The Definitive Guide to Registering a Company in Singapore

Singapore is the world’s easiest country in which to do business. Don’t take our word for it, it’s the World Bank who has been declaring that for 10 consecutive years. For decades, Singapore has been the gateway to larger, meatier Asian markets. With a highly-educated talent pool, straightforward and efficient administrative processes and attractive pro-business policies, it’s no wonder that registering a company in Singapore continues to be the obvious choice for entrepreneurs. In year 2016 Q2, the share of foreign-held companies in Singapore was 52%, an indication of the confidence that foreign companies have in Singapore.

And Singapore is home to some of the world’s best customers, too. According to a 2011 Boston Consulting Group report, Singapore has the highest concentration of millionaire households in the world, with 16 per cent of all households boasting at least $1m in assets.

Interested in company incorporation in Singapore? Look no further than this definitive guide!

Decide what type of business you want to register

Before going into the how and who, one of the first and most important questions is to be clear on what type of business it is that you want to register. Even if you are registering a company in Singapore through an accountant, who can take care of the administrative work, only you and your partners would have a clear idea of what type of organization best suits your business goals.

According to the Singapore Credit Bureau, private limited companies make up the biggest category of businesses in Singapore at 44.8%, followed by sole proprietorships at 40%.

Here is a drill down of what the types of businesses are and their requirements. You may find that you don’t necessarily need to set up a company and other organizations (e.g. Sole Proprietorship and Limited Partner) are easier and quicker to set up and maintain.

Sole Proprietorship

What it is:

A business that is owned by one person. Setting up a sole proprietorship is easy, involves minimal registration costs, and is also easier to maintain. In most cases sole proprietorships and partnerships are set up just 15 minutes after the business registration fee is made. As a sole proprietor, you can also own property in your own name.

The major downside is that you face unlimited personal liability for any losses, charges, or debts. In addition, you will be taxed at a personal income tax rate (max 20%), which is higher than corporate tax rates in Singapore (17%).

Partnership

What it is:

An organization with two more persons that have an aim of generating profit. Partnerships generally have 2-20 partners. If you have more than 20 partners, you need to incorporate a company.

Partnerships are also easy and cost-effective to set up and maintain. You cannot own property in the firm’s names, and partners are personally liable for debts and losses incurred by other partners.

Limited Partnership

What it is:

A partnership of two or more persons, with at least one general partner and one limited partner. There is no maximum limit to the number of partners.

The General Partner takes on unlimited liability for debts and losses while the Limited Partner is only liable up to the amount of his agreed contribution.

Limited Liability Partnership

What it is:

A partnership where the individual partner’s own liability is generally limited. At least two partners are required, with no maximum limit.

In an LLP, all partners are only personally liable for losses that are incurred due to their own wrongful actions, and not the actions of other partners. Unlike the other two forms of partnerships, you can own property in the name of the firm.

While still easy to set up and maintain, LLPs are obliged to an annual declaration of solvency/ insolvency and the ability to pay its debts during the normal course of business.

Private Limited Company (Pte Ltd)

Practically speaking, foreigners who choose to open and operate a business in Singapore would choose to open a Private Limited (Pte Ltd) company.

What it is:

A business and legal entity that is separate from its shareholders and directors. An exempt private company has 20 or fewer members with no corporation that holds beneficial interests in the company’s shares. A Private Limited Company has 50 or fewer members and a Public Company can have more than 50 members.

In a company, members are not personally liable for debts and losses of the company.

Setting up a company is the most costly out of all the other types of businesses. Specifically, you will need to appoint:

  • At least one director who is ordinarily resident in Singapore. The director is responsible for managing the affairs of the company and providing directions. Directors are also responsible for acting in the best interest and benefit for the company, and ensure that conflicts of interests are avoided.
  • An auditor within 3 months after incorporation unless your company is exempt form audit requirements (ie less than S$10m in revenue).
  • A company secretary within 6 months of incorporation. The company secretary must also be residing locally in Singapore and must not be the sole director of the company. In cases where the company fails to comply with laws, the secretary may also be held liable.

In addition, a company is obliged to file annual returns and to comply with requirements for annual general meetings (AGM). The first AGM must be held within 18 months of incorporation and subsequent meetings must be held within 15 months from the previous AGM. Annual returns must also be filed within 30 days after the AGM.

