For more than four years straight, Singapore is the World Economic Forum‘s number-one place to do business in Asia-Pacific last 2020 and the number-three best place globally.
Singapore’s government recognizes foreign business’ importance to its economy. With this in mind, the country continues to have low tax rates and an easy registration system for international businesses.
If you’re a foreigner planning to do business in Singapore, you most likely find these five factors attractive and won’t have any issues registering your company in the country.
Benefits of Starting a Business in Singapore
1. Easily Set It Up Online
Singapore’s advanced online infrastructure allows foreigners to register their private limited company within minutes. The online facilities make it easy to submit all required Singapore company registration documents, create a corporate bank account, and submit all the Accounting and Corporate Regulatory Authority requirements from anywhere with an Internet connection.
In addition, you can submit all requirements from other government agencies within their efficient online channels.
2. Work With a Fair Tax System
All of Singapore’s existing international and local tax regulations and agreements favor international businesses. These policies minimize any disruption to trading, knowledge-sharing, trademarking, and investing.
Any international business entity planning a company registration in Singapore will face fair taxes, such as the Goods and Services tax, small business benefits, corporate tax, and more.
3. An Enormous Pool of Local Professionals
Singapore’s workforce is highly educated, trained, and experienced. Many foreign entrepreneurs are confident in establishing their brands because they have access to a capable and highly competitive pool of professionals with knowledge and experience from renowned local and international companies.
Foreign businesses won’t have to import employees from their home country or spend much time training locals to attain the business’s required professional level for employees.
4. Capable Immigration Policy
Singapore’s government is friendly to international entrepreneurs. Singapore’s employment immigration policy makes it easy for international businesses to obtain an Entrepreneur Pass or EntrePass for foreign CEOs and professionals.
In addition, Singapore’s Global Investor Programme (GIP) encourages international Singaporean entrepreneurs to have permanent residence if their business enormously contributes to the local economy.
With this in mind, the government’s policies on foreign businesses protect and help foreign-owned businesses to grow exponentially.
5. Great IP Security
Many international regulating and evaluating agencies worldwide consider Singapore’s intellectual property protection framework the best in the Asia Pacific. Any international business can register their IP for designs, products, services, programs, music, and trademarks with full confidence that the law is fairly and consistently implemented.
5 Easy Steps To Start a Foreigner-Owned Singapore Company
After you’ve picked out your business name, here is the complete condensed guide that you’ll need to start a foreigner-owned business in Singapore.
1. Set Your Objectives and Secure Capital
A business’ product or service must solve a problem their customers currently and consistently face. Once you’ve identified your objectives, you can develop your business’s unique selling proposition (USP). Lastly, you’ll need to secure capital for your business. You can do this by doing any or all of the following:
- Government Grants and Programmes: After registration, you can register your business for grants and programs from Startup SG Tech, Enterprise Development Grant (EDG), and funding from other organizations. You can successfully earn capital if your business qualifies.
- Friends and Family: There’s no shame in asking for funding from friends and family who support you. Give back courtesy by giving them a regular report and roadmap of their contributions.
- Self-Funding: Before leaving and registering your startup in Singapore, you can do pre-planning while you’re still employed. Once your operations take the next step, you might have enough funds from your employment to start bootstrapping in Singapore
- Angel Investors: Present your business plans to local Singaporean investors who might have an interest in your niche. Angel investors can fully fund your startup in rounds, allowing them to evaluate your progress and decide whether to continue or stop their funding.
- Business Loans: Singapore banks and financial institutions can provide you with essential financing that can give you more than S$200,000 after registering and incorporating your business in Singapore.
- Crowdfunding: Individuals and investors worldwide might be interested in the product or service you’re providing. Take the next step and ask them to invest in your business through a crowdfunding campaign.
2. Secure All Essential Business-Opening Requirements
Singapore makes it easy for foreign entrepreneurs to register their business without a separate legal entity. In addition, you’ll need to have the following required documents to register your business. Here is the complete list of requirements your business needs:
- Business Visa: Singapore’s EntrePass allows foreigners to register their business under a sole proprietorship. If you can’t secure an EntrePass, you can use a local nominee to register your business.
- Company Name: Accomplish all forms that require you to fill out your company’s complete name. Be consistent in spelling and highlights to avoid conflicting documentation that can cost time and money to change in the future.
