5 Business Incorporation Mistakes Startups Should Avoid

5 Business Incorporation Mistakes Startups Should Avoid

The process of business incorporation, at its core, involves turning a sole proprietorship or general partnership into a company that is formally recognised by a state of incorporation. This company is a legal entity that is separate and distinct from the owners of the business.

Although it may sound simple, the process of incorporating a business is actually quite complex. It requires technical knowledge to carry out business incorporation successfully, and a single mistake can cost a company thousands of dollars.

Continue reading this article to learn about the common mistakes startups should avoid when incorporating their business.

1. Launching a business too early

Starting a business can be an exciting feat. However, for any business to become successful, timing should always be considered as a crucial factor. One of the most common mistakes made by business owners in Singapore is launching their business too early. This may be due to various factors, such as lack of research or failure to understand the local market.

Before launching a business and making it a full-scale company, entrepreneurs should first do research and equip themselves with the necessary knowledge on business launching. They can do so by hiring a business consultant or joining several startup mentorship and guidance programs.

2. Lacking a clear business structure

It is a common requirement for entrepreneurs to have an understanding of the type of business model they want to follow before venturing into the corporate world. However, many business owners still seem to overlook this basic requirement and go straight ahead to launching their business without a clear structure.

As a result, many of these businesses are far less likely to succeed in the long run. Building a clear and well-defined business structure is the key to having a successful company. Startups can turn to business advisory professionals who can give consultation in developing a business structure that works effectively and profitably. The more thought and preparation are put into the design of their business model, the better.

3. Incorporating a business without support

Even though the process of business incorporation may appear relatively straightforward, many things can quickly go wrong along the way. For example, an inexperienced employee can easily send off incorrect documents, resulting in the incorporation application being cancelled or causing a lengthy delay in the process.

To avoid committing minor but significant errors during the incorporation process, it is highly advisable for startups to seek the support of a professional who provides company incorporation services. This professional helps businesses organise their papers and speed up their incorporation process.

4. Spending too much on unnecessary advertising

Branding and advertising are essential elements of a business. However, when a budding business spends too much on advertising beyond what is necessary at the moment, it can potentially incur significant losses in the future and quickly lose its way.

To avoid having more expenses than revenue, startups should avoid committing to over the top advertising. Their budget for advertising during their first year in operation must be low enough to leave backup funds in case of future failures. Otherwise, these startups are running the risk of putting themselves into debt.

5. Failing to comply with the regulations

Incorporation does not shield a business from local business regulations. In incorporating and running a company, compliance with the regulatory policies of authorities like the Accounting and Corporate Regulatory Authority (ACRA) is necessary. Failing to comply with these regulations can cost a business thousands of dollars in back taxes, fines, and penalties. It can also even put the company at risk of being padlocked.


Knowing what steps should be done and what mistakes should be avoided is essential in successfully incorporating a business, especially a startup. Business incorporation is a complicated process where mistakes can be costly. Hence, it is highly recommended for startups to seek the assistance of a professional to avoid committing any error during their incorporation process.

Get in touch with OneStop Professional Services if you are looking for experienced professionals to help you in setting up your corporate entity or company. We provide businesses with a number of services, such as accounting, company auditing, business advisory, company incorporation, and financial outsourcing. We are an audit company you can surely trust with all your business needs.