign employees are exempt from this requirement.

Once you have completed the CPF registration, you and your hires would be subject to a contribution rate of 17% and 20%, respectively. These rates will vary if your employees’ age is above 55.

3.5. Annual Compliance and filing requirements

There are several statutory requirements that are associated with the management of a company. These are accounting requirements, convening AGM, annual return filing, and corporate tax filing.

Accounting requirement: it goes without saying that you must do routine bookkeeping on a regular and timely basis. And as XBRL has become a standardized recording method for filing your annual financial statements, you should adopt it now.

Convening AGM: AGM is where the director tables the financial statements and accounts for every number recorded on it. This formality is an obligation and must be performed at least once a year.

Annual Return Filing: all companies are duty-bound to file their annual return within one month after the AGM takes place.

Corporate tax filing: This tax is levied on the income of your business. Under IRAS, you must file it well before 30 November if you opt for paper-filing and 15 December if you prefer e-filing.

> For further information on the compliance requirements, please visit BBCIncorp’s Overview of Compliance Requirements in Singapore.

Should you have any further questions as to how to set up a company in Singapore or if you are ready to incorporate, talk to our consultants by dropping a chat message or sending an email via [email protected]

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