How to set up a business in Singapore as an expat
Written by Steven Naarden on 2 December 2016
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Starting a business in Singapore can be a complicated process and understanding the city's rules and regulations is the key to corporate success. Below is a quick guide covering the basics of how to set up a business in Singapore if you are an expat.
As a global trade hub, Singapore attracts entrepreneurs from all over the world. Businesses in the city benefit from a number of incentives, not least attractive corporate tax rates (capped at 17%), a business-friendly bureaucracy, and a strategic gateway to the wider Asia-Pacific region.
While businesses can thrive in this environment, expat entrepreneurs aiming to set up a business in Singapore must navigate numerous rules and regulations - from deciding whether to relocate and how to structure their company, to registering with relevant government bodies and applying for industry licenses. Costs are also a factor: setting up and doing business in the city, as an expat, can prove to be an expensive venture.
To incorporate successfully in Singapore, entrepreneurs unfamiliar with its administrative and financial challenges should take the time to explore the landscape before their journey begins.
1) Pre-incorporation administration
Incorporating in Singapore can be a complex and costly process - prospective entrepreneurs should first think carefully about how they will handle the administration and logistics of their set-up plan.
Third Party Incorporation Services
Foreigners may choose to engage the services of a third-party to handle set-up administration on their behalf. Business incorporation services can be obtained as packages from companies within Singapore, and represent a way to save time and money. These packaged services cover every stage of the process - from pre-registration document preparation, to post-incorporation tax registration.
If you plan to handle the set-up process yourself - and move to the city to do so - you will need to obtain an EntrePass which is a temporary residence and work-permit aimed at foreign entrepreneurs with innovative business ideas.
- The EntrePass requires the submission of a 10-page business plan to the Singapore government for official approval.
- Applicants must hold at least a 30% share of their company, and demonstrate they have a minimum investment capital amount of $S50,000.
- Business owners may apply for an EntrePass before incorporation, or up to 6 months afterwards.
- EntrePass holders may only incorporate a Private Limited Company.
Renewal of the EntrePass involves further business commitments: in the first year, your company must have hired 2 full-time Singapore citizens and demonstrate total spending of at least S$100,000. Those financial criteria increase incrementally each year.
An alternative way of relocating to Singapore to set up and run your business is to apply for permanent residency status.
- The Professionals/Technical & Skilled Worker scheme (PTS) is a popular route to PR status, although applicants must hold an existing EntrePass to apply, and have worked in Singapore for a minimum of 6 months.
- The Global Investor Programme (GIP) allows applicants to achieve PR status through the amount they invest in a new business. Applicants will be required to invest S$2.5 million in a new business, or a GIP-approved fund.
2) Determining company structure
Much like in the UK, before beginning the actual process of business registration, you will need to determine the type of legal entity your organisation will assume for its operations. Singapore offers several categories of legal business entity - the structure you choose will depend on factors such as the liability you are prepared to take on, the number of owners involved, and your business' level of investment.
A sole proprietorship is a business run by a single owner, with complete control of the business. The sole proprietor assumes personal responsibility for their company's liabilities.
A partnership is a business established and owned by up to 20 partners. Each member of the partnership assumes responsibility for the liabilities of the others (except in Limited Liability contexts).
Limited Liability Company (LLC)
An LLC is a company which exists as a separate legal entity to its owners. LLC liabilities are limited to share capital - owners' personal assets are not at risk from business liabilities.
In Singapore, the Private Limited Company (a subset of the LCC) is popular amongst entrepreneurs (and indeed, the only option for EntrePass holders). A private limited company's shares are not available to the general public and must be controlled by less than 50 persons or entities. 'Pte Ltds' offer investment scalability (new shareholders can be brought in easily), and deliver financial incentives (profits below S$300,000 are taxed at less than 9%).
3) Registering With ACRA
After determining the legal entity under which your company will operate, you may take the final step towards incorporation in Singapore - by registering with the Accounting and Corporate Regulatory Authority.
Registering with ACRA is straightforward, but involves some administrative effort. Before registration you will need to assemble various documentation for your business, including:
- ACRA-approved company name
- Company director, secretary and shareholder details
- Company address
- Description of business activities
Registration itself involves an online application form accessible through the BizFile portal on ACRA's homepage. Alternatively, you may use the special kiosks at ACRA's headquarters (located in Singapore's International Plaza). The process involves a fee (from S$50 to S$600 depending on the type of company registered) and should take around 15 minutes from confirmation of payment. Registration may take longer if additional governmental approval is needed.
After a successful registration, you will be issued with a 'Business Registration Number' unique to your organisation. You can also request an ACRA business profile (for a small fee) which may be necessary for contractual purposes.
4) Requirements of your business post-incorporation
After registering - and incorporating - your business in Singapore, there are still several steps your business must take prior to commencing operations, such as:
Opening a corporate bank account
You may need to be present in person to open a bank account - a copy of your company profile may be requested.
Commissioning a company seal
A seal is needed to stamp official documentation. Commercial seal-makers can produce your seal for around S$50 - S$70.
Obtaining a business licence
A wide variety of Singapore business activities require licences. While the application process is straightforward, business owners should ensure they understand the specific licence their organisation requires.
Registering for tax
Singapore's Goods and Service Tax is applicable to all businesses with revenues in excess of S$1 million.
Registering for the CPF
Singapore employers and employees contribute jointly, on a monthly basis, to a compulsory pension scheme known as the Central Provident Fund.
5) Requirements for running a business in Singapore in the longer term
Singapore's business set-up process involves obligations which extend beyond the short term, and into the months following incorporation:
- A company secretary must be appointed within 3 months of incorporation.
- An AGM must be held within 18 months.
- An auditor must be appointed within 3 months, and an audit carried out within 1 month of the AGM.
Your business' set-up plan should also take into account the need to hire employees (you may be responsible for arranging permits for foreign workers), and observe Singapore's ongoing compliance regulations.
Successfully establishing and running a business in Singapore also means becoming familiar with the city's culture and customs: the more familiar you are your new business landscape, the greater your chances of success in the city and beyond.
Next steps for setting up a business in Singapore
If you are considering setting up a business in Singapore, ActivPayroll have created a more in-depth overview alongside a detailed guide about payroll and tax in Singapore which provides invaluable guidance for anybody thinking of setting up a business in Singapore as an expat.