Why is Singapore by far the best place to be an entrepreneur?
Known for its business-friendly government, ease of doing business (ranked first in World Bank’s report year-after-year), robust IP protection, attractive corporate tax framework, excellent connectivity, strategic geographical location with proximity to world’s largest emerging markets, and comprehensive trade agreements with over 100 regions of the world, Singapore is also a top-notch financial centre with availability of affordable funding for new start-ups or established companies.
If you want to take benefit from the above entrepreneur-friendly environment and incorporate a company here, Singapore Incorporation, Singapore’s pioneer company registration consultancy service, can assist you in completing all the formalities in just under few hours.
You take care of running your business while we’ll take care of all the fine prints.
Knowledge is the ultimate power in today’s modern-day societies. Think of us as your one-stop resource for the most up-to-date and comprehensive information on Singapore company incorporation, compliance and all other related business needs.
Relocating to Singapore – Asia’s business headquarters, may be the most profitable business decision you ever made.
A Step-by-step Guide for Company Incorporation in Singapore
Types of Business Structures in Singapore
ACRA – the Accounting & Corporate Regulatory Authority, national regulator for business entities and public accountants, mandates that all companies in Singapore must be registered and abide by the country’s Companies Act.
While there are five different entities to choose from, the most common and flexible business entity that can be set up in Singapore is the private limited company. Other options are sole-proprietorship, partnership, limited partnership, and limited liability partnership (LLP).
The scope of this guide is Private Limited Company only, which henceforth will be referred just as “company”.
A company is limited by shares and is a separate legal entity from its shareholders. It is recognised as a taxable entity in its own right. As a result, shareholders of a Singapore company are not liable for its debts and losses beyond their amount of share capital.
Key Requirements to Incorporate a Company in Singapore:
- at least one shareholder (individual or corporate entity)
- one resident director (either a citizen, permanent resident, EP holder or a Dependant Pass holder)
- one company secretary
- initial paid-up share capital of at least S$1
- a physical Singapore office address
If the number of shareholders is 20 or less, with no corporation holding any beneficial interest in the company’s shares, it is known as an exempt private company (EPC). If the shareholders are more than 20 but less than 50, it is just a company (private limited or Pte Ltd). If the number of shareholders exceeds 50, it becomes a public company.
Selecting a Singapore Company Name
This must be done diligently as it is critical for brand-building. Including your business activities in the company name itself is beneficial in this.
An important consideration while choosing a company name is to first check whether the chosen company name matches an available domain name. This is important because a suitable web address is must for business growth these days. Whether to go for .sg, .com, .org or any other extensions will depend on your target market region.
Another consideration is to check at ACRA online registration portal Bizfile whether the selected name is available. If yes, get it approved by the Authority. Please do note that ACRA is going to implement the Business Names Registration Act by the end of 2014, which is aimed at simplifying the process for the registration of persons and their business names, and reduce regulatory burden on business owners.
Selecting the Singapore Company Business Activities
Browse through the Singapore Standard Industrial Classification Code (SSIC) 2010 and select the business activities your company will be engaging in. These must be clearly stated at the time of company incorporation.
Procedure for Company Incorporation in Singapore
Decide on the Shareholding Pattern: Every Singapore company must issue one or more subscriber shares to its initial members. The issued share capital of the company is the total number of shares existing in the company multiplied by the nominal value of each share. Remember that at least one corporate or individual shareholding is required while forming a Singapore company. 100 percent local or foreign shareholding is also allowed. However, do note that a company can be registered with a minimum paid up capital of S$1 (or its equivalent in any currency).
Appoint a Singapore Resident Company Director: Every Singapore company must have at least one director who is “ordinarily” resident in Singapore. ACRA defines this as a Singapore citizen, a Singapore permanent resident or a person who holds an employment pass/entrepreneur pass or a dependant’s pass with a residential address in Singapore. Do note that a company director and shareholder can be the same or different person.
