Setting Up a Business in Singapore for Beginners

Setting up a business in Singapore is easy as long as you comply with all the requirements. Typically, it only takes less than a day to register your company in the country unless your application needs to be referred to another agency for approval or review. However, starting a business always comes with a unique set of challenges. 

To overcome inevitable risks when starting your business, you must prepare and plan properly. If you don’t know where to start, please keep reading this guide on setting up a business in Singapore for beginners.

Why choose Singapore?

Singapore is an excellent place for entrepreneurs and corporations all across the globe to establish their headquarters. The city-state is also the most competitive Asian country and one of the world’s easiest places to do business, thanks to strong trade and investment.

By setting up a business in Singapore, your company can gain the following advantages:

Centrally located in the heart of Southeast Asia, Singapore has access to a population of over three billion within a few hours of flight time.

• Singapore’s regulatory framework is one of the most efficient and devoid of bureaucracy globally.
• Singapore is well-known for being a center of innovation. It creates a climate that encourages businesses and financial institutions to use innovative technologies such as cryptocurrency and blockchain.
• Singapore has a well-structured tax system that is one of the most straightforward in the world. Individuals and businesses in Singapore are only taxed on income earned within the country, as it maintains a territory-based taxation system with no tax on income earned elsewhere.
• The Singapore government has signed Double Taxation Agreements (DTAs) with over 90 countries, preventing any Singapore tax resident company from paying twice for the same taxable revenue in two distinct countries.
• Capital gains are not taxed in Singapore, and dividends paid to shareholders are also tax-free. The corporate tax rate is capped at a flat rate of 17% on the company’s chargeable income. The tax break is available for newly incorporated companies, with an effective tax rate of 6.22 percent for the first S$200,000 in income for the first three years after formation.
• The Singapore government introduced the Goods and Services Tax (GST) in 1994, which is still one of the lowest in the world at 7%.
• Singapore has a single-tiered personal income tax system, with rates starting at 0% and rising to 22 percent for income over S$320,000 (non-resident individuals are subject to a flat tax rate of 22%).
• The Singapore government has developed many initiatives and programs to foster a healthy startup ecosystem for both local and foreign entrepreneurs, in addition to providing grants, loans, and tax incentives to businesses.

There are so many other benefits local and foreign business owners can gain by setting up a business in Singapore. To see such benefits, please refer to this guide:

Benefits of Setting Up a Company in Singapore 

Minimum requirements for setting up a business in Singapore

The following are the requirements for registering a company in Singapore:

1. Shareholding

A company must have a minimum of 1 and a maximum of 50 shareholders. Shareholders can be either individuals or businesses. Foreign ownership of 100 percent of the company is permitted.

2. Share Capital

The minimum paid-up capital required to start a business is S$1. A company’s share capital can be increased at any time by injecting additional capital.

3. Directors

A Singapore business can include directors who are both Singapore residents and foreign residents. Directors of corporations are not permitted. There has to be at least one director who is based in Singapore (can be a Singapore citizen, permanent resident, or an Employment Pass holder). 

4. Company Secretary

Within six months of incorporation, a business must appoint a certified company secretary who has to be a natural person who lives in Singapore.

5. Registered Address

Each firm must have a local registered address in Singapore, where all its statutory documentation must be kept. Note that a PO box cannot be used as an address.

6. Company Name

The company’s name must be approved before proceeding with the company registration.

For more comprehensive information on requirements for setting up a business in Singapore, please refer to:

Singapore Company Incorporation Requirements & Procedure

Steps to setting up a business in Singapore

Here are the steps to successfully starting a business in Singapore.

1. Make sure you are well prepared

Before you dive in, keep in mind that running a business is challenging and comes with its own set of difficulties. Otherwise, the hardship will be a hard pill to swallow. Therefore, you must first know your motivation to tell if you are prepared.

If your primary motivation for establishing a business is to leave your current job, make more money, or believe that running a company will be easier than working, you may not be ready unless you plan to work freelance in a field you’re already familiar with.

On the other hand, if you are driven by a desire to see a business idea through to completion or are enthusiastic about entrepreneurship, you may have the intrinsic motivation to succeed. So, before you take the plunge, be sure you have a solid strategy in place and have the skills, capital, and direction you’ll need to succeed.

2. Decide on your business concept

When assessing your business idea’s viability and feasibility, here are some things to think about:

• How specific is your business idea? 
• Is your business concept realistic and attainable? 
• Are you joining a niche market or will you be competing with other firms that provide comparable products or services?
• What sets you apart from the competition?
• Are you able to meet the needs of your customers?
• How would you assess your company’s progress and success?

Once you already have the answers to these questions, then you’re ready to move on to the next step.