- Appointed Resident Director: A local nominee or appointed resident director is responsible for handling all company responsibilities of CEOs who cannot relocate or have no plans to relocate their business plans in Singapore. Appointed resident directors can register Singapore companies for a sole proprietorship, and partnership, and comply with the Singapore Companies Act for Foreigners. They must be 18 years of age and have no existing bankruptcy or criminal cases pending.
- Shareholders: Your shareholders can be the first handful of employees you’ll work with. You can consider yourself and your local nominee as the first company shareholders. Shareholders can be employees, Singaporean residents, or corporate entities. Singapore law allows 100% foreign shareholder ownership of any business.
- Shareholders’ Fund: Any business will need at least S$1 to register a private limited company (PLC). The business can increase this fund once the business undergoes incorporation. At least S$100,000 is the advised shareholder’s fund sum because it shows an excellent business track record to future clients.
- Company Registered Address: This is the business’s physical location in Singapore. The only qualification for a company registered address is its capacity to receive all government and business communication. Any returned communications from a given business location require a review and re-registration.
- Taxation: Newly registered and incorporated Singapore businesses have tax exemptions during their first three years of assessments (YAs) :
All companies registered before 2019 can have full tax exemption on their first S$100,000 income and 50% tax exemption on their next S$200,000 income.All companies registered after 2020 can get 75% on their first S$100,000 income and 50% tax exemption on any income succeeding their first S$100,000.
3. Finalize Your Business Structure
Singapore’s government classifies various foreign Singapore businesses according to various structures. These determine the business’s nature, expected capital investment amounts, multiple business owners, and more. Here are each classification available in Singapore and everything involved in each of them.
- Sole Proprietorship
Foreigners in Singapore can apply for a Sole Proprietorship after they’ve registered and qualified for an EntrePass. Sole proprietorship gives foreigners full ownership, liability, and the smallest registration cost.
However, sole proprietorship exposes business owners to the highest liability level. All of the business’ tax rates are the business proprietor’s personal tax rates. Additionally, most investors have the least confidence in businesses with a single proprietor.
- Partnership
A partnership consists of two business proprietors. They can be private foreign individuals or two corporate entities. About 20 owners are allowed according to Singapore’s partnership classification.
Foreigners can register their business in Singapore as a partnership as long as they have partners who are Singaporean natural residents. However, like sole proprietorships, the business owners face personal tax rates as business tax, cannot own property under the business name, and are exposed to the highest liability level possible.
- Limited Partnership (LP)
Partnerships and limited partnerships (LPs) differ in the roles of business partners. LPs have a general partner (GP) and a limited partner (LP). There are no limits on the number of partners and foreign GPs or LPs can own the business with a Singapore natural resident. The LPs have limited business liability, but the business remains a connected legal entity to both GPs and LPs. Like Partnership business structures, both GPs and LPs in Limited Partnerships cannot own property under the business’ name.
- Limited Liability Partnership (LLP)
LLPs can be legally challenging to create because of its complex GP and LP ownership structure. Foreigners can register an LLP business with a Singapore natural resident and consider their business a separate legal entity from their owners. The business can apply for corporate tax relief and successions in doing so. However, all business taxes use the GP’s personal tax rate.
- Private Limited Company (PLC)
PLCs are businesses that do not exceed 50 persons, making them suitable for established small businesses. Their setup is challenging and has higher compliance costs. However, PLC registrations separate the business as another legal entity and give investors confidence that they’re working with reputable, established businesses. Lastly, PLC taxation uses competitive regimes that have their respective classification.
4. Register Your Company
Foreign business owners will then submit all their requirements for their chosen business structure to the Singapore Registrar of Companies (SRC). This process is simple and mostly leans on the Singapore Registrar of Companies and its approval periods.
- Pre-Registration
Business owners must have reserved their company name and gain approval to use it before filing for company registration. Doing so makes it easy for SRC to confirm the business’ identity and create relevant documentation.
- Registration Process and Classification
Foreign business owners can work with the following government agencies to set up their offices.
- Accounting and Corporate Regulatory Authority
- Inland Revenue Authority of Singapore
- Monetary Authority of Singapore
- Ministry of Manpower
- Legal Services Regulatory Authority
- Post-Registration Requirements
Businesses must have any of the following after they’ve made registrations so that they can begin their operations:
- Certificate of Incorporation: The Singapore Registrar of Companies will email your Company Registration Number. The CRN will serve as your business’s official Certificate of Incorporation. Receiving this gives you the option to open a corporate bank account.
- Corporate Bank Account Opening: Your incorporation gives you access to corporate banking services. Your business’s bank account must adapt to your business’ needs and scale.
