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How to Start a Business in Singapore

Feb 9, 2024 | Business Setup

Understanding how to start a business in Singapore is fundamental for entrepreneurs seeking to tap into one of Asia’s most dynamic economic landscapes. Singapore is renowned for its robust trade, strategic location, and favourable tax policies. It presents a fertile ground for local and international business ventures. The country’s streamlined business registration process, comprehensive legal framework, and government support programs make it a desirable destination for startups and established companies alike.

With advantages such as a skilled workforce, strong intellectual property protections, and a reputation for ease of business, Singapore offers an exceptional environment for new businesses to flourish. Whether you are a citizen or a foreigner, the steps to launching your enterprise in this vibrant city-state are designed for clarity and efficiency, setting you on a clear path towards successful entrepreneurship.

Singapore’s Business Environment

Economic Landscape in Singapore

Singapore’s economic resilience shone through with its growth of 1.2% last year, a commendable feat considering the global economic challenges. The city-state’s economy is expected to keep up this momentum, with exports, particularly semiconductors, playing a crucial role. Its high trade-to-GDP ratio, one of the highest in the world, highlights its trade-centric economy.

Located in the centre of Southeast Asia, close to economic powerhouses and emerging markets, Singapore offers you unparalleled access to a vast regional market. This geographical advantage is boosted by top-notch infrastructure, including Changi International Airport and a seaport with extensive global connections, making international trade and travel a breeze.

But Singapore’s economy isn’t just about trade; it’s also a hub for manufacturing and finance, contributing to its impressive average GDP growth of 7.7% over the years. The government’s forward-thinking policies have fostered a business-friendly environment that champions free-market competition and openness to global capital and technology.

This has lured a multitude of maritime establishments and businesses. The Maritime and Port Authority of Singapore (MPA) understands the significance of a pro-enterprise atmosphere for the capital-intensive shipping industry.

Legal Framework for Businesses

Singapore’s legal framework is tailored to support and protect businesses, with a strong focus on the enforcement of intellectual property rights and anti-corruption laws. The nation’s legal system is efficient and business-friendly, allowing companies to confidently operate in a transparent and fair environment.

Singapore’s dedication to economic freedom is evident in its score of 83.9, making its economy the freest in the 2023 Index and ranking it first out of 39 Asian–Pacific countries.

Setting up a company in Singapore is a breeze, with a straightforward incorporation process that requires just a single shareholder and director, a local company secretary, a local address, some business bank accounts and a nominal share capital. You’ll appreciate the ease of registration with the Accounting and Corporate Regulatory Authority (ACRA).

Businesses can swiftly set up business entity types, take up a corporate bank account, and apply for the necessary permits and licences.

Benefits of Starting a Business in Singapore

Entrepreneurs flock to Singapore for its robust economy, competitive tax structure, and ease of incorporation. The country’s tax regime is especially appealing, with a top corporate tax rate of 17%, no capital gains tax and income tax charged only on income generated locally. Moreover, resident companies enjoy partial tax exemptions, effectively lowering the tax rate for qualifying businesses.

Singapore’s network of Avoidance of Double Taxation Agreements (DTAs) with 62 countries further boosts its appeal as a tax-efficient jurisdiction.

Singapore’s reputation as a stable triple-A-rated economy extends to its financial sector, which is both competitive and resilient. The financial landscape includes a wide array of financial institutions, commercial banks, merchant banks, and capital market service licence holders. This financial ecosystem ensures easy access to capital for both local and international startups, supported by government grants, funding, and subsidies.

The country’s skilled workforce, primarily English-speaking, is another key advantage, ensuring smooth communication with international partners and headquarters. Singapore’s strict stance on corruption and its open trade regime, with no tariffs on imports, make it a less risky and more appealing destination for your business operations.

Business District In Singapore

How To Start A Business In Singapore As A Citizen

Starting your own business in Singapore is an exciting opportunity, especially with the city-state’s reputation for a business-friendly climate and a robust economy. The process is streamlined, efficient, and managed by ACRA, which oversees the registration process. You’ll find that setting up a business is complemented by a variety of business structures to suit different needs, including sole proprietorship, partnership, limited liability company or partnership (LLP), and private limited company.

