Simplicities and Complexities in Incorporation of Company in Singapore

The Simplicity of Starting a Corporation in Singapore  

A company can be incorporated in as fast as 60 minutes in Singapore. In most countries, this process of the incorporation of a company usually takes a day up to a week’s worth of paperwork and follow-ups with various government entities.  In Singapore, the requirements needed by local government agencies for the incorporation of company can be done online, making it very convenient and hassle-free for businessmen and investors.

Here are some truly enticing reasons why starting a business is almost like a walk in the park in Singapore:

1. Taxes are LOW.
2. There is zero tax on the capital gain.
3. Incorporating of company can be done in less than an hour.
4. A foreigner wholly (100% shareholding) own a company in Singapore (and the tax treaties allow various countries to put up their business) 

Requirements:

If you are a foreigner who is keen on registering a business in Singapore, you only need to have the following:

• a local registered address
• a Corporate Secretary
• a local director
• paid up capital of at least $1 per share

How do I process incorporation in Singapore?

Choose a name for your business. If it is available, you are now step closer to incorporation.  We will check if the company name you have chosen is available. The only thing that you need to do is to send us your IC or passport copy, details on directors and shareholders. We will prepare all the necessary documents, send them to you for electronic signature, and submit them to ACRA (a government entity that registers companies). On your end, it is just a message thread in a secure chat. Once a UEN has been issued, your company is operational.

How long does incorporation take?

Once all the documents are ready, it usually takes us less than an hour to the incorporate of company. It mostly depends on when you are comfortable with providing all the details, as well as the service hours of the authorities. Our record stands at 38 minutes and we keep getting better.

Do I need a company address?

Yes, all Singaporean companies must have a local registered address. It goes on all legal documents. If you do not have an office address, you can use our service. We will handle all your incoming letters, scan and store them in your account so you have easy access to all your documents. You can also use your residential address as your company address if your business is not going to disturb your neighbors. However, you might need additional approval from authorities for this.

What’s Corporate Secretary?

A corporate secretary is a person responsible for all necessary documents required by law. For example, issuing company resolutions, managing regulatory filing and maintaining company books. Every Singapore business must have one. This critical role requires various certifications and involves a lot of responsibility.

Who can be a director?

Anybody above 18 years old: Singapore locals or foreigners. You can have as many directors as you want, or it could be just you. 

What do I need to start a company in Singapore from Hong Kong?

In short, you will need the following:

1. Company name
2. Physical Singapore address
3. Corporate Secretary
4. Resident Director
5. Shareholder
6. Paid-up capital

1. Company name

A company name has to be unique. Come up with a brand new word or combination of words, and register with ACRA, the Accounting and Corporate Regulatory Authority of Singapore, the national agency that registers and oversees the business. If you want to register a name fast, do not use words like ‘finance’, ‘media’, ‘education’, ‘Singapore’, ‘security’ or ‘international’. These words refer to the types of businesses regulated by separate government authorities, so ACRA will send your application to the relevant authorities for review. The name may still be approved but takes a couple of weeks longer.

2. A physical Singapore address

A Singaporean company must have a registered address. It has to be a real office mailbox that you regularly check. Most companies make use of corporate service providers for a fee to register office addresses. ACRA needs this address to contact your company by post and other means.

3. Corporate Secretary

Every company must have a corporate secretary. It is an officer who tracks changes in your company’s structure and top management, compiles papers, and reports to the government about your business. Make sure that the person you hire for this role is qualified and have experienced in handling the duties of the job. They would also need to be familiar with Singapore’s Company Act.

You need to appoint one within 6 months of the date of company incorporation, but you can do it right away to have the officer manage your incorporation papers. If you are the sole shareholder and resident director, you cannot be the corporate secretary.

4. Resident Director

Foreigners need a work pass like an Entrepreneur Pass to act as your company’s local director. If you do not have a work pass yet, you can choose to appoint a Nominee Director (or ND). The ND does not play any role in your day-to-day operations. They are appointed to fulfill Singapore’s regulatory requirements.

Here’s how to select a Nominee Director:

1. A real person (i.e. not a company, and not a business identity)
2. Ordinarily a resident in Singapore. This can be a Singapore citizen, Permanent Resident, or an EntrePass holder. (Note: Someone who is on an Employment Pass in Singapore, can only be a Director for the company they are sponsored under)
3. Be at least 18 years old.
4. You can have as many directors as you want, but at least one of them needs to be a local resident (i.e. their usual place of residence is in Singapore).

*** Take note that Employment Pass holders can only be the Director for the Company that sponsors their pass.

5. Shareholder

The sole director may also be the sole shareholder of the company. So basically, you only need two separate individuals to set up a company in Singapore – the director and the corporate secretary! As a foreigner, you can own 100% equity of the shares in your company.

