6 things to consider when starting a new business
It has never been a better time to start a business! Technology has disrupted the traditional business landscape and even large incumbents are struggling to keep up with the rapid changes. The rise of the internet, digital marketing, e-commerce platforms and SaaS solutions has lowered the barriers of entry to starting a business to a new level and yet allowed new businesses access to a large population no longer constraint by borders or timezones. The availability of freelancers and the gig economy allows new business owners to experiment without incurring fixed expenditures in the form of full-time staff. Singapore is an ideal location to start a business; politically stable, low tax rates, business-friendly government, large pool of accessible talents and hours away from major cities in Asia. Did we also mention the great food and how liveable the country is?
Who is eligible to set up a company in Singapore?
Well unless you happen to be a Politically Exposed Person (“PEP”) or on an anti-money laundering blacklist, it is relatively straight forward for almost anyone to set-up a company here. You may choose to work with a Registered Filing Agent (“RFA”) to incorporate your company where the RFA will be responsible for verifying the identities and conducting due diligence on the shareholders and directors. The RFA will also make the submission to the regulator (Accounting and Corporate Regulatory Authority or “ACRA”) on your behalf.
Here are 6 things to take note of when you decide to proceed with setting up a company in Singapore.
1. Choose an appropriate company name
Choosing a company name is often one of the most difficult tasks when you are starting a business. You may be thinking that the company name needs to reflect the brand image and product or service that you are offering, however, a company name can be different from your business name. For example, we do business as Sprout Asia, but our business entity is Go Biz Link Pte. Ltd. Notably, ACRA also has restrictions that your name cannot be obscene, religious or identical to other business names in use or reserved by other applicants. Let us know if you wish to find out if a certain company name is available and we can even reserve the name on your behalf! If you choose to have an online presence, it may also be worthwhile to check if your desired domain name is available.
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2. Private Limited structures are the most common
Singapore allows many different types of entity structures for a person to conduct business. The most common and highly recommended structure is actually the simple private limited company (Private Limited or Pte Ltd). The word “Limited” refers that you will have limited liability protection, meaning that your assets cannot be seized to pay off the company’s liabilities, unless you have provided a personal guarantee to creditors. The company will have its own profit and loss and will be taxed separately. This separation of company and personal interests delineates your role more clearly and may allow the company to raise funds from investors or the company’s ownership or shares to be sold off in the future. A “Private” company allows up to 50 shareholders, while at the same time, benefits from lower reporting and compliance requirements as compared to a public company.
3. Resident Director
A director has an important role in the company as he or she is responsible for managing the affairs of the company. The Companies Act stipulates that a company needs to have at least 1 director who is a resident in Singapore. A person is considered a resident if his or her usual place of residence is in Singapore. A Singapore Citizen, Singapore Permanent Resident, EntrePass holder or Employment Pass holder, and who has a local residential address are readily accepted as resident. Sprout provides nominee director services if you are unable to identify a resident director for your company!
4. Work visas
A foreigner (non-Singapore Citizen and non-Singapore Permanent Resident) who wish to work in Singapore will need to apply for an EntrePass or Employment Pass.
- Eligibility for EntrePass is set relatively high, EntrePass is intended for serial entrepreneurs, high-calibre innovators or experienced investors. Visit EntrePass Eligibility for details.
- You may also apply for an Employment Pass under the new company that you are incorporating. Employment Pass are reserved for managerial, executive or specialized job. A stipulated fixed salary is required, starting at S$3,600 and scales up depending on your level of experience. You will also be required to have acceptable qualifications such as a good university degree, professional qualifications or specialized skills.
If you are a foreigner already in Singapore on Employment Pass, Dependent Pass or other types of visas, you can be a shareholder of a new company, but is only allowed to be a director after obtaining a Letter of Consent from the Ministry of Manpower. Talk to Sprout for assistance in applying for the appropriate paperwork!
5. Opening a bank account
One of the natural tasks after incorporation is open a corporate bank account and immediately start operations! There are multiple factors to consider when you decide to select a bank to work with. You should consider minimum balance requirements, bank account maintenance charges and bank transfer charges that fits your business needs. You should also take into account a potential integration with your accounting system and the ease of operating the bank account such as the nearest bank branch or familiarity with the internet banking portal.
When you open a new bank account, the bank will conduct Know Your Customer (KYC) procedures so choosing a bank whom you regularly bank with will be helpful. Foreigners who are looking to open a bank account in Singapore for the first time may be asked to show invoices, contracts or bank statements to prove genuine business needs in Singapore. Look out for our blog post soon on key things to note on bank account opening.
6. Company Secretary requirement
It is mandatory for companies to appoint a Company Secretary. A Company Secretary must be a qualified person under the Companies Act whose role is to assist the directors in ensuring that the companies maintain accurate records and meets its regulatory obligations. A company who fails to meet its obligations may be taken to task by the regulators. The position of Company Secretary cannot be left vacant for more than 6 months at any point in time. Sprout offers secretarial services bundled with incorporation as a one-stop solution and represents great value. We are able to deliver value at attractive price point as we understand the focus of most owners are not on compliance, but on getting the business off the ground. Hence we aim to be the trusted advisor for owners to get the house in order while leveraging on technology to provide greater value.
Being an entrepreneur is a challenging calling and you should choose to work with a trusted partner who can guide you through the pitfalls. In our next article, we will provide tips on how to select a Company Secretary. Sprout ensures that you are not burdened with the administrative requirements of maintaining a company and allows you focus on the commercial aspects of your new business. Do not hesitate to reach out for a friendly chat if you are unsure!
Reach out to Sprout for a complementary consultation. We provide insights on the appropriate way for you to set you your new company!
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