Incorporate in Singapore: A Step-by-Step Guide to Business Setup

Are you looking to easily incorporate your business at a low cost? Do you want access to global markets in Southeast Asia? Singapore is the answer to all your questions. In this blog, we will help you understand the benefits Singapore offers for entrepreneurs like you. We also provide a detailed guide on how to incorporate your business and the major costs involved in incorporation.

Why Incorporate in Singapore?

Singapore is an ideal location to incorporate your business as it offers many advantages. In this section we discuss a few of the major ones.

1. Economic Powerhouse

With a stable and resilient economy, Singapore is ranked as the second least risky country for investment. It has a very high labor force participation rate (70.5% in 2021) in the Asia-Pacific region. This, coupled with business friendly policies, makes it the fourth largest recipient of FDI in the world.

2. Pro-Business Environment

Singapore has implemented many pro-business policies such as:

• Ease of business setup: You can set up a business online in 15 minutes (fastest in Southeast Asia).
• Favorable tax regime: There is a 17% corporate tax rate, no capital gains tax, and no withholding taxes on dividend payments.
• Strong IP regime: It has the strongest IP protection in Asia, creating an innovation-fostering environment.

3. Enhanced Market Access

Singapore is strategically located to provide access to all countries in Southeast Asia. Businesses in Singapore enjoy increased connectivity to regional and global consumer markets through its 27 Free Trade Agreements (FTAs) and well-developed transport infrastructure.

Legal Requirements for Incorporation in Singapore

In this section we look at the legal requirements for incorporation in Singapore, starting with the type of business entity you can incorporate.

Types of Business Entities Available

In a Singapore business setup, all entities must be licensed and regulated by Singapore’s Accounting and Corporate Regulatory Authority (ACRA). There are 4 types of business entities you can choose from:

1. Business

This is the simplest form of business entity. It can either be a sole proprietorship with one owner or a partnership involving anywhere from 2 to 20 people. There is unlimited liability, as owners are personally liable for the debts and losses of the business.

2. Company

A company can either be public or private. A private company can have up to 50 shareholders, whereas a public company can have more than that number. The company has a separate legal existence from its shareholders. The shareholders have limited liability and are not personally liable for the debts and losses from business operations.

3. Limited Liability Partnership

In a limited liability partnership, all partners have limited liability towards business. An LLP has a separate legal existence from its partners.

4. Limited Partnership

In a limited partnership, there are two types of partners: general and limited. A general partner is personally liable for the debts and losses from business operations, whereas a limited partner faces limited liability. This type of setup is not registered as a separate legal entity.

Eligibility 

To set up a business in Singapore, you must:

• Be at least 18 years old
• Have at least one partner locally residing in Singapore
• For business, limited partnership, and limited liability partnership, the owner’s or partners’ Medisave must be up-to-date

You must comply with all requirements during the registration process and ensure continued compliance with the regulations post-registration. If you are a foreigner residing in Singapore and want to start a business there, you can find more details here.

Step-by-Step Process to Incorporate in Singapore

To make your business incorporation process simpler, in this section we lay down a few key steps to follow.

1. Choose Your Business Structure

There are 4 types of business structure you can choose from: business, company, limited liability partnership, and limited partnership. Choose an appropriate business structure after making a thorough evaluation of factors such as:

• Capital requirements to conduct business operations
• Extent of liability you want to take
• Contribution you can make towards capital requirements
• Extent of decision-making control you want to retain

2. Register Your Business Name

You can either register your business name first and then register the business, or register both in one go.

To register your business name online, follow these simple steps:

1. Check for the availability of your business name.
2. Register your business name on the BizFile platform by entering your business name.
3. Provide details on primary and secondary (optional) business activities as per the Singapore Standard Industrial Classification code. 

Business names are usually approved in 8 to 20 days. Once approved, the business name is reserved for 120 days. You should register your business within this time period, or you will lose your reservation on the business name.

3. Complete the Incorporation Process

The process for incorporation varies post-business name registration depending on the type of business structure you have chosen.

1. Business (Sole Proprietorship/ Partnership)some text
   1. Provide a business address and a residential address in Singapore.
   2. Register your business on the Bizfile platform.
   3. For partnerships, official registration can take place only when all partners have consented to the application.

The registration takes around 15 minutes to be approved. If approval from another government agency is required, it can take between 14 and 60 days.

2. Company

If you register as a company, you must:

1. Select a financial year (of 12 months or 52 weeks) at the end of which you file annual returns and hold an Annual General Meeting (AGM).
2. Appoint at least one director and one company secretary. Provide personal information of appointed officers: NRIC, contact information, nationality, and residential address.
3. Prepare a constitution which contains:some text
   • Company’s name and registered office address
   • Liabilities of members
   • Amount of share capital and number of issued shares
   • Rules and regulations of business conduct
4. File your application for registration on the Bizfile+ platform. Ensure all appointed officers endorse the application within 60 days.

3. Limited Partnership

The registration process for an LP is similar to that of a business. You can register your business for a period of 1 year or 3 years.

4. Limited Liability Partnership

The registration process for an LLP is also like that of a business. Upon registration, you need to file the declaration of solvency/insolvency annually.

4. Obtain Necessary Licenses

Once you have registered the business, you may require licenses or approvals from government agencies depending on the nature of your business activity. You can check the licenses applicable based on your business activity here. You must obtain the necessary licenses before commencing your business operations.

Common Challenges and How to Overcome Them

Problem of Compliance

While setting up and operating a business in a foreign country, understanding complex regulations and ensuring compliance becomes crucial. Compliance requirements vary with the nature of the business entity. It does not stop with registration of the business, but is required post-registration too. Failure to comply with these requirements can invite monetary penalties from ACRA.

Solutions

You can hire a trusted third-party service provider like Commenda to ensure timely compliance, while you focus your efforts on developing the business.

Conclusion

Before deciding to start a business in Singapore, you need to critically evaluate the benefits offered against your business objectives, needs, client/ customer base, capital, and operational requirements. It is important to take time and analyze all factors before making any decision, as the decision to set up a business in Singapore has long-term implications.

If you decide to start a business in Singapore, you can book a demo with Commenda. We offer end-to-end solutions right from incorporation to compliance.