The Ultimate Guide to Starting an Online Business in SingaporeDownload Now: FREE GST 2023 GuidebookDownload Now: FREE Employment Pass ChecklistDownload Now: Free Incorporation Checklist
The business landscape for online start-ups and businesses has never been as attractive as it is today thanks to the surge in technology use since the start of the Covid-19 pandemic. But starting an eCommerce business isn’t easy, which is why we made this guide to help you launch an online business in Singapore. We’ll talk about best practices, taxation, registering and funding your online business, regulations, the infrastructure of your online business, and much more.
Step 1: Plan Your Business
Every business, whether they are online or brick-and-mortar, needs a solid foundation. And this foundation always starts with a good business idea. But what constitutes a good idea?
That’s simple. A good business idea is determined by how effectively it solves your customers’ problems. Hence, in the planning phase of your online business, also known as the problem discovery phase, you need to talk to your potential customers and do extensive primary and secondary market research to understand what their pain points are and how you can solve them.
Step 2: Create a Minimum Viable Product (MVP)
Once you’ve found a business idea that solves your customers’ problems and that they are able and willing to pay for, you need to create a minimum viable product (MVP). An MVP is a prototype of your product or service with the minimal set of features or capabilities that will allow you to get your first customers.
It’s the cheapest and most bare-bones version of your final product whose only function is to get you enough revenue and feedback from customers so that you can continue working towards your final product. The goal here is to better understand your customers’ problems and the potential solutions to these problems before investing all your money into a product or service that has not been thoroughly thought out .
Step 3: Understand Singapore’s Regulations for Online Businesses
According to Singaporean law, all Internet content in Singapore, including eCommerce businesses, is considered to be broadcast media content. As a result, it’s under the authority of the Singapore Broadcasting Authority (SBA) and Singapore’s Broadcasting Act.
While certain online businesses (commonly referred to as “class licensees”) are automatically licensed and therefore don’t have to apply for one to operate as an online business, you should still double-check to see if you need a license depending on the product or service you plan to sell to the public.
Moreover, your eCommerce business might be subject to additional regulations depending on the products or services that you’re selling, which means that you should contact the relevant authorities to ask if these regulations apply to your business. A few examples of industries that face additional rules include, but are not limited to:
- Online gambling service providers
- Online financial services and products
- Online sales of second-hand goods
- Online promotional activities
- Online advertising of certain products, such as medicines, alcohol, financial services, and others
Regarding taxation, it’s important to note that Singapore uses a territorial basis of taxation, which means that tax is collected on income accruing in or derived from Singapore or received in Singapore from abroad.
While it’s more difficult to determine exactly where the income of online businesses is accrued since they use electronic, borderless transactions and don’t exchange physical goods and services, it’s extremely important to understand this given the implications it has for the business taxes you’ll pay. For example, it will determine how much (if any) Goods and Services Tax you’ll pay.
Step 4: Incorporate Your Business
You are legally required to incorporate your business with the Accounting and Corporate Regulatory Authority (ACRA) before you start business operations in Singapore. As an eCommerce business, you should register it as a web-based business. The four most popular business structures to use to structure your business are the Sole Proprietorship, General Partnership, Limited Liability Partnership (LLP), and Limited Liability Company (LLC).
The following are the basic requirements for registering a web-based business in Singapore:
- A registered business address in Singapore
- A company auditor
- A unique business name
- Paid-up capital
- The personal details of the partners, directors, and shareholders
- A statement outlining the business activities
- A company constitution
- Personal identification documents of each company member
- At least one local resident director in Singapore, who can also be a shareholder
Step 5: Build the Infrastructure of Your Online Business
As an online business, it’s extremely important to ensure that your digital infrastructure is of the highest quality in order to be successful. If your customers continually encounter errors on your website or can’t place orders, you risk losing thousands of dollars in revenue. When launching your business, therefore, make sure to carefully consider the following key infrastructure:
- The design, hosting, security, and development of your website
- Processing online payments for orders
- How you will deliver orders to customers
- Which online store system you should use (e.g. Shopify vs. WooCommerce)
- Marketing and advertising your website through good Search Engine Optimization (SEO) practices
- IT infrastructure for your operations, website, and customer support
- Safely handling customer data
Sprout with Us!
When in doubt, reach out to Sprout. Our team of experts offer budget-friendly incorporation services to help you get registered with ACRA and start your own official online business in Singapore. Any questions? Feel free to reach out to us, we’ll respond within 24 hours.