Economic Landscape and Connectivity

This connectivity is further enhanced by Singapore’s top rating in Asia for logistics performance, according to the World Bank’s Logistics Performance Index. The economic landscape in Singapore is driven by trade, manufacturing, and finance, with services contributing to approximately 80% of its GDP. The country boasts a low unemployment rate, minimal inflation, and a government with high revenue and no foreign debt.

Government Initiatives and Business Support

Initiatives such as Startup SG Tech, the Enterprise Development Grant, and the Internationalisation Finance Scheme by EDB Singapore are part of why Singapore consistently ranks high for ease of doing business, investor protection, and insolvency resolution.

Registration Requirements and Process

If you’re a citizen looking to register a business, the requirements are straightforward: at least one shareholder, one director, one local company secretary, a local address, and a share capital of just $1. The incorporation process is fully computerised and can typically be completed within the same day. Singapore’s political stability, strong rule of law, and low corruption levels create a secure environment for businesses.

Infrastructure and Workforce

The highly skilled workforce makes the country an attractive destination for global entrepreneurial talent. The paid-up capital requirement for company registration is minimal, and the infrastructure, including commercial buildings, internet, and transport systems, is top-notch. Singapore’s digital competitiveness is evident, with the country ranking second globally.

Economic Strengths and Tax Incentives

The economy is strong, characterised by a high savings rate, significant exports, and a positive trade surplus. Tax incentives for businesses, such as partial tax exemption and a comprehensive network of DTAs, are available. Support programs like the Financial Sector Incentive Scheme and the Regional Headquarters Programme are also on offer.

Startup Ecosystem

Singapore’s startup ecosystem thrives on government initiatives and a vibrant tech community. The strategic location, stable economy, and supportive business environment make Singapore ideal for company registration and growth. It offers you a fertile ground to turn your business plan and aspirations into reality.

Business District In Singapore

How To Start A Business In Singapore As A Foreigner

To initiate the process, your physical presence is required at the time of your company’s incorporation. A local director must be appointed, and a registered filing agent must be engaged to facilitate the registration process, as you are not permitted to self-register your company.

Incorporation Process and Company Structure

The local director should be a resident to provide the business entity with a reliable point of contact within the country. The incorporation process involves a fee of S$300, and you will need to pay an additional S$15 for the company name application.

After successful registration, ACRA will issue an Incorporation Email, which acts as the official certificate of incorporation, confirming the legal establishment services tax of your company.

Opting for a private limited company is a common choice for foreign entrepreneurs. This structure allows for a maximum of fifty shareholders per Singapore company and requires at least one local director who is ordinarily resident in Singapore. It is recognised as a separate legal entity and is designed to continue indefinitely.

Options for Foreign Entities

For foreign entities aiming to establish a foothold, options include setting up a subsidiary company, branch office, or representative office. A subsidiary limits the parent company’s liability to the invested share capital. At the same time, a branch office is not a separate legal entity, and the parent company is fully accountable for its debts and liabilities. A representative office is a limited partnership that is only suitable for conducting market research. It is not permitted to undertake commercial revenue-generating activities.

Employment Pass and EntrePass

Holders of an Employment Pass or EntrePass can register a company and be the sole shareholder. A work pass such as the EntrePass is necessary to serve as a local director. This pass is available to all nationalities and requires your company to be innovative and registered with ACRA.

The EntrePass is initially valid for one year and can be renewed based on the company’s performance. After the second renewal, EntrePass holders may apply for Permanent Residence under certain conditions. However, there are restrictions on the types of businesses that can be operated by EntrePass holders.

Company Registration Requirements

A minimum initial paid-up capital of S$1 is necessary to register your company, which must also have a qualified company secretary and a registered local address. These stipulations ensure your

Financial Considerations

Navigating the financial landscape is crucial for the success of your new venture. Careful planning is essential from bank account establishment to understanding fiscal responsibilities and leveraging financial support.

