Incorporation FAQ

A2: A private limited company is the most popular business entity in Singapore. It has a separate legal status from that of its shareholders. Directors have limited liability for the debts and losses of the company. It usually has the words “Pte Ltd” as part of its name.

Advantages	Disadvantages
Shareholders are not personally liable for debts and losses of company	Companies must maintain ongoing compliance with ACRA/IRAS. However, you can outsource the compliance to us.
Benefits from local company tax incentives and exemptions
Benefits from special government grants
More attractive to investors
Better growth potential – can go public and publicly raise funds
More options regarding Work Pass applications; Click for more information on Visas and Work Passes

For more information, please refer to Sole Proprietor vs LLP vs Company . Or, you can email any queries you have to us at info@3ecpa.com.sg and we will promptly reply within 24 hours.

A3: With an increasing focus on helping small and medium enterprises (SMEs) in Singapore to achieve greater productivity and cost savings, various government agencies and organizations have been pushing to upgrade programs as well as adding assistance schemes and grants.
Many of these grants and schemes have been designed to allow SMEs to easily obtain assistance and to help them improve their business incorporation processes. Schemes such as the Productivity and Innovation Credit Scheme, iSPRINT and the Innovation and Capability Voucher Scheme have been launched with the aim of helping SMEs adopt technology. Mentorship programs and initiatives have also been launched by agencies such as SPRING Singapore to help SMEs face the challenges of a competitive market.
For more information, please refer to Singapore Government Grants | Financing Schemes | Assistance
You can always do a search for the grant related to your company at the following websites
Government Assistance – Grants Website
https://mybusiness.singtel.com/grants

A4: The private limited company is the most popular business entity in Singapore. It has a separate legal status from that of its shareholders and directors, who have limited liabilities for the debts and losses of the company. It usually has the words ‘Pte Ltd’ as part of its name. Please click Sole Proprietor vs LLP vs Company for details.

A5: Upon your submission of the proposed name to info@3ecpa.com.sg, 3E Accounting will process the name reservation with ACRA, which automatically processes the application and immediately responds with an outcome. For more information about Singapore Company Names Check, please click Guide to Select Your Singapore Company Names.

A6: ACRA may randomly carry out a due diligence exercise, which may delay the name approval process. In addition, the business activity could be subject to control and regulation by other government authorities. Therefore, it is recommended that you reserve your name early, should you have a deadline date to incorporate your company. Once the name is reserved, the company is guaranteed incorporation.

A7: “Constitution”, in relation to a company, means —
(a) the constitution of the company which is registered with ACRA at the time of incorporation, as may be amended from time to time; and
(b) in the case of a company incorporated before the date of commencement of the Companies (Amendment) Act 2014, the memorandum of association of the company, the articles of association of the company, or both, in force immediately before that date.

A company’s Constitution contains the following information:

• Name of the company
• Liability of the members
• Company’s capital structure
• Names of the subscribers and the number of shares subscribed by them
• The rules governing the internal management of the company

A8: The Singapore Companies Act allows foreign individuals and/or corporations to own 100 percent of a Singapore Company.

A9: Although there are no restrictions on the types of business activities in which a Singapore company may engage, some business activities, such as running a travel agency, recruitment agency, financial services company, school or others special cases, require licenses from an approving authority before you can commence business.

A10: In Singapore, 3E Accounting can set up a company within one hour if all the documents are in order. Once the necessary incorporation papers are signed, we can proceed to do the filing with the company registrar — the incorporation will then be completed in an instant.

A11: A Singapore private limited company must have at least one director who is be a resident of Singapore, i.e. a Singapore citizen, a Singapore permanent resident or a person who holds an Employment Pass/Entrepass with a residential address in Singapore.
The director must be at least 18 years of age, and must not be bankrupt or have been convicted of any previous crimes. Information about the directors appears on public records. Directors can also be shareholders and vice versa.
If you do not have a local Singapore resident director to meet the requirements of the Singapore Companies Act, you can always temporarily engage 3E Accounting’s Nominee Director Service.

A12: You are not required to visit Singapore to form a company. 3E Accounting can handle the entire incorporation process via email and couriers in order to get the necessary documents signed. For detailed steps, please click Singapore Company Incorporation.

