Singapore is one of Asia's leading business hubs, known for its pro-business policies, strategic location, and favorable tax system. Setting up a company in Singapore is a straightforward process, but it’s essential to understand the regulatory requirements to ensure smooth operations. Here’s an overview of the steps involved in establishing a company in Singapore.
1. Choosing the Right Business Structure
Selecting the appropriate business structure is key to setting up a company in Singapore. The most common options include:
- Private Limited Company (Pte Ltd): The most popular structure for both foreign and local investors. It offers limited liability, tax advantages, and has a scalable structure, making it ideal for growth.
- Sole Proprietorship: A simple structure with fewer requirements, suitable for small business owners but does not provide limited liability protection.
- Partnership: Ideal for two or more individuals sharing ownership. Variations include General Partnership, Limited Partnership (LP), and Limited Liability Partnership (LLP), with LLPs offering limited liability protection for partners.
The Private Limited Company (Pte Ltd) is the preferred choice for most businesses because of its limited liability, 100% foreign ownership allowance, and access to tax benefits.
2. Registering the Company
The Accounting and Corporate Regulatory Authority (ACRA) handles all company registrations in Singapore. To register, you must:
- Reserve a Company Name: The name must be unique, meet ACRA guidelines, and be approved by the authority. Avoid using prohibited words or names similar to existing businesses.
- Prepare Incorporation Documents: Required documents include the company’s Constitution (formerly Memorandum and Articles of Association), details of shareholders and directors, and particulars of the company secretary.
- Submit Incorporation Application: Once all documents are ready, submit the application to ACRA and pay the registration fee (SGD 315 for standard registration).
Upon approval, ACRA issues a Certificate of Incorporation, making the business legally recognized in Singapore.
3. Appointing Directors, Shareholders, and a Company Secretary
Under Singapore law, every company must appoint at least one local director who is either a Singapore citizen, permanent resident, or an EntrePass/Employment Pass holder. Additional requirements include:
- Directors: A minimum of one local director is required. Directors oversee the company’s operations and compliance.
- Shareholders: The company must have at least one shareholder, with 100% foreign
ownership allowed. Shareholders can be individuals or corporate entities. - Company Secretary: A qualified company secretary must be appointed within six months of incorporation. The secretary, responsible for maintaining company records, must be a Singapore resident and cannot be the sole director.
4. Setting Up a Registered Office
Every company must have a registered office address inSingapore, which serves as the official location for correspondence. The office must be accessible to the public during regular business hours, although virtual office services are also allowed.
5. Corporate Bank Account
Opening a corporate bank account is crucial for managing business transactions. Major banks in Singapore, such as DBS, OCBC, and UOB, offer business accounts tailored to various needs. Documents typically required for account setup include:
- Certificate of Incorporation
- Company Constitution
- Directors’ and Signatories’ Passport and Proof of Address
- Board Resolution authorizing the bank account opening
Banks may also request a business plan or financialprojections depending on the nature of the business.
6. Tax and Accounting Compliance
Singapore has a competitive tax regime, with a corporate taxrate capped at 17%. Additional tax incentives include:
- Start-Up Tax Exemption Scheme: Newly incorporated companies may qualify for tax exemptions on the first SGD 100,000 of taxable income for the first three years.
- Partial Tax Exemption: Applies to established companies, offering partial relief on the first SGD 200,000 of taxable income.
Businesses must register for Goods and Services Tax (GST) if annual turnover exceeds SGD 1 million. Companies are required to keep accurate accounting records and submit annual financial statements to ACRA, and certain companies may also need to conduct an annual audit.
7. Employee Registration and CPF Contributions
When hiring employees, companies must comply with Singapore’s Central Provident Fund (CPF) requirements, a social securitysystem funded by both employer and employee contributions. Employers must also comply with other regulations under the Employment Act regarding working hours, leave entitlements, and employee rights.
8. Government Incentives and Grants
Singapore offers various grants and incentives to support business growth, especially in sectors like technology, innovation, and manufacturing. Key programs include:
- Productivity Solutions Grant (PSG): Provides funding support for companies adopting productivity-enhancing technology and solutions.
- Enterprise Development Grant (EDG): Supports projects related to innovation, capability building, and internationalization.
- Startup SG: A government initiative offering grants, equity co-investment, and mentorship programs to support new businesses.
9. Conclusion
Setting up a company in Singapore is an efficient process with clear regulatory steps. With its attractive tax regime, strategic location, and supportive business environment, Singapore provides a
strong foundation for businesses to grow. By selecting the right business structure, complying with regulatory requirements, and leveraging government incentives, companies can establish a successful presence in Singapore.