Whether you are a local entrepreneur, or an international business looking to expand into the Lion City, understanding the business registration process is crucial. In this guide, we'll give you an overview of how to set up a business in Singapore, including legal requirements, documents needed, costs involved, usual time frame for company registration, and watch-outs, especially for foreigners. Our aim is to empower you to start your business in Singapore with confidence.
The Importance of Registering your Business
Registering your company is always an important first step to establishing your business in Singapore, and in fact any country throughout the world. Why?
● Legal recognition and protection - Registering your company makes it a legal entity in Singapore, and therefore entitles it (as well as those legally working within it, like your employees) to the rights and protections provided by Singaporean law.
● Establishing credibility and trust - Being legally recognized by the Singaporean government shows your customers and stakeholders that you are an honest and trustworthy enterprise. It shows that you have the resources and focus to merit their confidence. With credibility and trust, greater opportunities for relationship building and business growth will follow.
● Access to benefits and incentives - Singapore continues to be among the top-ranked business environments in the world, and registering here will give you access to desirable benefits, including attractive tax rates, generous government support programs for new businesses, and simplified regulations in Intellectual Property, Banking, and other key areas of business. Singapore also allows 100% foreign ownership of private companies.
Types of Business Structures
Before you incorporate, you must decide the type of business you are setting up.
Your decision will dictate many succeeding steps in your company registration, including: the paperwork your business is required to do, the personal liabilities or legal responsibilities you may face, and even the amount you pay in taxes.
The types of businesses you can register in Singapore are:
● Sole Proprietorship: This is the simplest form of business, owned and operated by one individual. The owner has complete control over all aspects of the business, and is personally liable (that is, legally responsible) for all its debts and losses.
● Partnership: Also called "General Partnership", this is a business formed by between 2 to 20 partners, all of whom are responsible for possible company losses or liabilities. Once there are more than 20 partners, the partnership must be registered as a company under the Companies Act, Chapter 50.
● Limited Partnership (LP): This is a type of partnership consisting of at least 2 types of partners. A "general partner", who is responsible for the actions of the LP and are liable for all debts and obligations; and a "limited partner", who is not liable for debts and obligations of the LP beyond their agreed contribution, and provided that they are not part of the LP's management.
● Limited Liability Partnerships (LLP): Like the LP, there must be at least 2 partners. The LLP gives these owners/partners the flexibility of operating as a partnership, while enjoying many benefits that come with being a corporate entity, like a Private Limited Company (more on this below). LLPs were primarily meant for professional industries (like that of accountants, lawyers, architects, etc.) where two or more professionals would like to build a joint practice in their common field, as opposed to operate in commercial trade.
BUSINESS ENTITIES OR CORPORATIONS
A "corporation" is a legal entity that is considered separate from its owners. It is owned by shareholders and managed by a board of directors elected by the shareholders.
● Private Limited Company (Pte Ltd): A private company that has less than 50 shareholders. "Shares" here represent ownership of a company, so shareholders are part-owners of the company. However, for private companies like this, shareholders are pre-selected individuals, and shares cannot be given or sold to the general public. The liability of shareholders depends on the number of shares they own.
A private limited company is the most flexible and scalable type of business. It is therefore the most commonly preferred type of business entity for serious entrepreneurs in Singapore.
● Limited Liability Company (LLC): This type of company combines the liability protection of a corporation with the flexibility and tax benefits of a partnership. An LLC is governed by the Companies Act and is recognized as a separate legal entity from its owners. This means that the LLC itself has its own name, and can be be actioned upon (e.g.: be sued) without personally affecting it's shareholders or owners as individuals.
If an LLC exceeds 50 shareholders, it will be deemed a "public company".
● Public Limited Company: This is an LLC where shareholders may be members of the general public. A public limited company must have at least 50 shareholders, and is subject to stricter rules and regulations since they have the power to raise funds from the public. This type of corporation is also typically listed on the Singapore Stock Exchange.
FOREIGN COMPANY REGISTRATION OPTIONS
● Subsidiary Company: This is a private limited company incorporated in Singapore, where the parent company from overseas acts as one of its shareholders. For small and medium-sized foreign businesses, a subsidiary company is the most preferred choice of registration in SG.
● Singapore Branch Office: A branch office is registered in Singapore as an extension of its parent company overseas, rather than as a separate business. The liabilities of a branch office extend to its parent company.
