Beginner’s Guide on Starting a Crowdfunding Business in Singapore

Starting a Crowdfunding Business in SingaporeSince the COVID-19 pandemic, many people from all walks of life have been left jobless. To survive in this pandemic and to feed their family, they have started venturing into new businesses. Many businesses have potential, but not many have the capital to start their business. This is where you can consider starting a crowdfunding business in Singapore.

Crowdfunding means raising a sum of money to finance projects and businesses that you think are potential moneymakers. This has many benefits to society and the world. A crowdfunding business allows you to collect money from a large number of people. The best part is, this can be done from the comfort of your home on an online platform. Excited yet? Here is a guide to starting a crowdfunding business in Singapore.

First and foremost, you need to obtain your company registration in Singapore. So let’s start from there. Prior to registration of your company, you’ll need to get certain things ready first.

 

Crowdfunding Business Registration Process

Create a Name for Your Business

So, think of a wonderful name and register it with the Accounting and Corporate Regulatory Authority of Singapore (ARCA). There are a few things to look out for when choosing a company name. Among them are, it cannot be identical to any other business in Singapore, mustn’t infringe on any trademarks or be vulgar or obscene, and lastly, this must not have been reserved by someone else.

Select Your Company’s Resident Director

This is a crucial component because the Companies Act stipulates that every company in Singapore must have at least one resident director. This person must be a Singaporean citizen, a permanent resident of Singapore, or a holder of an Entrepass, Employment Pass, or Dependent Pass.

Choose the Shareholders of Your Crowdfunding Business in Singapore

According to Singapore laws, you need at least a minimum of 1 or a maximum of 50 shareholders in your company. A tip for my dear readers, a director, can be a shareholder while a shareholder needs not to be a director of the company. Another point is that it is possible to have a mixture of local and foreign shareholders or a 100% foreign shareholding.

Hire a Company Secretary as Per the Singapore Companies Act, Section 171

You have six months from the time of company incorporation. Another criterion when hiring this person is that he or she cannot be a director or shareholder in the company and needs to be living in Singapore. This person is a very critical person in your crowdfunding business so take note, readers. This person will be in charge of the following:

  • maintaining the company statutory registers and records
  • arranging for shareholder and director meetings
  • lodging and filling in time all necessary documents required by law
  • providing administrative support in the preparation of meetings.

Require a Paid-up Capital to Be Able to Register as a Pte Ltd Company in Singapore

It can be even S$1. You can increase the amount at any point in time after incorporating your crowdfunding business in Singapore. You might be wondering what is paid-up capital? Paid-up capital is the amount of money a company has received from its shareholders in exchange for shares of stock. It is similar to stock equity.

Get a Registered Address for Your Crowdfunding Business

It can be residential or commercial, but it cannot be a post office box. Under the Home Office Scheme in Singapore, homeowners can conduct small-scale businesses using their residential premises. Therefore, this is good news for you guys, as you do not have to rent an office outside, and this will be easier for you during this pandemic as we all need to work from home, right? Before or after business/company registration with ACRA, an application for approval under the Home Office Scheme can be made to HDB or URA.

An Extra Tip for You Regarding Taxation

Singapore offers great taxation rules where you have to pay no more than 8.5 percent tax on your first S$300,000 of annual profits and 17 percent subsequently. This is just a heads up, so you don’t miss the payment and need to pay a fine for nothing. So there you have it, the guidelines to opening your very own crowdfunding business in Singapore. All the best for your business! If you still have some doubts, contact us at 3E Accounting, and we’ll gladly offer our services to ensure smooth sailing during your company’s incorporation.

 

What Are the Necessary Documents?

Remember at the beginning. We said that you need to prepare certain documents to get your crowdfunding business up and running. Here is the list of documents.

  • Company Name
  • Brief Description of Business Activities
  • Shareholders Particulars
  • Directors Particulars
  • Registered Address
  • Company Secretary Particulars
  • Constitution
  • Paid-up Capital and Number of Shares Issued

 

Types of Crowdfunding Businesses in Singapore

In Singapore, the law allows the following types of crowdfunding businesses.

  • Donations
  • Reward
  • Equity
  • Lending

So you have to discuss and decide which type of crowdfunding business you would like to run in Singapore.

 

Any Licenses Needed to Run a Crowdfunding Business?

Different types of crowdfunding businesses in Singapore follow different kinds of pathways and licenses. Therefore, before applying for any license, make up your mind on which type of crowdfunding business you would like to set up in Singapore.

Reward-based crowdfunding is where a group of individuals is interested in a non-financial reward such as items or even an experience. They will give their funds to ensure that their desired reward is accomplished. They have to abide by the charity law set by the Singapore government.

If you are choosing crowdfunding companies based on lending, you will need to obtain a moneylender’s license from Singapore’s Registrar of Moneylenders. This license will require you to put in a deposit of S$20,000. You also need to hire a qualified and experienced person who must manage the money lending business.

Should you decide to do an equity-based crowdfunding business in Singapore, you will only require the CMS license. This type of business does not require another license as it is governed by the MAS the same way they govern debt-based crowdfunding.

As for donation-based crowdfunding businesses, the investors act as donors and do not expect anything in return for their contribution. Usually, this type of crowdfunding business is used for charity projects and even by certain social enterprises. For this type of crowdfunding business, you do not need to get your license from MAS. However, you need to follow the code of practice for online charitable fundraising appeals by the Commissioner of Charity (COC).

 

Conclusion

Crowdfunding is interesting and has a wide variety. For those with a love of investing in new business ideas or start-ups, this is the perfect business plan for you. With this, you not only get to explore new ideas, but you also get to help those you think have potential and watch them grow! There are many corporate service providers in Singapore, like 3E Accounting, that have professionals to guide you through the entire process.

Starting a Crowdfunding Business in Singapore