Setting up a business in Singapore is as easy as 1-2-3
These days it’s quite easy to get a business started in Singapore. The city-state held the number one crown in the World Bank Ease of Doing Business Index for 10 consecutive years, until 2016. It has held the #2 spot since. One key reason that Singapore is favored in these rankings and by foreign businesses is that it is truly very simple to set up and start operating a company in the country. The process is as easy as 1-2-3!
The company registering authority in Singapore is the Accounting & Corporate Regulatory Authority (ACRA). Below we will help you breakdown the details of how in three easy steps a business owner can set up a company quickly and effortlessly navigate the rules and regulations of ACRA.
A – Choose an entity type
Your first option is the Sole Proprietorship and it is the quickest and easiest business structure to set up and operate a company in Singapore. There is very minimal compliance needed to operate and winding down operations is even easier.
A drawback to this company structure is that profits are taxed at the personal income tax rate. Furthermore, business owners are directly liable for any debt and liabilities. Just to be clear, what that means is that if business debts cannot be fully retired by the company’s assets, the owner would have to do so with personal assets. It’s not really treated as a separate business entity from a person’s own finances. Furthermore, you have to confirm you still wish to operate the business every year with annual registrations with ACRA.
Limited Liability Partnership (LLP)
The next option is Limited Liability Partnership or LLP. This is a separate legal entity and as the name suggests, it is a partnership, so at least two individuals are needed to form this business structure. And the liability of partners is limited to the business.
However, there is a moderate level of compliance that is required from ACRA. Also, like sole proprietorships, the company’s profits are taxed at partners’ personal income tax rate. So, partners do mist out on very competitive tax rates.
Private Limited Company
Finally, we have the Private Limited Company. This is the most versatile business formation option and has the best of all options. Business owners can benefit from a corporate tax rate that is one of the most competitive internationally and it is a separate legal entity with limited liability protection of shareholders. Although the incorporation process can seem complex, with Piloto Asia’s experience in setting up private limited companies, it is very quick and seamless for our team to handle.
Some drawbacks of this business structure are that private limited companies are subject to a high level of regulatory compliance from ACRA. Even the shareholders of private limited companies must abide by a robust Code of Conduct.
B – Prepare your application and submit it
Once picking the business structure is done, companies can then start the registration process. This is done with ACRA, the Accounting & Corporate Regulatory Authority.
The details required for a company are the name, address, details about paid up capital, and information about directors and key position holders. It is important to note that although these details normal, routine information expected to be asked, our experience shows that preparation for even the small details matter. Piloto Asia has seen numerous cases stuck at just choosing the name of a company.
The name of the company has to be approved by ACRA in order for it to be registered. It cannot be vulgar or infringe on any trademarks or copyrights. It also has to be unique. We recommend clients to have at least a few variations of the name in case their first choice has already been taken or may be in violation of ACRA guidelines.
Then there is the actual registration process of submitting all required details about the business within 60 days of the name registration. There are other key hurdles companies have to clear that can often derail the best laid plans. An important one is having a local director. At least one company director has to be a Singapore citizen, a Permanent Residence-holder, or a person with an EntrePass. Screening and picking a local director, or even a Company Secretary, another key role, are very important to get right to begin with. Piloto Asia can advise on the selection process and help to quickly move it along.
Collecting, securing and submitting vital pieces of indent information is another important responsibilities business need to be mindful of. Companies have to submit details such as business description, passport copies of foreign business owners and the copy of Singapore identity card for local directors. If your company has already been doing business outside of Singapore and would like to expand here, make sure to also submit your Memorandum and Articles of Association.
C – Do all that is necessary to start operations
Congratulations, you’ve registered your company. But don’t’ rest too soon! Now the business of running your business can commence. There is still much a company needs to do.
Once an application for company registration has been submitted to ACRA, business owners will get an email confirming the registration and that email is a legal document. Business owners can also purchase the Company Business Profile which has details about a business’ description, how much paid-up capital exists and details about key shareholders and directors.
It is these digital documents that companies can use to conduct business. The Company Business Profile document and the digital Registration Certificate will be asked for when opening a bank account. There will be a host of other necessary steps a company will need to start company operations.
The questions businesses would still need to answer and with which Piloto Asia can guide and execute on are:
Where and how do I open a bank account? Which bank is best? There are numerous options for banking institutions and it is vital to understand how to evaluate banks, i.e. bank branch operations, capital adequacy levels , the type of services they offer, the extent of their lending practices, i.e. loan growth, and if they have higher loan underwriting standards.
Does my company need to register for GST, the Goods & Service Tax? If so, what rates are applicable? Is it done with ACRA as well? You may need your business to have GST registration if your company’s annual revenues exceed S$1 million. The applicable rate would be 7%. The registration is not made with ACRA but Inland Revenue Authority of Singapore (IRAS).
You may still need a Company Secretary to officiate operations and hold meetings.
New companies need to consider if Singapore follows the International Financial Reporting Standard (IFRS)s. Singapore has its own accounting standards. Although most of the country’s accounting standards are based solely on IFRS, Singapore companies abide by the Singapore Financial Reporting Standards (SFRS).
If you plan to take out a bank loan, your business may have covenants demand that the company not only prepare financial statements every year but have them audited as well.
The questions of Company Secretary, Accountants, Auditors, and taxes will all need to be discussed and decided on in the next Board Meeting. In fact, an Initial Board Meeting has to be convened after the Company registration as per compliance guidelines by ACRA.
Setting up a business in Singapore is easier than ever. The country is known for its ease of doing business, rule of law, human and capital rights and is ideally situated in the heart of Asia free from any socio-economical or geopolitical issues. For 10 consecutive years Singapore topped World Bank Ease of Doing Business rankings for its simple government practices to be transparent and accommodating to foreign investments.
Visit https://www.pilotoasia.com/services/company-incorporation-singapore for more information.
So, there you have it, steps A B C easy as 1 2 3. Its that simple when you partner with Piloto Asia in starting your business in Singapore.