How to start a business in Singapore: A guide for SMEs

A guide to business incorporation in Singapore

Singapore is world-renowned as a leading hub for economic activity. It is often regarded as a gateway for businesses that want to prime themselves for further expansion into other ASEAN cities. Its politically stable environment, flexible immigration policies, and advanced technological landscape make up some of the advantages of setting up a business in Singapore.

Singapore-registered companies enjoy attractive tax exemptions and incentives. Your company pays less than 9% for the first S$300,000 you make in annual profits, followed by a flat rate of 17% thereafter. Singapore companies do not have to pay capital gains or dividend taxes.

Check out our podcast on why Singapore is a major attraction for tech startups below:

Our comprehensive guide below is a handy companion for anyone looking to start a business in Singapore.

What language do they speak in Singapore?

Singapore has four official languages: English, Mandarin, Malay, and Tamil. English is the primary language for business, education, and government matters. Malay serves as the national language, and Mandarin and Tamil represent the linguistic heritage of the Chinese and Indian communities.

What should I know before registering my company in Singapore?

Here is a summary of what you should have prepared before you make any plans to register as a business entity in Singapore:

• You must provide a local Singaporean address as the registered address of the company. Both residential and commercial are fine, but you cannot use a P.O. box.
  
  
• The name of your company must be approved prior to registration.
  
  
• You must appoint a minimum of one resident director. They should be aged 18 years and above, not bankrupt, and bear no malpractice charges in the past.
  
  
• Your company can have a maximum of 50 shareholders who may or may not be directors. They can consist of both local and non-local individuals or organisations.
  
  
• A qualified resident company secretary must be appointed within six months of your Singapore company registration.
  
  
• You should possess a minimum of SGD$1 share capital (also known as paid-up capital) to register your company in Singapore. This amount can be increased anytime after the incorporation is complete.

How can I start a business in Singapore if I am a resident?

The above guideline will still apply for non-residents, along with several additional considerations:

• Singaporean law does not permit non-resident individuals or entities to self-register a company. Therefore, you must enlist a registered filing agent (e.g. a law, accounting, or corporate secretarial firm) to help you submit your online application.
  
  
• If you incorporate a private limited company that you intend to operate from abroad, you will be allowed to enter Singapore on a visitor visa should you need to attend to any company affairs. In this case, a Singapore work visa is not required. However, you must hire or elect a local director to ensure you fulfill the minimum requirement of one resident director.
  
  
• If you intend to move to Singapore to run your company, you will need to apply for an Employment Pass or Entrepreneur Pass. This will also allow you to fulfil the role of local resident director in your company.
  
  
• You are not required to be in Singapore for the company registration or any work permit application to take place. However, you must be physically present if you plan on opening a bank account with a Singaporean bank.

For foreign entities that want to incorporate a Singapore company, there are currently three types of setup options you can explore:

A subsidiary company

This refers to a private limited company incorporated in Singapore where the majority shareholder is a separate local or foreign company. It is often the most preferred choice for foreign companies who want to establish their presence in Singapore as it allows for 100% foreign shareholding.

A subsidiary company is considered a legal entity separate from its foreign parent company. This means that the parent company will not be legally responsible for any debts, liabilities, or assets acquired by the subsidiary.

The subsidiary company can also have a different name from the parent company. However, the business name is subject to approval by Singapore’s Accounting and Corporate Regulatory Authority (ACRA).

As Singapore subsidiary companies hold the status of a resident/local company, they are eligible for certain government incentives and tax exemptions.

A branch office

Unlike a subsidiary, a Singapore branch office is treated as an extension of its foreign parent company rather than a separate legal entity. This means that the branch office must have the same name as its parent company and that its business activities are restricted to within the scope of its parent company.

A branch company can be useful for foreign companies who want to experiment with a new market in Singapore. It allows foreign companies to do business under their existing name and reputation. Subsequently, the foreign parent company will be legally liable for any debts or contracts incurred by the branch office. A branch office allows the foreign parent company to generate profits and hold properties in Singapore.

As branch offices are non-resident entities in Singapore, they are excluded from certain tax exemptions that a subsidiary company might enjoy.

A representative office (RO)

A representative office is a temporary administrative setup. It enables foreign companies to explore opportunities within a market and carry out any non-commercial business activity.

Representative offices have no legal status in Singapore, so they cannot sign contracts, trade, open Letters of Credit, or perform any other profitable activity. The foreign parent company is entirely liable for any activity conducted by its representative office in Singapore.

