Starting a business in Singapore sounds fun until you discover that there is paperwork, governmental departments, and acronyms that you have never encountered. ACRA. IRAS. SSIC codes. Your entrepreneurial flame is flickering. The thing is here though Singapore is actually one of the easiest countries of all in terms of starting a business and once you know the bare bones, the whole process no longer feels like a maze, it feels like a checklist. A short one. Entrepreneurs often see more benefits after reviewing Singapore’s tax policies.
To begin with, choose your business structure. The majority of individuals jump directly to the Private Limited Company – or Pte. Ltd. – and with justification. Your personal assets remain safe as the company is a separate legal entity. It has the authority to sue, be sued, enter into contracts and raise capital without your involvement. That is in contrast to a sole proprietorship, in which you and the business are almost one person under the law, and a lawsuit threatens to take away your savings account. That’s a pass. Banks and investors also find the Pte. Ltd. structure more favorable. It signals you’re serious. And the paid-up capital minimum? Just SGD 1. Yes, one Singapore dollar. There is actually no financial limitation that holds you back.
The registration itself is done by the Accounting and Corporate Regulatory Authority of Singapore, ACRA. You will also need a couple of things locked up before you can register: the name of the company should not be taken or offending, there must be at least one local resident director, a registered Singapore office address (not a P.O. box), a physical address that is accessible to all during business hours within six months of incorporation and finally an appointment of company secretary. That last one trips people up. It’s not optional. The registered address is not either. Get them both sorted early or you will be scrounging at the worst of times. This is done by services such as Hub Corporate Services, which is located at Chinatown point, and has over 20 years of experience in incorporating services, and they can incorporate a client within a week, or sometimes less.
This is where the foreign entrepreneurs fail. A foreigner may own 100 percent of a Singapore company, that is not a problem. You do need that local resident director though. In case you do not know anyone in Singapore that can fit the bill, a nominee director service is a neat way to solve that issue. The compliance train does not come to a halt once it is registered. Annual General Meetings, annual returns submitted to ACRA, corporate tax returns submitted to IRAS, proper financial records – not a one time activity as many might want to believe, but a continuous process. Lose them and you face punishment. A secretarial company such as Hub handles these burdens off your hands so that you can concentrate on running your business not trying to figure out the government filing portal at midnight.
The tax outlook is also very appealing. According to the Tax Exemption Scheme on New Start-Up Companies, Singapore has a corporate tax rate of 17, and new start-ups are allowed to receive a partial or total tax exemption during the first three years of consecutive assessment. What is important here is your Financial Year End date, as it dictates when your tax returns are submitted, when your AGM should be issued and which exemptions you are entitled to. Select it not randomly. The fact that you are working with an old-time corporate services firm on day one implies that you are getting advice on said information and you are being advised on something that is not going to cause you to get yourself locked in before it is too late. Singapore favours the ready. Get your organization in place, get your compliance in place, and the city will do the rest.