How to Incorporate Your Business in Singapore

Starting a business can be a daunting task. Every decision entrepreneurs make has the potential to truly impact the future of their company. Registering your company is the first important step in growing a successful business. Therefore, it is important to understand the process and choices associated with registering your business.

Eligibility Requirements

To start off, the cost of setting up your business will differ based upon your citizenship and the business structure you choose. If you are a Singaporean citizen or a Permanent Resident, you must be at least 18 years old to set up a business. There are no additional requirements in terms of getting a work permit.

If you are a foreigner, you will need an Entrepreneurship Pass (or EntrePass) to set up your business. However, if you choose to operate from overseas, you must appoint a local nominee and apply for an Employment Pass for yourself. Service providers in Singapore charge an average of S$4,500 per application for the EntrePass and about S$850 for application for the Employment Pass.

Choosing a Business Structure

Singapore offers five distinct business structures: sole proprietorship, partnership, limited partnership, limited liability partnership and company. We recommend that you strongly deliberate on your choice of business structure since it can have a massive impact on registration costs, taxation, risk and liabilities.

Registration Costs

The cost of registering your business generally ranges from S$115 to S$135 depending on the company’s business structure. Most types only require an ACRA registration fee, though a “Company” structure would require extra S$700 to S$2,000 for company secretarial services.

New businesses are required to appoint a company secretary within six months of incorporation. This typically costs about S$700 to S$2,000 and includes the ACRA incorporation fee and a year of company secretarial services. These services commonly include other benefits such as company memorandum, articles of associations, share certificates, e-notice incorporation from ACRA, minutes from first board meeting and assistance to open a corporate bank account. We encourage businesses to carefully review each secretary’s benefits in order to choose a package that makes the most sense for their particular business.

For foreigners, the total costs can vary based upon their desire to operate the company from overseas or relocate to Singapore. For example, if you choose to operate from overseas you must appoint a local nominee director. On the other hand, if you choose to relocate, then you must apply for the EntrePass. With that said, the cost of registration remains the same for foreigners and locals.

Taxes

The amount of tax you pay directly depends upon your business structure. Companies are taxed as corporations via the corporate tax while all the other business structures are taxed as individuals per the personal income tax rules. This means that businesses with partnership structures would tax each partner on his individual income.

The benefit of having a company in Singapore is that corporate tax rates are often lower than the personal income tax rates. For example – for chargeable income over S$320,000, the corporate income tax is 17% while the personal income tax is 20% for the first S$320,000 and 22% for any income over this amount. For more information about personal income tax rates, please refer to Inland Revenue Authority of Singapore’s (IRAS) website.

Additionally, companies are eligible for significant tax deductions in terms of tax exemptions and rebates provided by the government. For example, all companies may benefit from a 40% tax rebate capped at S$15,000 in 2018. Singapore also remains attractive by helping companies avoid double taxation. For more information, refer to IRAS’s website. The government also offers support to sole-proprietors and partnerships through a few deductions. Finally, make sure that you review grants available to SMEs in Singapore.

Risk & Liability

There are also varying levels of liability associated with each business structure. For example, if your business is a sole proprietorship, your own personal assets are at risk in the event of a liability case, such as a lawsuit or bankruptcy. Registering your business as a company or limited liability partnership will help you isolate this risk strictly to assets owned by the company. Therefore, in the event of a liability case, only the assets belonging to the business will be at risk. Likewise, partnerships and limited partnerships also offer a similar insulation from risky situations. However, while individual partners are not responsible for business liabilities occurring from the action of other partners, they are still personally responsible for business liabilities occurring from their own actions.

Business Structure Summary Table

Registration Process

The requirements and procedure to start a business in Singapore are fairly straightforward. Your application to incorporate takes place needs to take place with the Accounting and Corporate Regulatory Authority (ACRA). To register, you must be above 18 years of age and must use your allocated SingPass ID. In order to be eligible to register, you must be a Singaporean, Permanent Resident or Passholder during your application.

 

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