Looking to increase your business footprint internationally? Searching for a strategic global location to setup a company that offers a pro-business environment much needed to facilitate corporation growth and expansion? If yes, then consider doing business in Singapore.
From a safe and secure living environment, stable and high-end lifestyle, to the cutting edge business community and ease of company setup, Singapore offers all this and a lot more, making it one of the best places for business expansion globally and to experience company growth.
Singapore Setup Company in Singapore
Before we explore the many reasons to setup company in Singapore, let’s first take a look at the impressive statistics that make Singapore the best location for business setup for foreign and local entrepreneurs alike:
- Earned the status of the easiest place to do business throughout the world by the World Bank
- Has low annual inflation rate of 1.0 percent
- Exports more than imports with total trade volume of $982,701.9 million (2014)
- Declared as the 3rd wealthiest nation worldwide by Forbes Magazine
- Recognized for having the Number 1 labour force worldwide
- Rated as the 3rd globalized economy by the Ernst and Young Globalization Index
- Singapore has no inheritance, death or estate tax
- Entrepreneurs don’t incur any capital gains or dividend taxes here
Why Setup Company in Singapore?
Singapore unarguably provides not just local but also foreign entrepreneurs with an excellent environment to start or expand operations in Asia. And this is evident from the fact that many global giants prefer to and have setup their headquarters in Singapore.
Let’s take a deeper dive to understand the business-focused proposition that Singapore presents to foreign entrepreneurs:
• Attractive Tax System
How much to pay in taxes is often the question that worries start-ups when operating internationally? However, when you setup your company in Singapore, you don’t have to fret over this question typically because the country offers low corporate and personal tax rates.
In Singapore, the corporate tax rate for private limited corporations is lower than 9 percent for profits ramped up to 300,000 Singaporean Dollars. And the rate is capped to 17 percent for profits above 300,000 Singaporean Dollars. Furthermore, another aspect of the flexible tax system of Singapore that makes this company one of the top choices for businesses to setup operations is that there are no capital taxes on income at the corporate-level. Therefore, dividends are distributed among the shareholders completely tax free.
• Pro-Business Policies and Environment
Singapore’s business friendly policies and environment truly makes the idea to setup company in Singapore appealing for entrepreneurs internationally. It takes only 1 to 2 days to setup a company here and begin your operations in the fastest time.
Programmes like GIP (Global Investor Programme) and Entrepass not only facilitate the entry of foreign entrepreneurs and investors but also make it quite simple for them to setup operations in Singapore.
• Open Immigration Policies
Another factor that appeals to many foreign entrepreneurs to start their company in Singapore instead of selecting any other place for global expansion is its open immigration policies. Their flexible policies and provisions pertaining to immigration make it super easy and smooth for foreigners to relocate and strengthen their footprint in Singapore. Its relaxed immigration policy also allows foreign entrepreneurs to gain SPR (Singapore Permanent Residence) status in the shortest time.
• Strict Copyright Laws
Unlike other countries, Singapore has strict copyright laws, thus protecting business owners from issues and threats like copyright infringements which are growing increasing common these days. In Singapore, copyright infringement is categorized as a serious criminal offense, providing legal business owners excellent intellectual property protection by law.
Setup of Pte Ltd Company vs. Setup of Sole Proprietorship in Singapore
When it comes to setting up business operations in Singapore, one of the biggest concerns for entrepreneurs is whether to setup a Private Ltd business or a sole proprietorship? If you’re also facing this issue and wondering which one to select, then let us assist you with this decision.
Here are some of the most important things to compare and evaluate regarding these two business structures to make an informed choice:
• Legal Identity
It is important to understand that in Singapore, sole proprietorship is not considered as a separate legal identity. This gives you full control over the company and its business operations. However, it also means that you’re personally responsible and liable for all legal actions and debts against your company.
In comparison, a private limited, be it a limited liability company or limited liability partnership, has its separate legal identity. This means it is separate from the directors and shareholders of the company and this implies that the business entity can receive obligations and even hold property in its name and also enter into legal contracts with its employees, 3rd parties, members and directors.
• Raise Capital
Raising external capital for business expansion is slightly difficult as a sole proprietor. This is virtually because capital is limited to personal finances and business profits. However, if you wish to secure loans and raise capital from lending financial institutions like banks, then you’ll have to provide personal assets like your home as collateral. This provides lending institutions with a cushion against the loss in case you default.
Similarly, limited liability partnerships also experience the same problem. They too also have difficulty in raising capital.
As compared to sole proprietorships and LLPs, raising capital as a private limited company is easier. This is because a limited liability company allows you to raise capital through venture funds and by adding new equity partners. More importantly, since it is a separate legal entity, investors and banks also find such business propositions more attractive.