As ROs are mainly established to help the parent company research a new market, they tend to be limited to gathering information on markets and potential clients, conducting product research, attending trade shows and exhibitions, etc.

An RO is only allowed to operate for a maximum of three years. Therefore, if the parent company decides to continue its business in Singapore, it usually opt to set up a subsidiary or branch office.

The representative office must operate under the same name as the parent company and appoint a Chief Representative Officer (CRO) from the foreign parent company’s head office based in Singapore to oversee the RO’s activities.

Source: VectorKnight/Shutterstock

What documents are needed to register a company in Singapore?

According to ACRA, these are the documents you must provide:

• Company name
• Brief description of business activities
• Shareholders' particulars
• Directors' particulars
• Registered address
• Company secretary particulars
• Company’s constitution
• The last day of the company’s proposed financial year-end

For companies that are engaging the services of a third-party service firm, you may also need to provide the following documents:

• For non-residents: A copy of your passport, overseas residential address, and any additional supporting documents
• For Singapore residents: A copy of your Singapore identity card
• For corporate entity shareholders: A copy of registration documents

You must ensure that officially endorsed translated versions accompany any non-English documents.

How do I register my Singapore company and how long does it take?

Company registration in Singapore is fully digitised by ACRA and it typically takes one to two days to incorporate a company.

The applicant must first log in to the BizFile+ website with their identification card number and Singpass. If the applicant does not have a SingPass, a registered filing agent can also do so on their behalf.

First, choose your company name

This step involves getting your company name approved by applying with ACRA. It typically takes an hour to determine if your proposed name has been approved or rejected.

In some cases, this process can take several weeks, but it is usually reserved for situations where the proposed name contains certain words (e.g., finance, media, law, bank, etc.) that require it to be reviewed and approved by an external government authority.

To speed up the approval process, make sure that your proposed company name:

• Is not identical or too similar to any existing local company names
• Does not infringe upon any trademarks
• Is not obscene or vulgar
• Is not already reserved

Once your company name has been approved, it will be reserved for 60 days from the date of application. You may extend this by another 60 days by requesting an extension before the expiry date.

Submit your company’s constitution to ACRA

Formerly known as the Memorandum and Articles of Association, this legal document states the regulations surrounding a company's organisation. It outlines the internal structure, obligations, responsibilities, and relations of its board of directors and shareholders.

Finally, complete your company registration on BizFile+

Once your company name and constitution are ready, you can log in to BizFile+ to submit your application. You will also need your transaction number from your approved company name application during this stage.

Once your company has been set up, you must register for a Corppass to file transactions in Bizfile+. Following this, an email notification for endorsement will be sent to the appointed officers, including all company directors, shareholders, and the company secretary. All must endorse their consent online via Bizfile+ within 60 days of the email notification date.

The registration fee as of 2021 is $300, and payment can be made via credit or debit card, PayPal, Apple Pay, and Google Pay. Once your company has been registered, you will receive an email confirmation from ACRA. This will contain your company registration number, which is regarded as the official certification of incorporation.

Source: olesia_g/Shutterstock

How do I open a corporate bank account in Singapore?

Once you have successfully registered your Singapore company, the next step is to open a corporate bank account.

Most banks in Singapore will require you to submit the following documentation.

• Application form
• The company director’s resolution in writing approving the opening of the bank account and its certified extract
• A certified true copy of the certificate confirming your Singapore company incorporation
• A certified true copy of the official company register to evidence the current directors and its shareholders
• Certified true copy of the company’s memorandum and articles of association
• NRIC/Passport copies of the proposed bank signatories
• Minimum deposit

Enter new markets quickly with an Employer of Record (EOR) 

For businesses that are keen on exploring opportunities in foreign markets like Singapore without having to go through the hassle of incorporating an entity, an Employer of Record can be a fantastic alternative.

For example, working with a local Employer of Record (EOR) can help companies find and hire talent and get their business up and running in as little as 48 hours.

On top of that, an EOR will be legally responsible for all compliance issues, payroll management, immigration support and more. This allows businesses to minimise the risks of setting up a company overseas and focus their time and resources on growing their business.

Our article on working with an EOR vs International Business Incorporation breaks this subject down in more detail.

Expand your business into Singapore with help from Airswift’s Employer of Record experts

With more than 40 years of experience, Airswift has helped clients worldwide succeed in international incorporation.

From corporate tax compliance advice to hiring in Singapore, relocation and global payroll outsourcing, our Employer of Record services can be customised to match the unique needs of our diverse clientele.

Contact us today to learn more about how we can support you in your global expansion endeavours.