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Starting a company in Singapore is an exciting opportunity, but it requires a clear understanding of the legal requirements. It may seem frustrating for foreign business people who do not understand Singapore’s laws. So, what are the legal steps you need to know?
When opening a business in Singapore, you must undertake several legal formalities to ensure proper company functioning. These relate to business registration, compliance with shareholders’ expectations, and employment of a resident director. With these steps, you can prevent pitfalls and potential legal issues.
1. Understand the Business Structure Requirements
Selecting the proper business structure is essential in incorporating a Singapore company formation. There are few business structures available in Singapore, such as sole proprietorships, partnerships, and private limited companies. Each structure has its legal ramifications regarding taxes, liability, and ownership.
The most popular business structure in Singapore is the private limited company. This structure is famous, as it lessens the responsibility of the shareholders and offers more scope for obtaining funds. However, every type of business organization has its legal requirements. For example, sole proprietorships are easy to establish, but clients’ assets are not protected.
When choosing a structure, learn about its particular characteristics and seek advice from business people who are well-versed in Singapore’s legal business systems. They can help find what structure is more suitable for your business objectives. This choice impacts all aspects of business, from taxes to business scalability; thus, making the right decision is essential.
2. Register Your Company Name and Obtain Necessary Licenses
After choosing your business structure, the next step is to register your company’s name. The company names must be unique and should not be similar to the existing trademarks in Singapore. To find out the availability of a name, you can go to the Accounting and Corporate Regulatory Authority (ACRA). Upon approval, you can continue with the legal formalities of registration.
Beyond the name registration, extra authority permits may be needed depending on the business. For instance, if your business involves food and beverage, education, or financial services, you will need special permits from the relevant authorities. Without these licenses, your business operation can lead to penalties or even forced closure.
There is often fuss around applying for these permits, so start early and consult with the licensing authorities. Submit all the required documents and follow all guidelines strictly to prevent delays.
3. Appoint a Qualified Company Secretary
The Singapore law states that every company must have a secretary within six months of incorporating the business. This official plays an important function related to compliance with the local legislation. They fill annual returns, keep the company’s records, ensuring all board meetings comply with Singapore laws.
The company secretary must live in Singapore. They should also have proper knowledge of the corporate law in Singapore. Employing a professional company secretary is essential to many foreign business owners. It guarantees that their company business and compliance-related affairs are in the hands of a professionally skilled person who knows the law.
4. Meet the Shareholder and Capital Requirements
To start a company in Singapore, you must have at least one shareholder. Singapore has 100% foreign ownership, enabling most foreign investors to own businesses and assets. Another rule is the obligatory minimum paid-up capital of SGD 1.
However, you can set a higher paid-up capital based on your business objectives. It can also assist with building up your company’s creditworthiness, improving the chances of getting loans from financial institutions. For instance, some industries or business partners may prefer companies with a higher capital base, as it proves financial stability.
Singapore has legal rights for shareholders, like voting on matters affecting the company. These are rights and responsibilities that must be understood to avoid misunderstandings. If you have questions about establishing the shareholder structure, consult a business advisor and possibly a corporate lawyer.
5. Understand Tax Filing and Accounting Obligations
Having started your company, you must respect legal requirements concerning tax and accounting in Singapore. Singapore has a favorable taxation system for businesses, and the income tax applicable is only 17%. New companies may also operate under tax exemption, which can help minimize formation costs.
Every company must submit its tax returns and keep all its records updated yearly. It is mandatory to register for GST if the company’s turnover is over SGD 1 million. Failing to register for GST can lead to penalties, so keep track of your revenue and file timely applications if necessary.
Manage these requirements carefully, and hire an accountant or a tax consultant who knows about this jurisdiction. They can help you fill your tax returns, prepare balance sheets and profit and loss accounts, and ensure your company meets all the necessary tax requirements.
Maintaining compliance with your tax and accounting needs will help avoid penalties that will cause problems for your business in Singapore.
Conclusion
Legal regulations in Singapore concerning company formation may be manageable if you subscribe to specific approaches. Note these tips to set a good foundation for your business. At first, it might appear complicated, but working with local experts or advisors can simplify the process. These five steps can guide you on how to conform to the regulatory requirements in Singapore to ensure your new business has the best start and thus increases its chances of excelling in a new market.
