Launching a Business in Singapore: A Seamless Process for Local and Foreign Entrepreneurs
In 2022, Singapore witnessed a monthly influx of 3,000 to 4,000 newly established businesses, both domestic and international, according to the Accounting and Corporate Regulatory Authority (ACRA). Singapore stands out as one of the most accessible countries globally for launching a company, with a straightforward setup process and minimal bureaucratic hurdles. What makes it even more appealing is that the entire incorporation process can be executed online, adding to its convenience and attractiveness.
Foreign Ownership Rules in Singapore
Similar to local residents, individuals from other countries can establish a company in Singapore and hold 100% of its shares. The incorporation process involves submitting specific documents to the Accounting and Corporate Regulatory Authority (ACRA), which must adhere to stringent criteria for approval. Additionally, companies must comply with statutory regulations regarding taxes, labor laws, and intellectual property.
Essential Criteria for Non-Citizens to Establish a New Business in Singapore
To establish a company in Singapore as a non-resident or foreigner, it is necessary to designate a local director and contract a trustworthy filing agent for the registration process. Self-registration is not permitted. Working with registered filing agents who are experts and consultants in this field ensures a smooth and efficient launch of your business.
Essential Steps and Considerations
Choose the Right Business Structure
Foreign individuals have the option to establish the following types of businesses in Singapore:
- A Private Limited Company
- A Sole Proprietorship
- A Limited Liability Partnership
Business Structures in Singapore
Private Limited Company (Pte Ltd)
A private limited company is a popular choice among businesses for several reasons:
- It can have anywhere from 1 to 50 shareholders.
- It must have at least one local director who is a resident of Singapore.
- This type of company possesses a distinct legal identity and enjoys perpetual existence.
- Shareholders have limited liability, limiting their financial exposure to the amount they’ve invested in the company’s shares.
- The corporate tax rate for such companies ranges from 0% to 17%.
Banks and financial institutions consider Private Limited Companies more reliable, making it easier for them to secure funding for business expansion.
- A sole proprietorship is suitable for low-risk scenarios, but it lacks a distinct legal identity separate from its owner. The owner bears unlimited liability for the company’s debts and losses.
- Income from a sole proprietorship is treated as the owner’s income and subject to income tax rates ranging from 0% to 22%.
Limited Liability Partnership (LLP)
An LLP is officially established by two or more individuals and/or corporations in Singapore, with the following key features:
- It has a separate legal identity from its owners.
- Owners’ liability is contingent upon their actions, oversights, or inactions that result in losses for the LLP.
- Partners are obligated to pay personal income tax on their earnings from the LLP, with rates ranging from 0% to 22%.
Why Choose a Private Limited Company?
Among the available options, a Private Limited Company is considered the most reputable choice by financial institutions, businesses, and regulatory authorities. Despite the additional filing requirements, this credibility makes it a popular selection among entrepreneurs and business entities.
Why You’ll Need a Corporate Service Specialist
We Understand the Compliance Needs of Your Business
With the proper help and guidance from experts, you can facilitate a smooth and efficient business launch in Singapore. Companies looking to establish a presence in Singapore often opt for one of the following structures:
A subsidiary company, in the form of a limited liability company, allows the parent company to fully own its shares. The subsidiary operates as a distinct entity from its parent, limiting the parent company’s liability to its share capital. To oversee operations in Singapore, the parent company must assign one of its employees, necessitating an Employment Pass for this individual.
Foreign small and medium-sized enterprises (SMEs) often choose to register a branch office in Singapore. A branch office holds legal status as an extension of its parent company. The parent company assumes responsibility for the branch office’s debts and liabilities, and a branch office is required to employ at least one Singaporean resident.
Foreign companies can establish a representative office in Singapore primarily for market research and assessing business potential. These offices carry out feasibility studies but lack a distinct legal identity separate from their parent company. The parent company must be an established entity with a track record of over three years and an annual turnover exceeding S$250,000. If the parent company dissolves, the representative office is deregistered.
Whether you intend to expand with a subsidiary office or establish a representative office as a testing ground, it is advisable to engage local corporate services to streamline the registration process. These services assist with matters such as office space, economic grants, manpower, and compliance requirements, allowing you to focus on your core business activities and minimizing the time and effort required for setup.
Effortless Incorporation with Expert Guidance
The process of incorporating a company can often seem bewildering and complex. However, with the right guidance from experts, establishing a business in Singapore that aligns with your specific requirements becomes a manageable endeavor.
If you encounter any challenges and seek a reliable partner to oversee your incorporation process, Experts & Consultants is here to assist you.