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Beginner’s Guide on Starting a Trading Business in Singapore
Singapore’s strategic location has long become the centre of attention for travellers and their commerce ships from all around the world, making the country’s port a desirable destination for trade. The city-state has connections to over 600 ports and 120 countries.
However, being one of the best countries for trade is not enough for Singapore. The ambitious country took things up a notch and launched the Industry Transformation Programme during their Budget 2016. The new initiative highlights the industrial issues and aims to strengthen the relationship between the companies, trade associations, chambers, and of course, the Government. A whopping $S4.5 billion was allocated in this programme for a total of 23 industries, with the Future Economy Council (FEC) as an onlooking facilitator.
Starting a trading business in Singapore is a straightforward process. Regardless if you are a local citizen or a foreigner looking for a business opportunity, setting up a company here is hassle-free and quick (provided if all your credentials and documents are in order). As the leading forerunner of the ASEAN market, doing business here can be a great way to penetrate Singapore’s trade links. Plus, Singapore has a friendly trade environment with world-class infrastructure and facilities.
If you are ready to commercialise trading and want to jump on this train, keep reading! In this guide, we will be explaining crucial aspects of starting a trading business in Singapore, such as industry practices and licenses. Also, find out where you can look for professional assistance to help you set up your trading business. Want to know more about how to start businesses in Singapore? Read our guide to company registration.
What is a Trading Business in Singapore?
Trading businesses refers to the act of buying and selling commodities to gain profit. In Singapore, you can choose to import goods from the overseas market into the country, or you can export goods from Singapore to the international market, or do both. According to the Ministry of Trade and Industry, International Enterprise Singapore must approve the goods for trading purposes first. The official agency, commonly abbreviated as ‘IE’, governs matters pertaining to the external trade growth and development in Singapore.
A trader’s clients base is vast. Almost anyone, such as individual customers, small businesses, local and international companies and the Government, can be clients to a trading business. However, trading businesses do much more than buying and selling items. This includes supplying large volumes of products, managing logistics and transportation so that products are sent and received on time. Apart from that, trading businesses also offer low and competitive prices for their clients. This is great news, especially for smaller companies who wish to purchase in lesser bulks.
Roles of a Trading Company
Trading businesses and traders take on multiple vital roles in this economy. They are suppliers, providing the market with products, handling customs and international trade obstacles. At the same time, they are responsible as sales representatives, too, propelling merchandise to attract potential buyers. Additionally, they also take on the role of marketers and distributors, introducing, popularising and distributing said products in an economy. Being an intermediary may not be a trading company’s prominent role; however, many companies pay trade businesses commissions for imports and exports.
Understandably, trading companies’ role is crucial to an economy. Given the mobile nature of the industry, the Government closely monitors trade companies for the flow of goods in and out of the country. Meaning, these companies must be compliant with a reasonable amount of trade regulations. Keep in mind that financial penalties and license suspension may be in order if you break trade laws. Setting up your trade business can surely use professional advice, all the more if this is your first time in the industry. Company incorporation services can be a great source of help for you to set up your business and help you stay compliant.
Registration Process Entails
As always, setting up a business would require you to register with Accounting and Corporate Regulatory Authority (ACRA). ACRA is the government body of interest responsible for regulating business and corporate service providers in Singapore. It is beneficial for a trading company to register with the ACRA. Audiences, such as clients, potential business partners and investors may look up important information for due diligence purposes before doing any business dealings.
Before registering with ACRA, you need to clearly establish several facets of your business, such as:
- Type of business entity
- Company name
- Company directors, shareholders and other staffs
- Business address or Company registered address
- Start-up capital
Choosing a business structure is vital as it will affect how you run your company later on. There are four business entities you can choose from, and they are Sole-Proprietorship, Limited Partnership (LP), Limited Liability Partnership (LLP) and Company. Legal liabilities, taxation, formation costs, flexibility depends on the business structure that you select. Therefore, choose wisely. You can also reach out to a reliable corporate service provider in Singapore for their assistance and advice to help you with that.
Licenses and Permits You’ll Be Needing
Essentially, starting a trading business will require you to have a handful of licenses. Start by registering your business with Singapore Customs. Under the Ministry of Finance (MOF), the department of Singapore Customs was created. The customs are responsible to overlook external trade dealings and to ensure it is secure and safe for everyone.
Once you have registered and activated a Customs Account, you can head on and appoint a Declaring Agent (also abbreviated as DA), to apply for custom permits through TradeNet. You can also do this by yourself or on your clients’ behalf. But first, you have to register to become a DA and possess a TradeNet user ID. After successfully becoming a DA, you can apply for the permits in two ways. You can apply with the approved purchasers in TradeNet Front-End Solution or the Government Front-End Application with your Singapass ID.
Aside from that, you will need to apply for Inter-Bank Giro (IBG). Having an IBG with Singapore Customs standardises all business transactions on services provided by the country. Such services include duties payment, penalties, fees, taxes and other relevant services. Once you have applied, it can take anywhere between three to four weeks to receive an approval notification. You will then need to classify your products and check if they are prohibited from trading by the Singaporean Government. Apart from that, check if the goods you wish to trade falls under the controlled goods category and is considered one of the following:
- Controlled and non-dutiable
- Controlled and dutiable
- Fully controlled and non-dutiable
You have to identify your goods and their respective Competent Authority (CA). You can check whether your goods are controlled or not here. Examples of controlled goods are items such as explosives, medicines, publications, endangered species, animal products and their by-products.
The next step would be working with a CA representative and applying for a permit. Depending on your products, there may be additional permit applications, such as Furnish Security. Transporting particular goods may in a specific fashion warrant extra-security.
Once you have the green light on your goods, you can proceed to apply for Customs Import, Export or Transhipment Permit. If everything goes well with your permit, you can then carry on to prepare for cargo clearance with your Front End Solution Providers. To know who is TradeNet’s approved front-end solution provider, refer here.
Need a Hand?
Starting a trading business in Singapore is just the beginning. Along the way of setting up your company, you will encounter many applications, permits and other long-term formalities. The trading business scene in Singapore is held to the utmost standard. Hence why being compliant with the law must be on the top of your list as well. When time is ticking and you want to start your business quick, what do you do?
We got you. With more than a decade of experience, 3E Accounting has seen it all. Our multidisciplinary experts are equipped with the right knowledge and expertise to help you start a trading business in Singapore. We go above and beyond for our clients – just take a look at our track record of excellence! If you wish to know more about us and how we can assist you in getting your business off the ground, do not hesitate to contact 3E Accounting.