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Requirements for Registering a Company in Singapore

Regardless of the type of organization that you have chosen from the above, there are the requirements that are uniform throughout. You need to:

  • Be 18 years old and above
  • Be an ordinary resident in Singapore, or otherwise have one as an authorized Director.
  • In the case of registering a company as a foreigner, if you wish to be a local director of the company, you could apply for the EntrePass or an Employment Pass from the Ministry of Manpower. (More to follow on this)
  • Be discharged if you had been in bankruptcy. Persons in undischarged bankruptcy cannot manage or be a director of the company.

Registering a company in Singapore itself is a straightforward process that can be done via ACRA’s electronic filing BizFile system. Either log in with your NRIC and SingPass. If you are a foreigner, engage a filing agent (e.g. accounting firm) to do so on your behalf.

ACRA is the Accounting and Corporate Regulatory Authority of Singapore. This is the organization with whom you will be registering your business, filing annual tax returns, and converting business types (e.g. converting from a Company to a Limited Liability Partnership).

Registration Costs

Now that you have an idea of the type of organization that you want to set up, here are the costs of doing so:

Sole Proprietorships, Partnership, Limited Partnership

Name Application Fee: S$15
Business Registration Fee (1-year): S$100
Business Registration Fee (3-year): $160

Limited Liability Partnership

Name Application Fee: S$15
LLP Registration Fee : S$100

Private Limited Company (Pte Ltd)

Name Approval Fee: S$15
Registration Fee: S$300

Requirements Specific to Foreigners

For foreigners interested in registering a company in Singapore, you don’t actually have to reside in the country. However, you must:

  • Appoint a locally resident director If you do not wish to stay in Singapore to manage your business.
  • To assume the role of a local director, you need to apply for the EntrePass or Employment Pass (EP) with the Ministry of Manpower (MOM).
  •  Engage a registered filing agent (e.g. accounting firm, law firm) to submit the online application on your behalf. Many of these firms that incorporate companies for foreigners also offer immigration services, such as applications for employment pass and dependent passes. Opting for a full-service package will save you the administrative hassle and time in dealing with various agencies.

Setting Up a Branch of a Foreign Company

If you wish to set up a branch of a foreign company there are 3 options:

  1. Establish a Representative Office – This is a temporary entity used to explore new markets or conduct other research. All legal requirements fall upon the parent company.
  2. Branch Office – This is a legal entity and can make contracts in the name of the local branch. However, all responsibility, liability and obligation fall upon the parent company. For taxes the Branch office is treated as a non-resident entity and is therefore unable to access the benefits of the Singaporean corporate tax system.
  3. Subsidiary Company: For most companies this is the best option as a subsidiary is treated as a local entity for tax purposes. The foreign entity may own 100% of the local company as sole shareholder. For liability purposes the subsiderary is treated as being separate from its foreign owners.

How to Move to Singapore

There are two common ways for entrepreneurs to move to Singapore to run their businesses. The first is the Entrepass (not recommended!) and the other is via an Employment Pass (EP).

Entrepass

The EntrePass is specifically for foreign entrepreneurs who want to start and operate a new business in Singapore. It is valid for up to a year, and can be renewed. While you don’t need a minimum salary to apply for the Entrepass, there are a number of strict requirements that need to be met:

Your company needs to have at least $50,000 in paid-up capital and you need to hold at least 30% shares in the company. In practice, a paid up capital of S$50,000 may be deemed too low for the company to achieve its objectives and additional funding will probably be required.

Your company also needs to fulfill at least one of the following requirements:

  • It has funding from a government-accredited Venture Capitalist or business angel.
  • Your business holds intellectual property
  • It has research collaboration with A*STAR or a university in Singapore
  • It is an incubatee at a government-supported incubator.

Your business can’t fall into categories of business that are typically reserved for local entrepreneurs. For example, coffee shops, bars, employment agencies, etc.

Getting Entrepass is TOUGH; and what is even harder is to renew the EntrePass. For every year that you have held an EntrePass, you will need to increase the number of local jobs you create, and the total spending amount for the business. After 3 years in business you need to have a minimum of 6 local hires and a minimum business spend of S$200,000 per year. Ministry of Manpower calculates Minimum Business Spend as Total Business Spending (TBS) = [Total Operating Expenses – (Royalties/Franchise Fees/Know How Fees to Overseas Companies + Work Subcontracted to Overseas Companies + Remuneration to Applicant)].