A13: The issued share capital must be paid up immediately upon incorporation into the corporate bank accounts.

A14: Paid-up capital is money paid in by shareholders to the company to purchase shares. These funds can be used for all company expenses, including paying off all company debts. There is no personal liability on an individual shareholder if the necessary amount for the subscribed shares is fully paid. In the event that this amount is not fully paid, the creditors can demand that the shareholder be personally responsible for the shortfall.

A15: There is no lockup period as such. You can immediately start using capital for your company needs.

A16: After your Singapore company has been setup, you can start your business activities immediately. However, you may need to do some or all of the following if applicable to you:

• Open bank accounts.
• If your business requires one or more licenses, you may need to obtain the relevant licenses first before you can commence your business activities.
• Register for Goods & Services Tax (GST) if necessary. The registration of GST is not mandatory unless your annual turnover exceeds S$1 million. We can help you register for GST, if you so require.
• If your company activities involve import and exports of goods, you will need to register and obtain a Central Registration (CR) number. The CR number is used in all import, export and transshipment permits, certificates and any other documents issued by Singapore Customs.
• If you plan to hire any foreign employees, including yourself, your company will need to apply for an Employment Pass (EP) for that person. We can assist you with EP applications.
• If you intend to hire local employees (Singapore citizens and/or permanent residents) you will need to open an account with the Central Provident Fund (CPF) Board. A percentage of the local employees’ salaries will be contributed to the CPF Board on a monthly basis as part of their retirement fund. For more details, please visit CPF Singapore. We can help you register your company CPF account and manage your staff payroll, if required.
• You will need to decide on your company’s fiscal year end, which can be any date within 18 months from the date of incorporation of your company. It is recommended to keep it at 12 months to maximize the tax benefit. Please Ongoing Compliance for detail.
• You will need to keep track of your income and expenses (bookkeeping) according to Singapore accounting standards. Depending upon the volume of transactions, we can provide bookkeeping services either on a weekly, monthly, quarterly or yearly accounting basis.

A17: Yes! You can setup a company to invest in commercial property. In order to claim back the GST, you will need to register the company as GST-Voluntary before the commercial property be rented out or sold off.
Kindly take note the GST registration will be approved if one of the following criteria is fulfilled:
1) First taxable rental income will be made within two years’ time, or
2) The property is to be actively marketed and will be ready for sale once a buyer is found (purchase the property with intention of trading), or
3) The company is generating other types of taxable income (like service income or trading income)
Kindly take note that the GST on commercial property can normally be claimed and refunded when the first taxable income of the property is certain — when the rental agreement or sales and purchase agreement is signed.
We are highly recommend not to register GST with the option 2 as your gain on disposal of the investment property will have high chances be subject to income tax when you sold it. For more information for the tax planning of investment property, please refer to Tax Planning for Investment Property in Singapore

A18: Generally, the gains derived from the sale of a property in Singapore are not taxable, as it is considered a capital gain.
When a person is deemed to be trading in properties, the gains from the sale of properties in Singapore are considered taxable income. Whether a person is deemed to be carrying on a trade will depend on individual circumstances.
To determine if a person is trading in properties, IRAS applies a set of guidelines known as the “badges of trade”. IRAS considers the facts of each case against the criteria of the “badges of trade” to determine whether the gains are taxable.
Examples of these criteria are as follows:

• Frequency of transactions (buying and selling of properties)
• Reasons for acquiring and selling of property
• Financial means to hold the property for the long term
• Holding period (a period greater than five years is normally considered as a long term investment)

A19: The Company can distribute dividends to the shareholder when profits are generated. The dividend is tax-exempt in Singapore.

A20: No CPF is payable by foreigners. All your income as an executive director, whether fee or salary, will be taxed at progressive resident rates and you may claim tax relief if you are here for 183 days in a calendar year (1 January 201x to 31 December 201x). Under Singapore’s tax residency rules, you will be regarded as a tax resident if you stay or work in Singapore for at least 183 days in a calendar year. The number of days in Singapore includes weekends and public holidays. Your employment income (if any) is taxed at 15 percent or the resident rate, whichever gives rise to a higher tax amount if you are here for 182 days or less.

