Singapore has emerged as one of the best locations to start a company. Many foreign entrepreneurs are impressed with its large domestic markets, cheap labor availability, and progressing infrastructure. This article will discuss what you need to know before launching a business in this country.
What Makes Singapore Attractive to Business Owners?
1. Strategic Location
Singapore is situated right at the heart of Southeast Asia which is close to high-growth markets such as China, Indonesia, and India. With this direct access, this country has become the global pivot for technology, innovation, and trading.
2. Enticing Tax Regime
The tax exemption scheme lets the emerging companies be exempted from taxes on its first SGD100,000 of income. The succeeding income generated to SGD200,000, however, will be subjected to a corporate tax rate with a 50% exemption.
3. High-Degree Protection of Intellectual Property (IP)
In the business community, the law allows companies to set up an IP safeguarding network. This provides heightened security and respect for intellectual property rights.
4. Business-Friendly Environment
The online registration process provides convenience and the compliance services are simple and easy to comprehend.
5. Flexible Financing
If you think your funds are insufficient, you can apply for a financial grant.
6. High-Pool of Local Professionals
Singapore is a home of skilled laborers with a high productivity rate and overall attitude. Employing the locals would strengthen the workforce.
7. Steady Political and Social environment
With the strong legal system, thus providing a sense of security and comfort, entrepreneurs and investors will be confident to venture out. It has a sound political infrastructure and policy-making procedures which provides a stable environment.
How Will You Start Your Business?
A foreigner can set up a business just like the locals provided that you are at least 18 years old, have no bankruptcy issues, and are not engaged in any criminal offenses. But before you set your foot into a business, you have to ask yourself the following:
- What type of business do I want?
- How much do I have to invest?
- Do I need a partner/partners?
- What responsibilities do I have to face?
- What are the risks involved?
1. Prepare the Visa/Work Pass
First and foremost, you need a correct visa in order for your business to be legally allowed in the country. Here are the things to consider:
- Relocation is possible – If you have a plan to relocate and work in Singapore, you must obtain an Employment Pass (EP) or an EntrePass. Having this allows you to act as a local director of your own company. It also gives you an advantage if you are considering the Singapore PR application.
- Relocation is NOT possible – In this case, it is necessary to appoint a nominee resident director.
2. Choose a Business Structure
You also have these options to register the individual businesses under the following type of enterprise:
1. Sole Proprietorship
- It is recommended for low-risk businesses.
- It has no separate legal entity from the owner.
- Responsible for its own debts and losses.
- It gives the sole freedom to control all decisions.
- Registration cost is minimal.
- Its income is considered as that of its owner.
- It pays a personal income tax of 0%-22%.
2. Private Limited Company (LLC)
- It can have not more than 50 shareholders/owners.
- It requires at least one local director who is a natural resident in Singapore.
- It has independent legal identity
- It has a perpetual succession.
- It sets limited liability depending on the share invested.
- It pays corporate tax of 0%-17%.
- It offers greater flexibility in raising capital for future expansion.
3. Limited Liability Partnership (LLP)
- It has no limit in the number of partners.
- It needs at least one partner who is a natural resident in Singapore.
- LLP has a separate legal existence from its owners.
- Its liability depends on its actions.
- The partners are required to pay the personal income tax of 0%-22% on their income from LLP.
For foreign companies, you may decide which of the below options would align with your company objectives:
1. Subsidiary Company – a business owned by a parent company but a separate legal entity for tax, regulation, and liability purposes.
2. Branch Office – an outlet of the parent company and does not constitute a separate legal entity.
3. Representative Office – acts as a local liaison office for a foreign corporation and does not have a separate legal entity from its parent company.
4. Come Up with a Unique Company Name
Always take note that no company name is identical. So be creative in choosing a name and ask your filing agency to validate it in ACRA.
5. Organize the Team
Shareholder – At least 1 shareholder is required but full foreign ownership is allowed.
Director – At least 1 Resident Director is required whether natural, permanent, or a legal pass holder. A director is not necessarily a shareholder.
Corporate Secretary – According to Singapore law, you need to appoint a secretary within 6 months of the date of company incorporation. In doing so, make sure that you hire a reputable one as he/she will be handling the company papers and will be reporting to the government.
6. Select a Registered Address
It is important to have a physical location that is either residential or commercial. This is important because all formal letters and communications will be sent to that address.
7. Set the paid-up capital
1 SGD per share is usually sufficient to set up a new private limited company. The total amount of the shareholder’s fund can be increased eventually and if the amount is in other currencies, it can also be changed any time after your company is incorporated.
Note for registration, just go straight to ACRA and furnish the necessary documents.
The above-mentioned are some of the reasons why this place is friendly for business and how you can expand your business in this country. Singapore has already simplified the rules for foreign business owners for an easy setup.