Resident Nominee Director of a Singapore Company
For those who wish to get the benefit of a Singapore company but can’t relocate to Singapore for some reason, Singapore Incorporation provides the services of a resident nominee director. This can help you in fulfilling the Singapore companies’ statutory requirement of a resident director. You can engage our services on a long-term or just temporary basis.
Local Registered Address for a Singapore Company: It is mandatory for every company registered in Singapore to have a local address as all official correspondences are send to it. The registered address must be a physical address and cannot be a PO Box. Some businesses are allowed to use residential addresses.
Resident Company Secretary for a Singapore Company: The law mandates that all companies in Singapore must appoint a company secretary within six months of incorporation. He or she must have the prerequisite domain knowledge and is responsible for ensuring all regulatory compliances. You can outsource this requirements to Singapore Incorporation.
Auditor for a Singapore Company: In Singapore, all companies, unless exempted, are required to appoint an auditor within three months of incorporation. To be exempted, the number of individual shareholders in the company must be less than 20 with no corporate shareholders, and its annual turnover must be less than S$5 million. This essentially means that an EPC with yearly revenue less than S$5 million doesn’t need to fulfil the audit compliance.
Memorandum and Articles of Association (MAA) of a Singapore Company: While the Memorandum specifies the activities in which the company may engage in, the articles of Association specifies the rules governing the internal management of the company. A standard MAA document provided by the Registrar of Companies is used by most companies in Singapore.
Documents Received after Singapore Company Incorporation: On successful incorporation, an email is issued by the authorities that includes the company’s Unique Entity Number (UEM). This is the standard identification number, issued by the Singapore Government to any business entity registered in Singapore. Later, the company secretary issues the company’s share certificate, first board resolution and the bank account opening resolution. The company incorporation certificate can also be obtained on some payment.
Additional Requirements of Singapore Company Incorporation: The company seal and company stamp (if provided for in the company’s constitution) are other requirements. The stamp is necessary as all official documents of the company need to have it along with the UEN and registered address.
Applying for Licenses and Permits of a New Singapore Company
Goods & Services Tax (GST): All Singapore companies with annual turnover exceeding S$1 million are required to register for collecting GST. Currently pegged at 7 percent, GST is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore. Some items, however, are specifically exempt from the tax. This includes financial services and the sale or lease of residential properties.
Trademark Registration: A Singapore company must register for its trademark if it wants to protect its ideas and develop a brand-name. While ® refers to a registered and protected trade mark pursuant to trade mark laws; ™ merely identifies that the mark is being used as a trademark by the owner but is not necessarily registered or protected under trademark laws. Companies can use the Productivity and Innovation Credit (PIC) scheme to offset costs incurred in their trademark registration.
Customs Registration: You are required to register the company with the Singapore Customs, if it has business activities in export, import or trans-shipment activities.
Copyrights & Patents Registration: Remember to secure a patent for your product or service, if its a game-changer in your field.
Additional Licenses and Permits: The company incorporation procedure may take some more time if the business activities such as private schools, travel agencies, liquor distributors, moneylenders, banks, childcare centres, importers/exporters, wholesalers and retailers of liquors, are regulated by the government authorities in Singapore. Thus, if the new company deals with any such business activities, additional licenses and permits will be required for successful incorporation.
Meeting Singapore’s Statutory Compliance Requirements
Annual General Meeting (AGM): A Singapore company must hold its AGM every calendar year, with its financial statements tabled at the meeting for shareholders’ approval.
Annual Filings Requirements with ACRA: All companies in Singapore must file their annual returns with ACRA within one month of its AGM.
No audit report for Singapore EPCs with turnover less than S$5 million
According to the Singapore Companies Act, solvent EPCs with an annual turnover of less than S$5 million are exempted from annual audit and accounts submission requirements. If the turnover exceeds S$5 million, the EPC will have to get its accounts audited and filed with ACRA just like any other company. Such EPCs just have to submit a solvency declaration signed by the company secretary and company directors in a prescribed form.
Annual Filing Requirements with IRAS: A Singapore company must fulfil its tax obligation with the Inland Revenue Authority of Singapore (IRAS) every year.
