Essential Steps for Setting Up a Business in Singapore

Steps for Setting Up a Business in Singapore

Starting a business in Singapore offers numerous opportunities due to the city’s robust economy and business-friendly environment. But to ensure our new venture is set up for success, it is crucial to follow the right steps. Understanding these steps helps in laying a strong foundation for our business.

 

How Do You Choose the Right Business Structure in Singapore?

 

Selecting the right business structure is fundamental in setting up our business in Singapore. Our chosen structure will determine many factors, including our liability, tax obligations, and how we can raise capital.

Sole Proprietorship

Sole proprietorship is the simplest and most common structure. It is easy to set up and operate, making it ideal for small businesses. However, the owner has unlimited liability, meaning personal assets are at risk if the company incurs debt.

Partnership

A partnership involves two or more people sharing ownership. It can be either a general partnership or a limited partnership. In a general partnership, all partners share liability, whereas in a limited partnership, liability is restricted to the amount invested by each partner. This structure is ideal for businesses looking for shared resources and skills, but comes with shared responsibility.

Private Limited Company

This is the most preferred structure for growing businesses. It offers limited liability, meaning personal assets are protected. A private limited company can also raise capital by issuing shares and has a more professional image. However, it involves more regulatory requirements and is more complex to set up.

We can choose a structure that aligns with our business goals and risk tolerance by carefully evaluating these options.

 

How Do You Register Your Business with ACRA?

 

Step 1: Select and Reserve Your Company Name

• Ensure Uniqueness: Choose a distinctive, non-offensive name that is not identical or confusingly similar to existing business names or trademarks.
  
• Check Name Availability: Use ACRA’s BizFile+ portal to conduct a name search and reserve your business name. Once the name is approved, it is reserved exclusively for your use.
  
• Include Designation: The name must end with “Private Limited” or “Pte Ltd,” indicating the company’s limited liability status. 

Step 2: Prepare Essential Incorporation Documents

• Identity Verification: Provide copies of all directors’ and shareholders’ passports or NRICs.
  
• Proof of Address: Submit residential addresses for local directors and the registered office address in Singapore.
  
• Company Constitution: Draft or adopt the company constitution (previously the Memorandum & Articles of Association), which sets the company’s rules.
  
• Consent to Act: Obtain signed consent letters from directors and shareholders agreeing to their appointments. 

Step 3: Appoint Key Officers and Define Shareholding

• Director Appointment: At least one director must be a Singapore resident (citizen, permanent resident, or Employment/EntrePass holder).
  
• Shareholders: The company can have 1 to 50 shareholders, who may be individuals or corporate entities, local or foreign.
  
• Capital Requirement: There is no minimum capital requirement, but most startups start with SGD 1. 

Step 4: Register the Company with ACRA

• Online Submission: File your application through ACRA’s BizFile+ portal. This registration process is essential for legal operation in Singapore and is usually completed within 1 to 3 business days if all documents are in order.
  
• Pay ACRA Fees: The standard incorporation fee is SGD 300 for most private limited companies.
  
• Unique Entity Number (UEN): Upon successful registration, you will receive a UEN, which can be used for all official transactions and legal matters. 

Step 5: Open a Corporate Bank Account

• Submit Documents: Banks generally require the company’s ACRA Biz Profile, constitution, and identification documents of directors for account opening.
  
• Choose a Bank: Consider full-service banks such as DBS, OCBC, UOB, HSBC, or digital banks, depending on your business requirements, including international transactions.

 

Understanding Tax Obligations

 

Understanding our tax obligations is crucial for complying with Singapore’s tax laws and optimising our financial performance. Proper management of taxes helps avoid penalties and ensures smooth business operations.

Corporate Income Tax

Singapore has a straightforward corporate tax regime. Companies are taxed on income earned in Singapore and foreign income remitted to Singapore. The effective corporate tax rate is 17%, with tax exemptions for new startups on the first SGD 200,000 income. However, incentives and exemptions may lower the actual tax payable. It is essential to keep accurate financial records to calculate taxable income correctly.

Goods and Services Tax (GST)

If our business has an annual turnover exceeding SGD 1 million, we must register for GST. GST is a value-added tax on goods and services supplied in Singapore. Registered businesses charge GST on sales and can claim credits for GST paid on purchases. Understanding the proper GST registration and filing process is essential for compliance.

Annual Filing Requirements

All companies in Singapore must file annual returns with ACRA and yearly tax returns with the Inland Revenue Authority of Singapore (IRAS). This includes financial statements, tax computations, and other necessary documents. Ensuring timely and accurate filings helps avoid penalties and maintain good standing.

By staying informed about our tax obligations, we can manage our financial responsibilities effectively and focus on growing our business.

 

Setting Up Essential Business Functions in Singapore

 

Setting up essential business functions is vital for our company’s smooth operation and success. Each function supports different aspects of the business, ensuring everything runs efficiently.

Human Resources

Establishing an HR department helps manage employee recruitment, training, payroll, and benefits. Clear HR policies improve employee satisfaction and retention. We should also ensure compliance with employment laws to avoid legal issues.

Accounting and Finance

A robust accounting system tracks income, expenses, and cash flow. Accurate financial records aid in decision-making and are essential for tax filing. Using accounting software can streamline these processes and provide real-time insights.

Corporate Secretarial Services

Compliance with statutory requirements is crucial. Appointing a company secretary ensures we meet regulatory obligations, such as filing annual returns and maintaining company records. This role is mandatory for all companies registered in Singapore.

IT and Digital Solutions

Implementing IT systems enhances productivity and security. IT solutions support various business functions, from setting up email servers to using cloud storage. Investing in cybersecurity measures protects sensitive data from breaches.

Sales and Marketing

Developing a sales strategy and marketing plan boosts our company’s visibility and attracts customers. Utilising digital marketing tools, such as social media and search engine optimisation (SEO), can drive traffic and generate leads.

By setting up these essential functions, we can ensure our business operates smoothly and is well-equipped to handle growth.

 

Conclusion

Establishing a business in Singapore involves several crucial steps, each requiring careful planning and execution. By choosing the right business structure, registering with ACRA, understanding tax obligations, and setting up essential business functions, we lay a robust foundation for our new venture. Each step ensures our business operates legally, efficiently, and effectively in Singapore’s competitive landscape.

For those seeking expert assistance in company setup in Singapore, 3E Accounting Pte Ltd – Singapore offers comprehensive support. Contact us today to learn how we can guide you through setting up your business and help you achieve long-term success.

 

Frequently Asked Questions