For smaller companies the ongoing headcount increases may prevent them from being able to renew the Entrepass.

Remember, Entrepass and Employment Pass are only applicable if you want to be managing your business locally in Singapore. If you do not wish to reside in Singapore, these do not apply.

There is also a less tedious and more common way of entering Singapore as a foreigner, and that is through the Employment Pass.

Employment Pass

The Employment Pass (EP) is a work visa that is issued to foreign employees, managers, and owners or directors of Singapore companies. It is typically issued for 1-2 years at a time and is renewable. Having an EP allows you to live in Singapore and travel in and out of the country, and is also a platform for getting the Singapore Permanent Residence status if you desire to do so in future.

In contrast to the difficult requirements of the EntrePass, Employment Passes are a lot more manageable. Here are the key requirements:

  • A minimum salary of S$3600 a month from 1 January 2017. A higher salary is usually required of mature applicants with experience. Especially if they are applying to enter SIngapore in a Director capacity.
  • Educational qualifications and work experience. For example, a tertiary degree from a recognized university. In the absence of formal education qualifications, strong record of professional employment and good salary will be considered.

Usually, foreigners registering a company in Singapore would set up a private company and have the local director of the company employ them as the Director of the company. However, as this route to Singapore residency has been abused by some in the past, the Ministry of Manpower has tightened their requirements. The company will have to demonstrate its business viability. This could be with a combination of IRAS filings, a formal business plan, established contracts, and paid up capital. The company’s business plan may also be evaluated by SPRING Singapore, a government agency that deals with the development of startups and SMEs.

Registering a Company in Singapore?
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Start Your Company

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Open a Corporate Bank Account in Singapore

If you work with an accountant then getting your Singapore company set up is pretty straightforward and will take only a few days.

However in this age of anti-money laundering (AML) and Know Your Client (KYC) getting a bank account for your Singapore Pte Ltd can be a bit trickier than in days past.

In most cases, to open an account as a director, you will need to be physically present in Singapore with your ID (passport). Get your accounting company to introduce you to the bank officer so that they can visit you at the accountant’s office to avoid the hassle of going to the bank branch yourself. After you’ve received the completed paperwork following registering your company in Singapore, you can meet up with a bank officer.

There are a few types of accounts that you can choose from, ranging from basic and low-cost accounts geared towards startups to more advanced and tailored solutions for larger corporations.

Here are some attractive low cost options for new businesses:

OCBC Business First Account

The OCBC Business First Account is a great option for startups with a low minimum monthly average balance of S$5,000. The account requires no minimum balance for the first six months, which will be very helpful for enterprises with a large cash outflow at the onset. The low initial deposit of S$3,000 is also an easy hurdle to cross.

There are also value added services that you can top up your account with, or an upgraded version, which gives you a number of free GIRO and telegraphic transfers.

DBS Digital Account

DBS offers a great range of corporate accounts, including accounts for Social Enterprises, SMEs, and institutional investors. However, one account that stands out, and perhaps one that seems reflect changing trends is the Digital Account. While there’s a monthly account fee of S$18, there is no hefty fall-below fee as no minimum monthly balance is required. You can also apply online for the account in just five minutes and have your documents picked up at your convenience.

Registering a Company in Singapore is Easy

That’s it! If you made it this far then you know everything about registering a company in Singapore. If you are a foreigner interested in registering a company in Singapore then the key takeaways are:

  • Your business type will probably be a Pte Ltd
  • If you are an existing foreign company then you probably want to be a local subsidiary
  • You’ll need to come to Singapore to open the company bank accounts
  • If you want to live in Singapore to run your company then you should take advice about when to apply for an Employment Pass. Some people suggest filing an application at least 6 months after the company is established. Before 6 months, MOM may wonder why you aren’t applying via Entrepass.
  • If you don’t want to live in Singapore then you’ll need a local director (provided by accounting firm)
  • An accounting agency can help you with all of the above, including local directors and corporate secretarial services.

Registering a Company in Singapore?
Our business support packages include FREE company incorporation

.

Start Your Company

 .