According to the SPRING Singapore enterprise agency, SMEs make up 99% of all the businesses registered in Singapore. They contribute nearly half of the country’s GDP, and employ almost 70% of the local workforce. It’s no surprise, then, that the Singapore government has set up agencies such as SPRING to help grow and develop small businesses in the country.
There’s a lot to recommend in Singapore for an interested foreign investor. As an up and coming city, and global financial powerhouse, Singapore allows for a high standard of living, with a diverse cultural background.
If you're thinking of starting a business in Singapore, you need to know how to go about it. Here’s a beginner's guide to starting a business in Singapore.
The main corporate entities used in Singapore are:
- Sole Proprietor
- Limited Partnership
- Limited Liability Partnership
Each structure is different, and will suit a different type of enterprise. Features of the different types of corporate entity in Singapore are listed on the website of the Accounting and Corporate Regulatory Authority (ACRA).
A sole proprietorship is quick and easy to set up, but suited to an individual who is unlikely to employ others. Your tax affairs and those of your business are treated as one entity.
A partnership arrangement is made between at least two people (with a maximum of 20 people). In this case, the partners are personally liable for any expenses incurred by their business.
In a limited partnership, there's one general partner who’s responsible for the liability of the company, but there may also be limited partners who aren't personally liable beyond their agreed contribution to the business.
A limited liability partnership means that the business is a separate entity to the individual, and is taxed separately. This limits the liability of the partners, but is more costly to set up and run.
A company also has limited liability, making it a common choice. There must be at least one registered director and one shareholder. If the director is not a Singapore national, then there's a further process to get an EntrePass, which is permission from the Ministry of Manpower to act in this capacity.
Full details of the different business structures are clearly set out in a comparison table on the ACRA website. This is a useful resource if you're unsure of which structure to choose, or need a reference guide to check the registration processes for the different corporate entities.
You can compare the administration needed to start a business in Singapore, with that in other countries, on the website of the World Bank's 'Doing Business' report. This helpful site summarises some of the main legal and bureaucratic steps you'll need to take when starting your new venture.
To register any type of business you must either be a Singapore citizen or resident, or apply for an EntrePass from the Ministry of Manpower. Usually you'll need to have at least one director (or owner) resident in Singapore, or have a local representative fulfil this requirement for you.
The full requirements to register your business depend on the type of business structure you choose. If you're registering a company then there are fairly strict requirements, such as appointing a company secretary and auditor. The process is more straightforward if you want to create a sole proprietorship or a simple partnership arrangement.
There's no minimum capital requirement, but there are other fees associated with registering your business in Singapore.
The company registration process in Singapore is fairly simple and shouldn't take too much time. The entire legal process is done online, and once you have submitted the forms and made payment, your company details should be confirmed within only about 15 minutes. You must take the following steps:
- Submit your registration forms through the ACRA online portal (including securing your business name)
- Pay the fees (in the region of SGD 315)
- Have a company seal made
After being registered with the government, your company needs its own seal. This is like a signature and will be used to authenticate documents. There’ll be a further fee for having a company seal made, depending on the speed in which you need this produced.
Once you’ve registered your business, you have other responsibilities if you're operating a limited company. You must appoint a company secretary within 6 months of registering, and an auditor within 3 months, unless you're exempt from audit.
The Singapore Government's ACRA site has everything you need to know about opening a business in Singapore - testament to how much the government encourages new business and entrepreneurship. There are a series of helpful guides available through ACRA, including one on setting up a local company or registering a branch of a foreign company.
If for some reason you can't complete the registration process yourself, there are many agencies who will help you to do so. Ask for testimonials or recommendations from friends before you choose an agency, and make sure you know exactly what their fees will cover.
You're required to sign up for employer liability insurance as soon as you start to employ anyone. Once your turnover exceeds SGD 1 million you must also sign up for Goods and Services Tax (GST), with the inland revenue authorities.
In the case of running a company, you'll also have to pay tax at corporate tax rates. If you're a sole proprietor you'll pay tax on your business activities at your personal tax rate. Partnerships may be taxed at personal or corporate rates depending on their structure.
ACRA’s ‘Managing your Company’ section has a number of how to guides covering the filing of tax information and preparing of company reports for your business. This is a good starting point to see what information and reporting is required. If you're unsure about the tax liabilities you have as part of your new business, take local advice.
Old-world bank accounts only work properly in one country. They hold money only in one currency. And it gets expensive when you try to use them across borders. TransferWise's new Borderless accounts solve all of this.
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SPRING Singapore (The Standards, Productivity and Innovation Board), is a government agency dedicated to helping businesses in Singapore grow and develop. Their responsibilities include helping startup businesses with financing and grants, and providing details of loans, tax incentives and grants to more established SMEs looking to grow.
The Ministry of Manpower also provides a list of the government agencies who work together to support business in other ways. Their website holds information about how to recruit and retain employees in Singapore.
Once you’re in Singapore and ready to get going, look for local networking events on sites such as Meetup, Eventful and Eventbrite. You can also check out trade associations such as the Association of Small & Medium Enterprises, or the Singapore Business Association. Here you can meet like minded people and build your customer and business contact book.
Whatever your reason for wanting to base your new enterprise in Singapore, the progressive business approach, along with economic and cultural diversity should help you get off to a flying start.
When starting your business, if you find the need to send or receive money from abroad at the least possible cost, consider using TransferWise. Not only does their real mid-market exchange rates generally beat the banks, but since your money is received and sent locally in both the sending and recipient currency, all those nasty international fees magically disappear. Give it a try.
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