• Business Liability
The owner of the sole proprietorship in Singapore has unlimited business liability because it doesn’t have a separate entity. This implies that creditors can sue the owners for debts and can claim against your assets, like your personal property.
However, when you setup a private company, creditors can’t do that. In other words, your liability is limited to the sum of investment you’ve made in the entity while it keeps your personal assets protected from court orders.
See the table below to see tax charges on taxable income
|Taxable Income||Tax Charged to LLC||Tax Charged to Sole Proprietorship|
|S$ 100,000||S$0||S$ 7,000|
|S$ 300,000||S$ 17,000||S$ 40,000|
|S$ 600,000||S$70,000||S$ 98,000|
|(Please note, these are rough calculations for ease of understanding )|
By looking at this table, you can see that the effective tax rate for limited liability companies/private limited is imposed when their taxable income reaches 300,000 Singaporean dollars while taxable income for sole proprietorships is 100,000 Singaporean Dollars. Furthermore, for the first 3 years of the company setup and incorporation, there is zero tax on the first 100,000 Singaporean Dollars of profits every year. Also, once the income is taxed, then the LLC can distribute dividends to the shareholders, and that too, tax free.
• Ongoing Maintenance
When it comes to setup and ongoing maintenance, it’s much easier to incorporate a sole proprietor as compared to a LLC. Government fee for setting up and registering a sole proprietorship is only 65 Singaporean Dollars and it also involves minimal paperwork. Besides this, there are also no ongoing paper filing requirements except for the annual sole proprietorship renewal.
However, the registration fee for the LLC and the filing requirements are also slightly complex, and therefore, you may want to hire a professional for assistance. Annual filing requirements include filing of annual accounts, organizing general meetings, filing tax returns, etc.
Though getting a private limited company registered may be slightly complex and involve a lot of paperwork but in comparison to all the benefits that you get to enjoy by running a LLC, it is worth it.
Basic Requirements to Setup Company in Singapore
As per the SCA (Singapore Companies Act), to register and setup a company in Singapore, you must follow and fulfill basic requirements (pre and post registration). These include:
• Pre Registration
You need to get it approved first before you incorporate your company in Singapore
One locally residing director is mandatory and they should be above 18 years of age and should not be convicted of malpractice or bankruptcy
You must appoint a qualified secretary for your company within six months of incorporation. And in case you have a sole director, then that person can’t act as your company secretary. In addition to this, the company secretary should be Singapore’s resident.
A private limited company can’t have more than 50 shareholders
Minimum Paid up Capital
The minimum paid up capital for a LLC at the time of registration is S$ 1. However, this can be increased after the company is incorporated
To register and setup company in Singapore, you must provide a local address. Also note that the address should be physical and not a P.O. Box number
Please note that all this information and particulars must be provided to the company registrar to ensure the process of company setup in Singapore is not delayed because of missing paperwork. Additionally, if you’re a non-resident, then you’ll also have to provide the registrar with these documents:
- Copy of your passport
- Proof of your overseas residential address
- Know your client information which includes bank reference letters, and business and personal profile
- For those who are Singapore residents, they would only have to provide a copy of their Singaporean identity card.
Also, if you happen to provide any papers/documents that are not written in English, then it is important that you get them translated and endorsed first before you submit them.
• Post Registration Requirements
Though a soft-copy of the certificate of company incorporation will be sent to you via email on your provided email account address, it is advisable to get a hard copy issued. For this, you’ll have to request the company registrar to issue you the hard copy and pay a fee of S$ 50. Once you submit your request and pay the fee, you can collect the hard copy the next day from the registrar’s office.
Request for the Company Business Profile from the Registrar
Once your company is incorporated, it is advisable to get a business profile with all the particulars from the registrar. Ideally, you’ll have to request this online and pay a small fee. Once you send your request, the registrar will provide you with a PDF file containing all the details about your company which include your company name along with its registration number, date of incorporation, paid up capital, shareholder and director details, principal activities, and also the details of the company secretary.
This document is extremely important for all contractual and legal purposes, such as opening a bank account, and signing lease.
Get Your Business Licensed
Some industries such as education, finance, trade, travel and food require licensing in Singapore. If you’re planning to operate in one of these industries, then you will have to apply for and get your business license before you begin your operations.
All these requirements must be met when setting up a private limited company in Singapore. Keeping track of all the requirements, completing all the paperwork accurately and submitting it timely can be both stressful and time consuming but not if you hire a professional. Work with an experienced company to make the process of setting up your company in Singapore quicker and stress-free.