6. Paid-up capital

A private limited company needs a paid-up capital. In most cases, SGD$1 is enough. Usually, the amount is between $1 to $1000. Paid-up capital can also be in other currencies. You can increase the sum, any time after your company is incorporated.

What business structures are available for me to register in Singapore?

Before registering your company, decide which company structure suits your business. Ask yourself the following questions.

• How many owners will there be in the business?
• How much capital do you have to invest?
• Do you want to bear the liability personally?
• What are the advantages and disadvantages of different business entities?
• Is the business entity easy to close?
• How much tax will you pay under different structures?

There are 4 main types of business structures a foreigner can choose from:

1. Sole-Proprietorship or Partnership
2. Limited Liability Partnership (LLP)
3. Private Limited Company (Pte Ltd)
4. Company Limited by Guarantee

A private limited company is the most favored business structure for Singapore business registration. Choosing the right business structure is the key to successful company registration in Singapore as it can affect the taxation of your business. Look at this document to compare the different business structures side by side.

Do I have to come to Singapore to open a company?

No, you can be anywhere in the world with an internet connection and a smartphone to open and run your business remotely from abroad. You may need to fly in once and that is only to open your bank account.

To make your life easier, Onestop Professional Services will assist you in opening your business account fully online without having to come to Singapore at all. This is useful in the current pandemic situation where business travel is restricted.

Even if you fly into Singapore, foreigners cannot self-register a new company. You would need to hire a business registration provider. They would have the exact solutions to assist you with your registration, saving you time and money.

How long does it take to register a company in Singapore?

With all the required incorporation documents in hand, you can get your business incorporated within 1 day. Applications are processed even faster, within 15 minutes.

Can I move to Singapore if I open a business there?

Considering to be closer to your operations? Sure. There is a visa called the Employment Pass for you to consider. It takes around 6 months to receive it. To qualify for it, you would have to pay yourself a salary. It cannot be less than $3,600, which is the starting pay of a fresh graduate. If you have more working experience, your salary should be between $6,000 to $8,000. This will be needed especially when you plan to bring the family to move to Singapore with you. They would need Dependents’ Passes.

See also: How to move to Singapore under Employment Pass?

Is it mandatory to have employees in Singapore?

No, this is not needed at all. A foreigner can open a business in Singapore without a single employee there. What is needed from you is that you have a resident director and a corporate secretary.

How much does it cost to set up and maintain a registered company in Singapore?

Depending on your needs, you may find yourself hiring professional help to manage your company’s incorporation process, as well as other relevant services that help to lessen your load as the company director. These are costs that you need to budget for.

You would need to consider the cost of maintaining your company every year as there are many other administrative matters involved in running a company.

Should you move to Singapore, you’ll also save on the nominee director service Singapore, but will pay for the following:

Employment Pass (S$800-S$1,500)

Dependents’ Passes (S$400-S$600 per dependent).

What taxes will I pay?

If you are a Hong Kong foreigner opening up a business in Singapore with your source of income generated only in Singapore, you will be taxed corporate tax and personal income tax (for updated rates, please check here) in Singapore. Here we will explain more about corporate tax as we can help you figure this out for your business.

A company is taxed on the income it earned in the preceding financial year. This means that income earned in the financial year 2019 will be taxed in 2020.

What is the current Singapore corporate rate tax set at?

Singapore’s corporate tax is low, clear, and transparent. It’s set at a flat rate of 17%, regardless if it’s a local or foreign company.

What income is taxable in Singapore?

There are two types of income that will be taxed in Singapore.

1. Income that is derived from Singapore
2. Income received in Singapore from outside the country

It’s worth noting here that after all the incentives, exemptions and deductions, the effective tax rate you pay is lower than 17%. To find out more about Singapore’s corporate tax we explain more here: Singapore Corporate Income Tax: Rates, Relief, System.

Additionally, for any income you receive in Singapore from outside the country, like dividends, can be exempted provided it meets certain criteria. One exemption is if your foreign income received in Singapore is already subject to tax in the foreign country from which the income is received. There are more exemptions to tax that you can enjoy.

Do I have to pay tax to Hong Kong as well?

As a foreigner from Hong Kong doing business in Singapore, you might be wondering if you have to pay tax to the Hong Kong government, after paying tax to Singapore.

Just like Singapore, the Hong Kong tax system follows the territorial source principle to determine which income is subject to taxation. Only profits sourced from Hong Kong are taxable in Hong Kong. Therefore, if your business is only making profits from Singapore, you would not have to pay any further corporate tax to the Hong Kong government.

Let’s look at an example to make things clearer:

Sarah has a tech start-up registered in Singapore as she wishes to take advantage of the relatively low corporate taxes, and the generous support given to start-ups in terms of tax exemptions, grants, and networks. She lives in Hong Kong and works in Hong Kong. Her clients are from Malaysia, Singapore and Indonesia. They pay her through her company’s bank account in Singapore. The profit from this amount will be taxed by IRAS. As there is no income earned in Hong Kong, there is no need to pay taxes there.

