Epica Learn Series

Setting Up A Company In Singapore: A Comprehensive Guide

The small island nation of Singapore topped the World Bank’s best places to do business about six years ago and has never lost its number one status since then.

According to the most reputable business reports, starting a business in Singapore takes just three days. Isn’t this something any business owner would like to get at the place of setting a business? Fast and easy. Without any hassle.

In an article posted on Business Insider, the main reasons why Singapore has dominated the list for so long are its simple method for filing taxes coupled with its flexible immigration policy and business-friendly laws. The world bank report put Singapore above all, even the US in terms of ease of doing business and paying taxes.

Before I explain the guide to setting up a company in Singapore, the basic details need to be explained for the layman. So read the article through, and you would get all the information about setting up a company in Singapore.

Company Setup Packages

^{From S$}1,100

Various company registration packages available from SGD 1100 onwards. Price Depends on type of services needed.

Why Should You Setup a Company in Singapore?

The owners of companies have limited liability, unlike sole-proprietors and partnerships. The companies are distinct and separate legal entities from their owners. Hence, for the company’s debts or any legal action taken against the company, its owners are not personally liable.

However, as compared to sole proprietors and partnerships, companies have many more compliance requirements. These include many actions including holding annual general meetings and filing annual returns. Any failure in doing so results in a severe disciplinary action from the Accounting and Corporate Regulatory Authority (ACRA). It also includes a lot of extra work, should a company close down or wind up its business. For a company to be removed from the register, it can take up to 5 months.

Setting up a company in Singapore is considered to be the most suitable business structure for businesses with a view to growth. The registration of a business as a company as against other business structures also confers other significant benefits mentioned below:

Easy in raising capital for the company
Owner transferability is easy to transfer.

Steps in Setting up a Company In Singapore

Singapore is the favorite choice for businesses for a reason. Setting up a business in Singapore can be done in three simple steps, as mentioned below:

1. Select the Business Entity

Though other options exist, many new businesses prefer to register as a “private limited company” due to the convenience and flexibility it offers. On top of that, shareholders beyond their share of capital cannot be held liable for debts and losses. Designated in such a way, your company is known as a taxable independent legal person.

2. Setting Up a Company in Singapore

The Singapore Companies Act governs the private limited company. The company must fulfill the legal and lawful requirements as dictated by the Inland Revenue Authority of Singapore (IRAS) ACRA and. The titles contain:

Name of the Company

must be approved by the ACRA; it should be unique.

Shareholders

There should be a minimum of one shareholder.

Paid-up capital

At least S$1

Singapore Secretary of the Company

Should be necessarily a Singapore resident.

Members board of Directors

At least one director must reside in Singapore.

Valid Business Address

For the address, a physical office is required. However, in some cases, home address can also be used.

After setting up a company in Singapore, you will get a Business Profile from ACRA as a newly-incorporated Singapore company. The business profile is an electronic report which gives detailed information concerning your business, including your registration number (UEN), shareholders, registration date etc. This profile is a mandatory requirement to open a corporate bank account, apply for licenses and permits and check on potential business partners.

3. Opening of a Corporate Account in Singapore Bank

After setting up a company in Singapore, a business is required to open a corporate account in any of the banks in Singapore. This is a logical step, as any business can not operate without a bank account. The major banks that can be considered for a corporate account are Citi Bank, Standard Chartered, HSBC, DBS, OCBC, and UOB. Nowadays, many banks demand the physical presence of the company stakeholders for opening a corporate bank account to fulfill the norms of KYC.

Documents Required For Setting up a Company in Singapore

Name of the company that is registered with ACRA
A brief explanation of the business activities
Detailed address of the registered business in Singapore
Detailed particulars of the following:
- Shareholders
- Member board of directors
- Company Secretary
Copy of the passport and proof of residential address overseas (only for foreigner entrepreneurs)
Submission of memorandums and articles of associations (only for foreign companies)
Singapore Identity Card (only for Singapore residents)

Business Actions required After Setting Up a Company in Singapore

After setting up a company in Singapore, the following actions are required to follow through in order to continue a smooth functioning of the company:

Permits and Licenses

There are certain permits and licenses that are required to be obtained after incorporation of the company. Some of the business activities required approved permits of government authorities. Examples of such businesses are travel agencies, liquor distributors, private schools, video companies, money lenders, financial advisers, childcare centers, banks, importers, retailers, and wholesalers of liquor.

Business Registration Number

After setting up the company a registration number is issued by the ACRA. This number is your business identification number and is required to be mentioned on the business / company related documents used for official and business correspondence.

Customs registration

If your business involves importing or exporting, you must register your company with the Singapore customs.

Goods and services tax registration

A tax on the supply of goods and services and on the import of goods in Singapore is levied and is known as Goods Services Tax (GST) . You must register for GST if the annual taxable revenue of your company exceeds $1 million per year.

Registration with Singapore Central Provident Fund (CPF)

There is a pension fund scheme in Singapore by the name of the Central Provident Fund or CPF. You are required to register with this fund if you are employing Singapore Citizen or a permanent resident. It is a compulsory fund in which employers and Singapore citizens / permanent resident employees contribute a specific percentage of their salary monthly.

What are the Perks to Setup a Company in Singapore?

Singapore is a haven for businessmen and entrepreneurs. It offers a variety of perks and privileges for the business owners who are setting up a company in Singapore. Below are the detail of the advantages that you get:

1. Advantages in terms of Tax Payment

Tax rate for Corporations: Singapore tax laws levy a Corporate income tax ranging from 0-17% from corporations.
Tax rate for Individuals: Singapore tax laws levy a Personal income tax ranging from 0-20% from the individuals.
Tax Exemptions: Tax exemptions are offered by Singapore Tax laws on the following:
- Dividends
- Capital gains
The facility of the unilateral tax credit is also offered by the Singapore government.
Reduced Withholding Tax: Any Individual or company in Singapore is entitled to a reduced rate of withholding tax on the income that has been foreign-sourced.
Pooling of the tax credit

2. Linked Market

Singapore offers a well-connected market place which has a strong local and international network of agreements that helps businesses a great deal. A number of these agreements are mentioned below:
- 74 Double Tax Agreements (DTAs)
- 41 Investment Guarantee Agreements (IGAs)
- 26 Free Trade Agreement/ Economic Partnership Agreement (FTA/EPAs)
In addition, Singapore offers a state of the art transport and logistics infrastructure that is vital for any robust market place.

3. Leading Economic and IP Growth Centre

Singapore offers one of the most developed financial ecosystem for setting up a company.
Singapore offers and low-cost financial accessibility.
There are a number of incentives that make Singapore a hub of IP (PIC).
Singapore is the biggest corporate banking hub of Asia, with over 160 banks.
Singapore is the biggest corporate marketplace with deep routed and liquid capital markets.

4. Effective Business Atmosphere

Singapore offers one of the best and effective atmospheres for business due to following reasons:

Singapore is the easiest place for doing business in the World.
Singapore is a leading center of arbitration.
Singapore has a clear and very efficient tax system.
Singapore has an educated and skillful work / labor force.

Summary

Singapore may be the easiest place to setup a company. however, setting up a company in Singapore isn’t that smooth a job. Therefore, hiring a good, professional and reputed corporate secretarial services firm is a recommended way forward.