3. Determine your capital needs

So, you’ve come up with a great business idea and devised a fail-safe approach. But, to make your ambitions a reality, you’ll need to raise some funds.

First and foremost, you must determine how much capital you will require. This varies considerably based on your company’s size, scope, and nature.

Some small, bootstrapped firms may only require a little amount of capital to get off the ground. For example, a sole proprietor starting a small business to market their skills as a private tutor, music teacher, web developer, or illustrator, for example, could be able to get started with personal funds. However, other enterprises, such as brick-and-mortar retail stores or food-and-beverage facilities, are capital-intensive and require a six-figure investment.

Here are some options for raising funds if you don’t have enough savings:

A. Government schemes

There are various government grants available in Singapore to newly-incorporated companies. Startup SG Founder and Startup SG Tech are examples of financial support programs that can help entrepreneurs fund their businesses in the early stages. 

B. Fundraising

Crowdfunding services such as Kickstarter, Indiegogo, FundedHere, and Fundnel can assist you in raising funds from the general public.

C. Venture capital and angel investors

You can contact venture capitalists and angel investors to see if they want to invest in your business. However, conduct some research before accepting an offer to ensure you understand their terms and conditions and that their principles align with yours.

D. Family and friends

You can ask your friends and family to invest in your company. However, ensure that they are aware of the risks and that all parties are aware of how the investors’ return on investment will be distributed.

E. Loans

This is a simple process, but the drawback is that it will put you in debt. Make sure you compare interest rates across the different banks and financial institutions.

F. Peer-to-peer lending

Platforms like MoolahSense and FundingSocieties offer an easier way to get funding than traditional business loans.

4. Choose a business entity

There are three main types of business entities to choose from:

1. Private Limited Company (Pte Ltd)
2. Sole Proprietorship
3. Limited Liability Partnership (LLP)

Despite the fact that other options exist, many new businesses choose to register as “private limited companies” with the Accounting & Corporate Regulatory Authority (ACRA) due to its scalability. 

5. Choose your office 

When incorporating your company, you need to give ACRA an office address where mail may be received. However, this doesn’t mean you need to rent a separate office space. If you use our incorporation service, you can use our office as your business address. 

If you own a small-scale business and conduct your operations from home, you can apply for the Home Office Permit to use your own home as your office. However, note that you must not hire more than two non-resident employees.

For a larger scale business, you’ll most likely need office space. Other than renting or buying office space, you can also consider a coworking space that offers business addresses. 

For more information on renting office space in Singapore, please refer to:

Tips for Renting Your First Office Space in Singapore

6. Incorporate your company

Before you can register your company, you must first reserve your company name with ACRA. Typically, you should know if your suggested company name has been accepted or refused within a day. If your proposed company name includes particular words like media, bank, law, finance, or education, an external governmental entity may be required to review and approve the name.

For more information on choosing a company name in Singapore, please read this guide:

How to Choose a Company Name in Singapore

Once your name has been approved, the company registration process can be completed within a day, as long as all of the documentation is complete and signed by all of the new company’s directors. This company incorporation process will be a lot easier with the help of a corporate service provider (CSP). Hiring a CSP is a must, especially if you are a foreign entrepreneur or entity wishing to register a business in Singapore.

7. Open a bank account

After successful company registration, you need to set up a bank account for your business. There are numerous alternatives for a corporate bank account in Singapore. Following your incorporation, we will give recommendations for banks that will meet your demands and make introductions to bank executives.

8. Hire staff

Another important part of setting up a business in Singapore is hiring staff. There are requirements you need to consider when recruiting employees, especially if you plan to hire foreigners. It is also essential to learn about labor laws applicable to employees. 

Singapore’s fundamental labor law, the Employment Act, covers the basic terms and conditions of employment for employees covered by the Act. The Act also covers foreign workers holding work permits, which outlines employers’ responsibilities and obligations to employ foreigners.

For tips on hiring employees in Singapore, please refer to this article:

A Guide to Hiring Employees for Every Business in Singapore

9. Create your digital presence

Any company would benefit from having a strong internet presence. In today’s world, online marketing is displacing traditional marketing methods and is here to stay. It is also a cost-effective technique to successfully contact your target audience. You can start by building social media accounts for your company and tracking growth and interaction rates on a regular basis.

What’s next after incorporation?

There are several other tasks you need to complete after the incorporation. These tasks may include registering for GST, applying for business licenses, and filing corporate income tax. Please, refer to our Post-Incorporation Guide for Singapore Startups guide.

Whenever you are ready to set up a company in Singapore, feel free to contact us! Biz Atom provides an online incorporation service in Singapore from anywhere in the world, allowing clients to avoid the stress and complication of forming a business. Say goodbye to long delays and hefty paperwork!

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