Opening a Business Bank Account

When opening a corporate bank account, you’ll encounter a variety of features tailored to business needs, such as multi-currency facilities and online banking services. The process typically requires the physical presence of account signatories and majority directors for document signing. Essential documentation includes:

  • A board resolution.
  • A certified true copy of the Certificate of Incorporation.
  • The company’s business profile.
  • Identification for directors and signatories.

Preparedness with these documents ensures a seamless account opening.

Understanding Tax Obligations

Singapore’s tax system is designed to support businesses with incentives such as the three-year startup tax exemption for eligible new companies, excluding those in property development and investment holding. The one-tier tax policy ensures that dividends distributed by resident companies are not subject to further taxation at the shareholder level.

Accessing Grants and Funding

The government offers a spectrum of grants and funding programs to bolster businesses at different stages. The Startup SG Founder scheme provides mentorship and a capital grant contingent on a matching fund from the entrepreneur. The PSG and MRA grants assist in adopting productivity solutions and international expansion. The EDG encourages innovation and global ventures, while the ACT Fund is dedicated to local food production entities.

Support is also available for hiring senior workers, persons with disabilities, and ex-offenders, as well as for increasing the wages of lower-wage workers. For businesses aiming to enhance energy efficiency, subsidies for adopting approved equipment are accessible. Companies engaged in R&D can benefit from increased tax deductions and may convert eligible expenses into cash payouts.

Planning Your Budget and Forecast

A detailed budget and financial forecast are vital for maintaining fiscal health and achieving strategic objectives. This planning should incorporate available grants, funding opportunities, and tax considerations to forge a financial strategy that underpins sustainable development within Singapore’s thriving commercial sphere.

Business District In Singapore

Setting Up Operations

Finding a Location and Office Space

The nation’s commitment to cybersecurity and digital innovation provides numerous business opportunities. The EDB assists companies in securing locations and office spaces that align with their strategic objectives, crucial for leveraging the dynamic local market.

Hiring Employees and Understanding Labor Laws

Understanding the employment landscape is essential. The Singapore Employment Act outlines the legal framework for employment contracts, which must be in writing and offer terms that meet or exceed those specified by the Act. The Act excludes certain positions such as managerial and executive roles, domestic workers, seamen, and most government staff. Additional protections are provided under Part IV of the Act for employees earning below $1,930 (SGD 2,600) per month. Benefits such as a 13th-month payment, annual leave, and sick leave are common, though not regulated for minimum salary.

Employers are required to contribute to the CPF for Singapore Citizens and Permanent Residents. While not obligatory, many companies offer private health insurance, education, or training benefits to maintain a competitive workforce.

Developing a Marketing Strategy

In a competitive landscape, a robust marketing strategy is essential. The government’s initiatives in areas like cybersecurity can be leveraged to market innovative solutions effectively.

Establishing a Supply Chain

The country’s strategic position is ideal for creating a supply chain that efficiently serves both local and regional markets. Initiatives like the SMA and the IDP assist manufacturers in developing sophisticated supply chains.

The MPA’s initiatives to enhance maritime business spending reflect the commitment to facilitating trade and supply chain operations. Financial mechanisms such as the Growth IPO Fund and the Enterprise Financing Scheme-Green are available to support business expansion and potential public listings. The updated Global Investor Programme facilitates the application process for permanent residency, reflecting the nation’s dedication to attracting and supporting businesses.

Taking the Leap in Singapore

Singapore stands out as a beacon of prosperity for entrepreneurs. It’s where visionary thinking meets systematic execution, underlined by all-inclusive support from regulatory guidance to financial boosts. Here, startups and international conglomerates alike can navigate through a seamless trajectory of growth supported by a framework built for success.

Your journey begins with a straightforward setup process and unfolds amidst a landscape ripe with opportunity. Whether you’re a local citizen or a global investor, the Lion City welcomes you with open arms and clear pathways to start and thrive.

Embark on your entrepreneurial venture where innovation is nurtured, ambitions are supported, and success stories are countless. Welcome to Singapore – your next business frontier awaits.

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