Fiscal Year Determination: Unlike some countries, all companies in Singapore have the freedom to determine its financial year end (FYE), which does not necessarily be December 31. Do note that it’s always advisable to keep the company’s FYE within 365 days in order to enjoy the zero tax exemption for new start-up companies (full tax exemption on the first S$100,000 of normal chargeable income for its first three consecutive years of operations).
Estimated Chargeable Income (ECI): It is an estimate of a company’s chargeable income for a Year of Assessment, which must be submitted to IRAS within three months after the end of the financial year.
Payroll Management: When your company embarks on a growth trajectory, managing the payroll becomes cumbersome. Proper care be taken while calculating, processing and reporting payroll components such as government remittances, benefits, allowances and deductions, to avoid penalties. Especially, while fulfilling the two statutory requirements for employers in Singapore as regards to their contribution per employee – the Central Provident Fund (CPF) contributions, and the Skills Development Levy (SDL).
Accounting and Bookkeeping: An important statutory requirements is that all Singapore companies must maintain the general ledger, accounts payable ledger, and fixed assets ledger; as well as have proper financial statements and monthly reports monthly, quarterly and annual reviews.
You take care of running your business while we’ll take of all the fine prints.
Corporate Taxation in Singapore
All Singapore companies are taxed on profits derived in Singapore, as well as on foreign soil, which are then remitted to Singapore. The corporate income tax rate fixed at 17 percent, while already being the third lowest in the world, comes out to even lower if one takes advantage of all the government incentives, subsidies and schemes. For instance:
Corporate Income Tax (CIT) Rebate for Singapore Company: All Singapore companies are granted a 30 percent corporate income tax rebate that is subject to an annual cap of S$30,000, for the years of assessment 2013, 2014 and 2015. This CIT rebate include registered business trusts, non-tax resident companies in Singapore, and companies already receiving income taxed at a concessionary tax rate.
Tax Exemption for Singapore Companies under Start-up Tax Exemption (SUTE) Scheme: The eligibility conditions include:
- either an EPC
- in case of corporate shareholders, one individual must hold at least 10% of the issued shares
But do note that property and investment holding companies are not eligible under the scheme. If the above two conditions are satisfied, tax exemption is given to start-ups on normal chargeable income of up to S$300,000 for each of the first three consecutive years of its operation.
- For first S$100,000, after 100% exemption, the exempt amount is S$100,000
- For next S$200,000, after 50% exemption, the exempt amount is S$100,000
- Thus, the total exempt amount for income up to S$300,000 is S$200,000
Corporate Banking in Singapore
Also, be careful while choosing your corporate bank account as Singapore has an array of banking options available to private companies. You can either go for a local or foreign bank depending upon your business requirements. Overall, Singapore’s OCBC and DBS banks have consistently ranked as among the strongest banks in the world. So going for these is always a very good choice.
We can assist you with opening a corporate bank account in Singapore and make sure you get the best possible deal.
What we will need from you is as follows:
- a resolution by company’s board of directors sanctioning the opening
- copy of the certificate of incorporation
- copy of the business profile
- copy of company’s MAA
- copies of the passports (or Singapore national identification cards), and proof of residential addresses of the directors and ultimate beneficial owners
Funding for New Companies in Singapore
Government funding for a Singapore Company: In Singapore the government in a bid to foster innovation and entrepreneurship in the country, has initiated quite a few funding programmes such as the micro-loan programme, loan insurance scheme and local enterprise finance scheme (LEFS) offered by SPRING Singapore; the ACE Start-ups Scheme; and the iSTART:ACE. Companies incorporated in Singapore can also take advantage of the Innovation and Capability Voucher (ICV) scheme and apply for vouchers each valued at $5,000 for redemption of professional consultancy services, hardware and technical solutions.
Eligibility conditions for ICV include a Singapore registered and physically present company, with at least 30 percent local shareholding, and group annual sales turnover of not more than S$100 million or group employment size of not more than 200 workers.
Please do note that all purchases must be made only after the indicated items have been approved in the ICV application.