Starting your own company in Singapore
If you are thinking of starting a business in Singapore, you must first decide on a legal structure for it. Usually you'll choose either a sole proprietorship, a partnership, or a limited liability company (“company”).
For entrepreneurs, the best legal structure to use among these three choices is that of a company. A company is considered to be a separate legal entity from its owners and provides the most advanced, flexible, and scalable type of business structure in Singapore.
Company at a glance
With a company, you can enjoy many legal and tax benefits and this structure also makes it easy for you to raise capital for your new venture. In a company, the liabilities of the owners are limited to the assets in the company and their personal assets are protected from business liabilities. Some of the key advantages of a company over other forms of business structure include:
- Separate legal entity
- Limited liability
- Perpetual succession
- Ease of raising capital
- Professional image to partners and employees
- Easier transfer of ownership
- Tax benefits and incentives
There are two main types of companies in Singapore: private limited companies, where there are less than 50 shareholders, and public limited companies, which have at least 50 shareholders and its shares are made available to the general public.
Entrepreneurs starting new business ventures will typically register their business as a private limited company.
After you have decided to incorporate a Singapore company, the next course of action will be toregister your company. All companies in Singapore are governed by the Singapore Companies Act (Cap 50 of the 1994 Revised Edition of the Singapore Statutes).
There are two ways to get this done: you can a) use the Singapore government’s online portal at www.bizfile.gov.sg to complete the filing and registration requirements yourself; or b) choose the services of a professional firm to do this on your behalf.
The second option is a requirement by law for all foreigners who wish to set up a company in Singapore. Even for local entrepreneurs, due to the legal nature of a company, it’s highly advisable to engage a professional firm to not only manage the initial incorporation but also the on-going statutory compliance for their company.
The company incorporation process in Singapore involves two main steps: (a) registering the company name; and (b) incorporating the company. All Singapore companies are registered with Accounting and Corporate Regulatory Authority (ACRA).
Step 1: Register company name
Before a company can be incorporated, you must first secure a name for the company from ACRA. In most cases, the approval process for the company’s proposed name takes 1-2 hours unless the proposed name contains certain restricted words (such as bank, finance, law, media, etc.) or if the name contains certain undesirable words.
A name containing the restricted words might require the review and approval from a corresponding external government authority. If the name is referred to an external authority, the name approval may get delayed by few days or weeks. Therefore, to speed up the process of getting your company name approved, make sure it:
•Is not identical or too similar to any existing local company names
•Does not infringe with any trademarks
•Is not obscene or vulgar
•Is not already reserved
A fee of S$15 is charged for this process by ACRA. Once you have obtained the notice of approval, you will need to incorporate your company with that name. An approved name will only be reserved for 60 days from the date of application, although you can extend the name for another 60 days by filing an extension request just before the expiry date.
Step 2: Incorporate Company
The next step is filing the incorporation request and obtaining approval from ACRA. This can be completed in a few hours assuming incorporation documents are ready and have been duly signed by all the persons involved, such as directors and shareholders. Here is a brief rundown of key information and documents required for incorporation of a Singapore company:
•Brief Description of Business Activities
•Copy of Identity Card for Singaporeans and Passport, Overseas Residential Address
Proof for foreign nationals
•Registered Address for the company
•Company Secretary Particulars
•Memorandum and Articles of Association (MAA) for the company
A registration fee of S$300 is payable to ACRA at the time of incorporating a private limited company. Once you have completed the entire registration process and received an approval notification from ACRA, your company is legally recognized.
After your company has been incorporated, here is a checklist for some of the typical post- incorporation tasks that you will need to undertake:
•Open a corporate bank account.
•Obtain the necessary business licenses as may be applicable for your company’s business activities.
•Establish an office. If appropriate, you may want to explore the idea of having a home-office in the early stages.
•Set up a website.
•Order business cards and stationery as required.
•Set up a bookkeeping system for your company’s financial affairs or engage the services of a professional accounting firm.
•Recruit staff as necessary.
When starting a new business venture, the best choice of legal structure isn't always obvious especially for first-time entrepreneurs. However, a limited liability company offers clear and distinct advantages over any other forms of business structures and therefore has become the industry standard in recent times.
Although the company incorporation process in Singapore is fairly straightforward, it’s highly recommended to engage the services of a professional firm to ensure that the company is incorporated and maintained as per the regulations of Singapore Companies Act. When choosing a professional firm, it’s helpful to choose a firm that can provide a one-stop service for all your company administration needs such as company administration, accounting, tax filing, business license application filing and related matters.
Jacqueline Low, Chief Operating Officer, Janus Corporate Solutions