Process of Company Registration in Singapore
Here are the general steps in registering your business, particularly as a corporation, in Singapore:
● Select your Business Structure (details in the section above)
● Choose a Company Name - Prepare at least 3 options, in case your selected company name is already taken -- you cannot register an identical name to one that is already in use. Also, as part of the company name application, you must specify the primary and secondary activities of your business.
● Appoint Directors and Shareholders - Your directors must be individuals at least 18 years old, who have never been disqualified from holding directorship in Singapore or elsewhere. You must always have at least 1 local Singaporean resident director in your company. Shareholders, on the other hand, can be individuals or legal entities, such as another company. All companies must also appoint a Corporate Secretary, and an Auditor.
● Have a Singapore Business address - This refers to the place where all communications and notices of your company may be addressed, and where your company records will be kept. This address must be accessible during regular business hours, though it does not have to be where your company conducts its business activities (for example, you may have factories or stores elsewhere).
● Submit the Registration Application - Depending on the type of entity you want to register as, prepare the requirements above, as well as any other requirements that may be needed, and lodge your application for registration with the Accounting Corporate Regulatory Authority (ACRA) via their website. ACRA is the national regulator of business entities, public accountants, and corporate service providers under the Singapore Ministry of Finance.
It is also best to review their website thoroughly for other requirements you may need prior to submitting your application.
● Pay the Registration Fees - You must pay SGD 15.00 for your company name application, and at least SGD 300.00 for your registration fee. If you are securing the assistance of 3rd party providers for your registration application, you may have to pay additional professional service fees as well.
● Receive your Certificate of Incorporation - You will receive an email notification if your application is successful.
● Set up your Corporate Bank Account - You must open a local corporate bank account in Singapore for all your business transactions, as personal accounts cannot be used for business activities.
How long does it take to Register?
All in all, the application process can take as quick as a few days, as long as all your requirements are submitted promptly and are error-free. The online application process allows entrepreneurs and businesses the ease of reviewing all the requirements needed and submitting them purely via the ACRA website. However, the application may take up to 60 days if the requirements are incomplete or merit further investigation.
Additional Steps to Consider for Foreigners
● Singapore does not allow a foreign individual or entity to self-register their company, so you will have to hire a professional or 3rd party to assist you with the process.
● If you plan to incorporate your Singapore company, but don’t actually plan on moving to or living in Singapore, you do not need to obtain any specific work visa. You can actually operate your company from overseas, and still visit Singapore on a regular travel visa when you need to deal with company issues. This is part of Singapore’s efforts to attract foreign business and make the process convenient for foreign investors.
● Even if you are not in Singapore, you will still need to have at least 1 local Singaporean director in your company.
Legal and Compliance Reminders
After you've received your Certificate of Incorporation, the work does not stop there! Keep in mind these additional compliance steps that you and your company must abide by as a Singapore-based organisation:
● Maintain proper accounting records - Make sure your company keeps records that can be used to calculate taxes and ensure compliance with tax laws. Failure to maintain proper records can result in penalties, fines, or even legal action.
Furthermore, proper accounting records are also necessary for securing funding. Banks, investors, and other potential sources of finance often require detailed financial records to assess the viability of a business. If a company cannot provide these records, it may struggle to secure the funding it needs to grow and succeed.
● Annual filing of taxes & other obligations - This is a legal requirement no matter where you are. You should not only keep detailed records of your company finances, but also remit to the government what is due. THis allows you to maintain your legal status, as well as make claims to benefit your company where possible.
Taxes ensure the smooth functioning of government services, promotes fairness, and can provide financial benefits for individuals and businesses.
● Compliance with the law at all times - Again, your responsibilities do not end upon the approval of your registration. In fact, they are only beginning. Make sure you are also well versed in local labour and employment legislations, as you will be proceeding to hiring and employing for your company.
Singapore is a great place to do business. The Singaporean government has made it particularly attractive for businesses, even foreign businesses, to work out of Singapore through clear guidelines, simplified online processes, and attractive tax rates, not to mention a high quality of life in the island state.
If you decide to set up shop in Singapore, save this article for future reference, and for your hiring and background checking requirements, contact Veremark. We are a Ministry of Manpower-accredited partner for Education Verification checks for your foreign employees’ work pass applications, and can further assist you with all types of pre-employment background screenings you may need to implement for your business.
Request a discovery session with one of our background screening experts today.