Many factors make Singapore a preferred location for startups. For starters, the city-state ranks first in the world in the Global Talent Competitiveness Index (GTCI) 2022. The GTCI is an annual benchmarking report that measures how cities grow, attract, and retain talent.
The city-state also ranks first in the world as the country with the best quality infrastructure. However, there are strict regulations on business startups in Singapore. Moreover, only the toughest businesses survive in the competitive open economy. That’s why you should consider these 7 things before starting a business in Singapore.
A Solid Business Plan
A business plan is a written document that acts as a roadmap, showing the goals and implementation plan of a business. Basically, a business plan isn’t a mandatory requirement for setting up a business in Singapore.
However, as mentioned earlier, Singapore is an open economy that facilitates foreign trade in goods and services. Therefore, it’s important to go a step further and get everything in place for a successful company setup in Singapore.
A business plan is a roadmap and a reference point when things get complicated. Secondly, it can also serve as an argumentation tool for investors to raise capital for your venture; Singapore government agencies offer grants to qualified foreigners, citizens, and residents.
A business plan for your company operations in Singapore mustn’t be pages upon pages of documents. In fact, infographics highlighting core company elements should do.
Such core company elements include company incorporation data, the target audience, market research (including competitor analysis), operations plan, and managerial team (including what they bring to the table). Other factors include a corporate profile, industry overview, goals and strategies, financial plans, implementation plans, a development budget, and a growth and sustainability plan for a given period
Company Name Registration
Company name registration is the first mandatory step in incorporating a business. Singapore’s Accounting and Corporate Regulatory Authority (ACRA) oversees company name registration and sets up parameters for acceptable company names as follows.
First, the proposed company name must be unique to your company only, and any similarity to existing companies is grounds for disqualification. Therefore, conduct a quick search on the ACRA’s online business regulation and filing portal to ensure that your proposed company name meets the unique criterion. Although you can adjust your company name to make it unique, the ACRA has a list of name modifications that do not qualify as unique, so avoid them.
Second, the company name should be free of profanities or words that the ACRA considers vulgar. Third, the proposed company should not feature any trademarks within or outside Singapore, including modifications of existing trademarks. Lastly, although not mandatory, your company name should reflect your business industry for easy identification by potential customers.
Once the ARCA approves your business name, you can pay to reserve the approved company name for the next 120 days while completing other incorporation prerequisites. Company name approval takes as little as 15 minutes for companies that do not require a referral from a relevant industry authority. Those that require a referral take 14-60 days.
The minimum paid-up capital to incorporate a company in Singapore is S$1 in any currency. Therefore, you can increase the paid-up capital after incorporation.
However, while the city-state’s minimum paid-up capital amount eases the incorporation process, running capital is necessary to keep your company afloat. Therefore, consider the following avenues to raise capital for your company in Singapore.
The first option is to approach angel investors who provide expertise, mentorship, and business networks besides providing funding. However, their primary condition is receiving a substantial stake in the business. Second, consider venture capitalists as they offer capital on mostly similar terms to angel investors.
Third, Singapore’s government runs several grant programs, including the Startup SG Founder for first-time entrepreneurs and the enterprise development grand (funds for equipment, software, and infrastructure). It also runs the solutions productivity grants for companies developing new technology and efficiency-enhancing solutions. Other capital-raising avenues available in Singapore include bank loans, incubator and accelerator programs, and peer-to-peer lending.
A Business Structure
Singapore, under the ACRA, offers four different business structures, sole proprietorship, partnership, limited partnership, and limited liability partnership. The primary difference between the structures is company ownership and liability.
A sole proprietorship has a solo owner who assumes full liability for the business. Second, a partnership constitutes at least two owners (maximum 20) who can be individuals or entities and assume full liability for the business’s debts.
On the other hand, a limited partnership features at least two partners, with one acting as a limited partner and the second a general partner. However, only the general partner is fully liable for the business.
In contrast, limited liability partnerships allow individuals and entities to conduct business while assuming separate legal entities from the company. Besides liability, other factors to consider when choosing a business structure include capital investment, number of owners, ease of dissolution, and risk level.
Singapore is a tax haven, utilizing the most straightforward and rational tax systems. For starters, company gains and dividends do not feature any taxes. Second, Newly-incorporated companies receive a tax break for the first three years in business, including a 0% tax on their first S$100000 earnings. Moreover, Singapore accommodates profits repatriation for foreign-owned companies.
However, the city-state has a corporate tax system for SMEs based on income and turnover progression. Therefore, ensure you understand the tax system to avoid non-compliance penalties, including fines and jail time of up to three years.
Make The Minimum Company Personnel Appointments
All companies in Singapore must have at least one shareholder, resident director, and company secretary before incorporation. Although shareholders can be foreigners, the resident director and company secretary slots are exclusively open to Singaporean citizens, permanent residents, or foreign residents holding an EntrePass (entrepreneurship pass).
Each pointee has unique responsibilities stipulated in Singapore’s Companies Act. The ACRA has a comprehensive criterion for qualifying candidates for each position.
Setting Up A Business Bank Account
A corporate bank account in Singapore has multiple benefits that a company cannot accrue from a personal bank account. For starters, corporate bank accounts ease filing taxes. Second, they facilitate multi-currency transactions.
Numerous global banks have set up shop in Singapore thanks to its status as a stable open economy. Therefore, a business bank account allows your company to easily conduct global transactions.
Singapore is the best place to start a company worldwide globally due to its infrastructure, talent, incentives, and favorable policies and procedures. However, a core understanding of your business goal is crucial to sustainable growth and profitability. Therefore, ensure your company has smart goals while fulfilling other company incorporation obligations.