- Goods and Services Tax Registration: As a service provider, your business has tax levies on all Singapore-made goods and services. Singapore’s GST is currently at 7%. Businesses that make up to S$1 million per year need to register for GST, giving them the right to claim their GST payments on their recent business purchases.
5. Cut The Ribbon and Begin Your Operations
At this point, foreign business owners are ready to start their first business day by cutting the ribbon and welcoming their customers.
How Much Does it Cost to Incorporate a Company in Singapore?
Registering Singapore businesses can be expensive, but you can expect the following:
- Company Name Application: S$15 for a 60-day reservation. Extending the reservation costs extra
- Company Registration Fee: S$300
Foreigners and Singaporeans can register a sole proprietorship up to a private limited company without being physically present or undergoing the process. However, they cannot self-register their business and use an appointed registered filing agent regulated by the Accounting and Corporate Regulatory Authority (ACRA).
Here’s how to start a business in Singapore with no capital.
5 More Details To Consider After Your Incorporation
Foreigners running a business in Singapore for the first time in a new country will most likely face challenges they’ve never experienced before. These may include the following.
1. Licenses
Any food and beverage, finance, education, construction, and software development require educational aptitude and licensure from respective government agencies. These licensures protect customers from inadequate and poor products and services. You’ll need to pay fees, train your employees, and keep up your licenses to gain customer confidence.
2. Office Rentals
Property rentals add significant costs to a business’ budget. Physical offices give traditional investors more confidence in your business. However, property rental and co-working space costs can skyrocket to new heights, making remote work and virtual offices a better and more dependable option.
3. Annual Compliances
The government of Singapore makes compliance easy. Businesses that have zero GSTs and withholding tax only have annual compliances. However, complex taxations can have much more frequent and difficult compliance requirements.
4. Hiring Good and Fitting Talent
Singapore has an enormous talent pool renowned worldwide because of its top-notch education and world-class business experience. However, foreigner-owned Singaporean businesses must prioritize local hiring before importing foreign workers into the country, according to the Ministry of Manpower’s Fair Consideration Framework. With this in mind, it’s best to scout around good and fitting talent before you start registering your company.
5. Operational Histories
Businesses financing from banks and creditors play a huge role in expanding a business’ operations. However, it’s challenging to get a business loan approval without starting operational histories without using any business equity or collateral.
Alternatively, venture capitalists and angel investors have strict requirements that make it challenging to compete with other businesses.
Singapore Business Opportunities You Can Try in 2022
Here are some business ideas foreign businesses can start with if they already have enough paid-up capital and appointed a local director in the country.
1. Online Marketing
Online marketing creates, distributes, and advertises goods and services over the internet. It does this by using tools, digital media, and other methods of communication to create awareness for its products or services and build a targeted audience and generate sales.
This business niche will always provide value because it is continually developing and changing with more and more people using the internet, more technology being developed to make the internet faster, and more ways to use the internet.
2. Graphic Designing
Graphic design is the art and practice of visual communication that typically uses typography, photography, illustration, and layout to communicate ideas and messages visually. Most businesses consider it a subset of the broader field of visual communication.
Graphic designers create visual identity proposals, such as logos and color schemes, for an organization, product, service, or event. Once approved, the business can use the designs for various marketing and communication materials including websites, advertising, magazines, newspapers, and flyers.
3. Fitness Coaching
Fitness coaches help individuals get in shape, improve their performance, and increase their physical potential. They usually work online or offline with clients one-on-one, teaching them general concepts and specific training techniques. The personal trainer will create a unique training program for each client based on their individual needs. Some example fitness goals include weight loss, fitness, and health goals.
Need more ideas? Find out more options for small business in Singapore!
Closing
Singapore is a great place for foreigners to start running their businesses. With convenient online applications, submission statements, and clear guidelines, foreigners can have a quick and easy time implementing their first business idea under the Singaporean flag.
Key Takeaways
- Singapore’s laws make it easy and favorable for foreign business owners to begin operations in the country.
- Singapore’s advanced digital infrastructure makes it easy to submit all requirements, register a business, and gain approval for operations using the internet.
- All foreign businesses in Singapore must register with a local appointed director or partner before registering their business, opening a corporate bank account, and starting their operations.
- Except for the Private Limited Company model, all Singapore business models refer to personal assets and tax for business taxation and do not treat the business as a separate legal entity.
- There are numerous business opportunities in Singapore ripe for picking.
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