Answering questions on tax can be more complex as your business grows. As each company operates differently, there is no one size fits all answer to tax questions.

It depends on many factors like:

1. How much of your business income is taxable?
2. Which country did you derive your income from?
3. Which country is your company a tax resident of?
4. What is your company’s structure?

You might be overwhelmed with information and confusion at this point. No worries, it happens to the best of us. Drop us a chat if you need to talk to any of our friendly expert accountants.

Can I prepare and file paperwork requirements myself as a foreigner?

As a foreigner or non-resident, you cannot register for a company on your own. To avoid this, you can hire an authorized filing agent. If you choose this option, find out whether the state fees are included in the price, some agencies do not include this and charge you extra.

After the successful registration, ACRA sends you an Incorporation Email. In Singapore, it serves as the Incorporation Certificate. You can obtain its hard copy by paying appropriate fees.

You can set up a company in less than an hour. Applications are processed even faster, within 15 minutes.

To sum up, this is all that you need to incorporate your first company in Singapore within an hour.

Here is a checklist of what you would need:

1. Come up with a company name
2. Register a physical Singapore address as your local company address
3. Appoint a corporate secretary
4. Nominate a resident director
5. Nominate at least one shareholder
6. Paid-up capital of at least S$1 (equivalent to around HKD$5.58)

We wish you all the best in starting your company in Singapore!

Next Steps

If you want to register a Singapore company from Hong Kong, or you need more information, we are here to help.

Start a Singapore company from Hong Kong

Onestop Professional Services, a leading corporate service provider Singapore explained that being a transparent and efficient country where all filings are done online means there are few complexities that can delay formation.  “We often see companies opting for listing in Singapore due to its high standards of corporate governance,” she added, pointing to the many incentives on offer for firms looking to start up, including a tax exemption scheme for nascent businesses. 

However, doing business in Singapore is not without some challenges, and demand from global businesses is providing tough competition and reducing margins, as well as increasing business costs, mostly in rentals and a squeezed labor market.

Starting a Business

Businesses looking to start-up in Singapore must register online with the Accounting and Corporate Regulatory Authority, where a name search can be conducted, and filing for the company incorporation and tax number (GST) can be completed. A company seal and registration for Work Injury Compensation Insurance at an insurance agency should also be completed. 

Dealing with Construction Permits

There are 11 procedures involved when dealing with construction permits, although the process should take less than a month to complete. Businesses must obtain written permission from the Urban Redevelopment Authority before getting structural plans approved, obtaining technical clearance, and consulting with the Central Building Plans Unit of the Ministry of the Environment and Water Resources, as well as the Land Transport Authority and Commissioner for Workplace Safety and Health. 

Getting Electricity

It takes 36 days to get an electrical connection, most of which is spent opening an electricity account and paying the connection fee before external works are carried out. 

Registering Property 

Registering property can be a complicated ordeal, particularly in relation to payable fees. Companies new to the environment will spend several days conducting online searches on various government bodies, from the Inland Revenue Authority, the Land Transport Authority, Ministry of Environment, PUB-Water Reclamation Network Department, and Urban Redevelopment Authority. 

Getting Credit

Singapore ranks 12th in the world for ease of getting credit, but businesses should be aware that individuals and firms are not listed in a public credit registry with information on their borrowing history from the past five years.

Protecting Investors

The World Bank and IFC rank Singapore in second place in the world for the strength of investor protection thanks to its strong performance on the disclosure, liability, suits, and protection indices. 

Paying Taxes

Companies are required to make five tax payments per year which takes an average of 82 hours of business time to complete. Corporate income tax is competitive and is filed online, and social security contributions and VAT are also dealt with on the web. 

Trading Across Borders

Singapore has historically acted as a global trading center and is the most cost-competitive region in the world for trading across borders. There are four documents to prepare when exporting and importing, taking five days or less to complete on average.  

Enforcing Contracts and Resolving Insolvency

It takes 150 days to enforce a contract compared to the OECD average of 510. Resolving insolvency takes well under a year, compared to 2.9 years in East Asia and Pacific and 1.7 years across the rest of the OECD. 

Culture

There is a strong emphasis on relationships in Singapore, which means the process of doing business should be unrushed and based on personal development at first, rather than the facts and figures of corporate life. A relatively young country, Singapore draws influences from both East and West, which can make it a hotbed of cultural values. 

Onestop Professional Group

We have the local knowledge to help you navigate these minefields. Whether you want to set up in Singapore or just want to streamline your Singaporean operations, talk to us at +65 96449531 and contact@onestop-ca.com

Originally published by onestop-ca.com