A Step-By-Step Guide To Company Incorporating ProcessDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
You've found a market niche. You've created a perfect product. You've secured the funding. However, when does a business idea turn into an actual business? Well, that's when you officially incorporate a company in Singapore!
There's no more important step on the road to business start-ups than company incorporation. As Singapore is well-known for favouring pro-business policies, entrepreneurs and start-ups are driven to swiftly conceptualise and incorporate businesses via affordable company incorporation packages and services due to its many advantages.
Some of the advantages of incorporating a company in Singapore are:
- Enjoy an encouraging 0% tax rate on capital gains by your company
- Enjoy 0% tax rates on dividends paid to shareholders
- Enjoy one of the lowest corporate income tax rate in the world. In addition, access the many tax incentives in Singapore
- Gain access to various financial benefits that is accessible and available immediately upon incorporation
Step 1: Get to know the mandatory requirements of company incorporation in Singapore
Before proceeding further into the actual process of company incorporation, you'll need to learn more of the mandatory requirements for all Singaporean companies to be incorporated successfully. Some of them are:
- A minimum of 1 Singapore Resident Director
- It is required to have a minimum of one shareholder either in the form of an Individual or a Corporation
- The Company must have a resident Company Secretary or will be engaging services of one
- The Company must have an Initial paid up capital of least S$1
- The registered office for the Company must be located in Singapore
Step 2: Learn and familiarise yourself with the types of business structures
Deciding what form of corporation your company will be is a key step and an invaluable business decision not just for the company incorporation process, but also in your business's long term future. You can refer to our blog here for a comparison of a Private Limited Company with Sole Proprietorship.
Private Limited Company - As Singapore's most common form of Company formed, Private Limited Companies has a separate legal status from its shareholders and Directors - when it comes to debts and losses, they have limited liability. Private Limited Companies are allowed to own properties in its registered name, which required words including "Pte Ltd." as part of the company's name. A quick highlight of Private Limited Company features:
- It stands a separate legal entity from its shareholders and directors
- A Private Limited Company protects the personal assets of its shareholders and keep its liabilities limited to the company. Shareholders do not need to share into the losses of Private Limited Companies.
- Private Limited Companies have the authority to engage in litigation, and are liable to litigation in its own name
- There is a minimum of 1 shareholder for the Company while on the other end, there can only be a maximum of 50 shareholders
- Private Limited Companies can have different classes of shares and divide its shares into any variety of numbers. This makes them highly flexible and allows different kind of investors to participate in the company.
- Private Limited Companies are subject to the corporate tax regime as oppose to the sole proprietorships, partners, Limited Liability Partnerships where the sole proprietor/partners are taxed at their respective personal tax rates.
- Allowance of Private Limited Companies to benefit from the many tax incentives granted to corporates in Singapore such as the start-up company partial tax exemption by the corporate tax regime.
Sole Proprietorship – Often considered the simplest form of a business entity, Sole Proprietorships feature only one owner with the decisive authority and responsibility over all assets and liabilities of the business. This form of incorporation is open to Singapore citizens, residents and Employment Pass holders, while foreign individuals and companies may register a sole proprietorship by appointing a Singaporean resident manager.
However, when your business scales and expands, it might be a wise decision to convert a Sole Proprietorship into a Private Limited Company with the help of a professional company incorporation service firm. Here are some features of Sole Proprietorships:
- Sole proprietors are not a separate legal entity from the business owner
- Sole proprietors cannot own assets nor properties
- Sole proprietors cannot enter into agreements nor contracts
- Sole proprietors cease operations upon the natural operator’s demise
- Sole proprietors can sue or be sued only in the owner’s name i.e. a lawsuit against the Sole Proprietor is one against the owner
Step 3: Get started with the company incorporation process in Singapore
There are many complex and tedious processes behind the compilation of documents, records and particulars of your business before we proceed with this step. However, in this exercise, let's jump into what you'll be expected to undergo in Singapore's company incorporation process:
- Decide on your Company's name: Firstly, you'll have to decide on what is your Company's name, and it must be approved by Singapore's ACRA (Accounting and Corporate Regulatory Authority). The ACRA reserves the right to reject your Company's name in the case of it being identical to another Company's name, deemed undesirable or is distinctively similar to established company names or trademarks out there
- Decide on your Company's particulars: You will need to choose the companies’ business activities from the list of SSIC codes. A company can have a maximum of 2 business activities. You will also need to decide on the company’s registered address and financial year end. Another important detail to consider is how are the share capital and number of shares split amongst the shareholders.
- Ensure your details are comprehensively completed: The directors and shareholders details must be fully furnished. For foreigners, this step must be completed by a corporate service provider on your behalf. The corporate service provider will need to conduct know-your-customer processes to verify your identify before completing this step.
- Receive the confirmation of reservation of your Company's name: Once your Company's name is reserved and after receiving the approval, a comprehensive list of documents will be required to be prepared. Once your Company name is approved, it is reserved for the duration of 120 days for your incorporation to be finished within this time frame.
- Sign the incorporation documents: All of the necessary forms and documents must be signed by all of the directors and shareholders of the company.
It takes a painstaking amount of time, effort and attention for a smooth company incorporation - but it doesn't have to be.
Sprout ensures that you are not burdened with the administrative requirements of incorporating a company. We provide affordable company incorporation packages that takes care every small detail. That's how you can focus on your business, and we'll handle the rest!