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Starting a business in Singapore: A step-by-step guide to opening a business

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Singapore is one of the best places in the world to start a business. However, some may feel intimidated when registering a business and have difficulty understanding the entire process of starting one.

In this guide, we will be breaking down the process into bite-sized content so that it is easier for you to understand. Our guide consists of the foundations of a business, the benefits and grants and what are the type of business entities you can choose before starting.

Benefits and Exemptions from starting a business in Singapore

There are many benefits when it comes to starting a business in Singapore. Singapore has one of the lowest tax rates and with a strong economy, it is easy to incorporate into the company.

In addition to the strong economy, Singapore has one of the best well-trained workforce and strict rules limited to foreign ownership and operation of a business. (Foreigners are still welcome to open their business in Singapore)

After setting up your business in Singapore, you will be able to access well-developed capital markets to access financial services and loans. 

Some businesses are also exempted or not required to register with the Accounting and Corporate Regulatory Authority (ACRA). We will explain further in the article which company is not required.

Preparation before starting a business

Before starting a business, it is important to have a sense of foundation before creating pillars. Invest some time into research and planning so that you would understand the market before entering.

Things to take note of before registering a business:

  • Get a clear vision of your customer’s needs and how your business can meet their requirements
  • Insights of your products or services that can meet the customer’s demands
  • Read up on your competitors, their constraints, and how you can be unique against them
  • A marketing plan to make sure you can connect and attract the target audience
  • A mentor, or a consultant can advise if you need help to get your business running.

Always remember that there is never a smooth road when it comes to handling a business, there will be bumps and detours along the way so be sure to have your foundations ready.

With all the pointers cleared, you are 1 step closer to registering a business in Singapore.

Raising Capital for Your Business

After mapping out your business ideas and understanding ways to reduce the constraints in your business, another step would be understanding the capital needed for your business.

For some, starting a business can start with little to no funds. However, it varies depending on your size, scale, and business requirements to run the business.

For example, a sole proprietor starting his/her own home-based tuition, web development, or advisory might be able to rely on their savings alone.

On the other hand, businesses that require products like F&B or retail shops are very capital-intensive and would require more capital to start.

In Singapore, there are different ways that a company can raise their capital:

  • Government Schemes: ACE Startups grant offers funding for first-time entrepreneurs and Startup SG Founder Grants are available for new businesses

In Singapore, the Government is also pushing the digital marketing and e-commerce sector for companies. You can head to this link for further understanding of the different types of Grants provided.

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  • Fundraising: If your business is revolutionary or something that the public has always needed. Using sites like Kickstarter or Indiegogo can help you raise funds from the public
  • Friends and Family: you can always rely on your loved ones to invest in your business. However, ensure that they understand the risks involved and how the investment payout would work.
  • Loans: All Bank loans are pretty straightforward. Do note that there is a limit to how much you can loan for your required business. Interest rates are also something that you should consider when applying so do look at the different bank offers.

Registering a Business in Singapore

In Singapore, there are 3 different types of business entities that you can register:

  • Sole Proprietor
  • Partnership/ Limited Partnership
  • Company

Sole Proprietor: If you are a single business owner, you will have easier control and all profits received will go to you rather than your shareholders.

Do note that the disadvantage of registering as a Sole Proprietor is that your liabilities are not separated from you and your company. The cost to register under Sole Proprietorship is $100, or $175 for 3 years and follow-up renewal would be $30.

Partnership/ Limited Partnership: A partnership allows two or more people to own the business together. Similar to Sole Proprietorship, Partnership liabilities are not separated from partnership and company.

Company: Compared to Sole Proprietorship and Partnership, liabilities and debts incurred by business are separated from owners’. As it is a limited liability, it is easier to raise funds and provide your business credibility

Do note that the cost of registering a private limited company in Singapore is higher than sole proprietorship. Registration starts at $300 and annual filing is $60.

Opening a bank account in Singapore

After registering for a business, opening a business bank account for your business would be more beneficial than using your personal ones. Singapore major banks do offer a good range of business bank accounts with low online fees. 

However, additional features would be charged with higher fees especially when it comes to dealing with foreign currency. A multi-currency business bank account that would suit your company that deals with suppliers from overseas.

One multi-currency account that charges low-fees is the Wise Business Account. Link provided Here would direct you to the account registration. I would suggest creating a personal account first before registering a business account to understand the features provided.

Hiring employees for your business (Registering with CPF)

When it comes to expanding your business, hiring employees would ease your workload and increase the efficiency of your business process. If you are planning to hire employees who are Singaporean. You would need to apply for a Central Provident Fund (CPF) submission number. You can do this online through ACRA BizFile for an easier application.

Some pointers to take note of are the employees’ rights. Employees (Non-managers/executives) who are earning less than $2,600 and workmen earning less than $4,500 are protected by the Employment Act. 

They must receive at least 7 days of annual leave during their first year in the company and 14 days for subsequent years. They are also entitled to 14 days of paid sick leaves.

Understanding taxes and how to file them

Based on the IRAS Corporate Income Tax (CIT) Rate, companies in Singapore are taxed at a flat rate of 17%

For start-up companies, there will be a 75% exemption on the first $100,000 on your income, followed by a 50% exemption on the next $100,000. This is only applicable to the first 3 consecutive years.

For more information and examples, you can head to the link Here for more details on the Start-up company taxes

Summary

Starting a business in Singapore may sound scary and difficult to some but with the required steps above, it would assist you in your steps to operating a business in Singapore. So remember to consider those small steps and plan wisely before registering your business.

Resources for business owners

Licenses, Permits, Government Grants and services: GoBusiness Singapore, E-commerce Grant

PDF Guide to setting up your business in Singapore: EDB’s 2021 Guidebook

Guides to filing your tax returns: IRAS’s New Company Start-up Kit

Multi-Currency Bank Account Registration: WISE

Programs and grants for Startups: StartupSG

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