A21: Audit Exemption
Your Company will be considered as an exempt private limited company (for companies with financial year starting prior to 1 July 2015) if you have no corporate shareholders and no more than 20 individual shareholders. No auditing is required for exempt private limited company if its revenue is below S$5 million.

For companies incorporated or with financial year end period starting on or after 1 July 2015, the Company’s account must be audited if the Company has not qualified as a small companies for the immediate past two consecutive financial years.

A company qualifies as a small company if (a) it is a private company in the financial year in question; and (b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
(i) total annual revenue is not more than $10m;
(ii) total assets is not more than $10m;
(iii) no. of employees is not more than 50.

For a company which is part of a group, to qualify to the audit exemption:

(a) the company must qualify as a small company; and
(b) the entire group must be a “small group”

For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

Filing Financial Statements in XBRL
Your company would be required to file its financial statements in XBRL format during the filing of annual return, if your company is:

• An exempt private company (without corporate shareholder) but is insolvent (total assets – total liabilities = negative value)
• A non exempt private company (with corporate shareholder) and has business activities (not dormant) for the financial year

Tax Exemption
A newly-incorporated company that satisfies certain qualifying conditions can claim for full tax exemption on the first S$100,000 of normal chargeable income for each of its first three consecutive years. A further 50 percent exemption is given on the next S$200,000 of normal chargeable income for each of the first three consecutive years. One of the qualifying conditions is that Your Company must have at least one shareholder is an individual beneficially and directly holding at least 10% of the issued ordinary shares of the company in order to enjoy the Tax exemption scheme for new start-up companies.

Besides, the Company is Prohibited of loans (including corporate guarantee) to persons connected with directors of lending company if there is any corporate shareholder in the Company.

Our concluding recommendation is that individual ownership will allow you to benefit from audit and XBRL exemption or tax exemption or both and will have lesser formality to follow.

A22: Generally, banks in Singapore require you to have the following items in order to open a corporate bank account for your Singapore-incorporated company:

• A resolution by the board of directors approving the opening of the account and specifying the signatories to the account. Alternatively, the board can use the pre-approved format prescribed by a bank that simply requires the signatures of the directors.
• Standard account-opening forms signed by the abovementioned authorized signatories
• Copy of the Certificate of Incorporation
• Copy of Company’s Business Profile from ACRA
• Copy of Company’s Memorandum and Articles of Association (MAA)
• Copies of passports (or Singapore national identification cards) and proofs of residential addresses for directors, signatories, and ultimate beneficial owners.
• Copy of Certificate of Incumbency of the holding company (applicable for corporate shareholder only) *

* Certificate of Incumbency is An official document that lists the names of incumbent directors and officers within an organization, and their corporate position within it. An Incumbency Certificate is used as confirmation of the identity of the signing authorities of a company and to prove that they are authorized to enter into legally-binding transactions on the company’s behalf.
Most banks require that the account signatories and directors be physically present in Singapore for the signing of official documentation at the time of opening a corporate bank account. However, some banks accept documents that are signed in–person at one of their overseas branches or witnessed by a notary public. Additionally, the banks may require additional documents on a case-by-case basis.
Be forewarned that all banks in Singapore must comply with stringent laws and regulations. They therefore will carry out a comprehensive series of checks and investigations on their potential clients before opening a new account for a company. This is not only to safeguard their risks against any potential default, but also are a part of their regulatory compliance and stringent anti-money-laundering policies— as you may know, Singapore is very serious about combating terrorist financing and other transactions of illegal or doubtful nature. Thus, a company involved in dealings that are not above-board will not find it easy to engage in such transactions.
Depending on the amount of investigation that a bank carries out to confirm the identity and/or creditworthiness of the directors, secretary and the company itself, it may take between one day and four weeks to open a new company bank account.
Lastly, we highly recommend you be present in Singapore to open your bank account to avoid any delay. A bank always reserves the right to request the beneficial owner to be physically present prior to the approval of a bank account.
The process of opening bank account without physically presence in Singapore is as follows:-

• We will prepare all the required documents and arrange a meeting for you with the banker at overseas branch for KYC purposes
• You will need to get the bank documents, company documents, passport and other relevant documents signed in-person at one of their overseas branches or witnessed by a notary public and legalize at Singapore Embassy (if no branch is available in your country)
• The signed documents will be sent back to Singapore office by the overseas branch / by yourself (depend which bank you are opening the account with)
• We will liaise on your behalf with the banker in Singapore for the completion of the opening bank account process
• The bank account will open immediately once the bank is approved your application.

For more information, you may refer to our detail guidance at Guide for Opening Corporate Bank Account.

A23: Yes, we have ready-made dormant company which you can take over and change the Company name as you like. After change of Company Name, you can commence the business immediately. The process will take 1 hour upon receipt of the payment and the signed documents. However, existing Company is always come with a premium, the longer years it has, the premium is higher. The premium charge is starting from $800 (for the Company with 3 months and above).
The process involve for purchasing an existing company will as follows:

• Change of Company Name
• Change of business activities
• Add-on of foreign director
• Change of shareholder
• Increase of share capital if require

There are no additional charges for the process as it is included in the premium paid.
However, we are not recommended to purchase an existing Company due to the following disadvantages:-

• You will need to pay more, the premium on top of the normal incorporation package fee.
• You will not be able to apply for Entrepass as the Company must incorporated less than 6 months.
• The ACRA record will show what is the Company is formerly known as always.

A24: Under the Home Office Scheme, homeowners are allowed to conduct small-scale businesses using their residential premises. This scheme applies to both HDB and private properties.

Application for approval under the Home Office Scheme can be submitted before or after business/company registration with ACRA.

For more information, please click How-to Guide: Apply For Home Office Scheme (HO).

A25: With effect from 1 March 2009, any person aged 18 years and above may be appointed as a director. However, certain individuals (e.g. bankrupts and persons convicted of offences involving fraud or dishonesty) are disqualified from holding director positions.

In general, anyone can be the Company shareholder. There is no statutory restriction prohibit a minor who is below 18 years old from owning shares of a company. However, at common law a child will not be bound by a contract to buy shares as they are not ‘necessaries’. Therefore, some companies will not accept shareholders under the age of 18 years by provision in their articles or terms of issue.

Although the minor are allowed for signing of contracts, however, the contract entered are subject to repudiation by the minor before reaching the age of maturity.

As a conclusion, we will recommend the company shares be held on trust for the benefit of the minor until he/she reaches the age of maturity.

A26: As a PEP holder, you are not allowed to start your own business or engage in any entrepreneurial activities. You should apply for an Employment Pass if you intend to do so which means that you are not allowed to be a shareholder and/or a sole director of the company.

If you wish to be appointed as a director, you can only become a sleeping director in general. (a named director who are not involved in the day-to-day business operation)

A27: Your company is exempted from audit as long as revenue is below S$5 million and own by individual shareholder(s) only.
If the Company is own by the corporate shareholder, it is still exempted to appoint auditor before the company has active operation.

For companies incorporated or with financial year end period starting on or after 1 July 2015, the Company’s account must be audited if the Company has not qualified as a small companies for the immediate past two consecutive financial years.

A company qualifies as a small company if (a) it is a private company in the financial year in question; and (b) it meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
(i) total annual revenue is not more than $10m;
(ii) total assets is not more than $10m;
(iii) no. of employees is not more than 50.

For a company which is part of a group, to qualify to the audit exemption:
(a) the company must qualify as a small company; and
(b) the entire group must be a “small group”
For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

A28: Generally, the business owner must setup a legal entity to carry on his business in Singapore. Individual who conduct business in Singapore under only their names need not register with the Registrar.

Under the Business Registration Act, the following business are exempted from registration,
a) licensed hawkers;
b) craftsmen working from home;
c) taxi drivers;
d) trishaw riders;
e) sampan man plying his sampan for hire; and
f) farmers and prawn/fish pond keepers.

Besides, a foreign company shall not be regarded as carrying on business in Singapore for the reason only that in Singapore it —
(a) is or becomes a party to any action or suit or any administrative or arbitration proceeding or effects settlement of an action, suit or proceeding or of any claim or dispute;
(b) holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs;
(c) maintains any bank account;
(d) effects any sale through an independent contractor;
(e) solicits or procures any order which becomes a binding contract only if such order is accepted outside Singapore;
(f) creates evidence of any debt or creates a charge on movable or immovable property;
(g) secures or collects any of its debts or enforces its rights in regard to any securities relating to such debts;
(h) conducts an isolated transaction that is completed within a period of 31 days, but not being one of a number of similar transactions repeated from time to time;
(i) invests any of its funds or holds any property;
(j) establishes a share transfer or share registration office in Singapore; or
(k) effects any transaction through its related corporation licensed or approved under any written law by the Monetary Authority of Singapore, established under the Monetary Authority of Singapore Act (Cap. 186), under an arrangement approved by the Authority.

A29: There is currently no concept of “Doing Business As” in Singapore where a trade name or fictitious business name, under which the business or operation is conducted and presented to the world is not the legal name of the business or legal person(s) who actually owns the business and is responsible for it. If you would like to conduct or operate your business using a trade name you can either incorporate/register another company/business using the trade name or you can register a trademark for the trade name. If the trade name is not registered, it cannot be used for any official documents including opening of bank account, issuing of invoices, application of licences, etc. All official documents including invoices of a company/business must contains the Company/Business Name and the Registration Number.

A30: If your company’s year-end ends after the date of commencement of the Companies (Amendment) Act 2014, i.e. 3 January 2016 and is a dormant non-listed company (other than a subsidiary of a listed company), your company is exempt from requirement to prepare financial statements, if your company:

(a) fulfils the substantial assets test;
(b) has been dormant from the time of formation or since the end of the previous financial year; and
(c) the directors of the company have lodged with the Registrar a statement by the directors that —
(i) the company has been dormant for the period set out in paragraph (b), as the case may be;
(ii) no notice has been received under section 201A(3) of the Act in relation to the financial year; and
(iii) the accounting and other records required the Act to be kept by the company have been kept in accordance with section 199 of the Act.

The substantial assets test is that the total assets of the company at any time within the financial year must not exceed $500,000. For a parent company, the consolidated total assets of group at any time within the financial year must not exceed $500,000.

Dormant listed companies and their subsidiaries, and dormant unlisted companies which do not fulfil the substantial asset test must prepare financial statements but are exempt from audit. This remains unchanged from the current position.

A31: An officer of a company is allowed to reflect an alternate address at which he can be located, instead of his residential address, in ACRA’s public records. An alternate address must be an address where the individual can be located and must be in the same jurisdiction as his residential address. It cannot be a post office address or the same as his residential address.

If the individual cannot be located at his alternate address reported, ACRA will be empowered to investigate and after going through due process, replace his alternate address with his residential address. Such an individual may be subject to criminal sanctions for not being locatable at his alternate address. He will also not be allowed to report another alternate address for three years.

A32: Under the Companies (Amendment) Act 2014 which take effect from 3 January 2016, any allotment of shares other than a deemed allotment and any transfer of shares by a private company does not take effect until the electronic register of members of the company is lodged with and updated by the Registrar.

A33: A company is required to update any changes to its particulars such as change of officers, transfer of shares, change of business activities, change of company names, etc. with the Registrar within a stipulated timeline. Under the Companies (Amendment) Act 2014 which comes into effect on 3 January 2016, a Company is required to lodge any changes in the company particulars within 14 days from the date of change.

A34: According to the guidelines issued by the Ministry of Manpower (“MOM”), an EP holder should not act as a director of a company which is not the company as stated in his EP.

This is because EP holders are not allowed to hold multiple jobs. A registered/nominee Director in a company is required to discharge certain duties and that constitutes a form of work.

However, if there are strong grounds on why the EP holder’s role as a registered/nominee Director in another company is critical to his current job as an EP holder, the EP holder must first seek MOM’s approval.

Once MOM has approved, the EP holder will be granted a Letter of Consent (“LOC”) to take up the second directorship.

As advised by MOM, they will generally grant a LOC only if:
1) The company is related by shareholding to the EP holder’s employer.
2) The EP holder is taking up the secondary directorship for purposes related to his/her primary employment.

If the above requirements are met, the EP holder may proceed to apply for a LOC.

The step by step procedure are stated in MOM’s website at: Taking up secondary directorship.

Please note that the application will be processed within 5 weeks.

A35: UEN stands for Unique Entity Number (UEN). It is a standard identification number for entities to interact with government agencies. Special UEN (SUN) provides entity owners an option to choose a preferred UEN from a list of reserved UENs, at a fee during entity incorporation/registration and entity conversion process. For more information, please click here.