Singapore consistently ranks among the easiest places in the world to do business thanks to its pro-enterprise policies, robust infrastructure, and strategic location. With low corporate taxes, minimal bureaucracy, and access to global markets, it’s no wonder Singapore remains a top choice for entrepreneurs worldwide looking to incorporate.
Before jumping into the process, it’s wise to do your homework. Forming a company here is straightforward but does require adherence to specific regulations. Additionally, you’ll need to make important decisions regarding business structure, office location, corporate bank account, staffing, and more.
Thorough planning and preparation will pay dividends down the road. By understanding key requirements, costs, and considerations beforehand, you can avoid missteps and hit the ground running once your company is formally incorporated.
This comprehensive guide covers eight things you need to know before choosing cheap Singapore company formation. Let’s get started!
1. Choose the Right Business Structure
One of the first steps is deciding on the right business structure for your company. Singapore offers several options, each with pros and cons to weigh regarding ownership, liability, taxes, and administrative requirements. The most common structures for foreign companies include:
Private Limited Company
This is the most popular structure for small and medium enterprises (SMEs) in Singapore. It offers limited liability protection for shareholders while allowing for easy transfer of ownership. Mandatory compliance includes annual filing fees and submission of audited accounts.
Branch Office
A branch office is an extension of an existing overseas parent company. It offers limited liability but must be registered and renew its license annually. Foreign companies often use a branch office to explore the Singapore market.
Representative Office
Rep offices can market, conduct research, and facilitate business deals in Singapore. However, they cannot engage in direct revenue-generating activities. This structure has simple setup and maintenance for foreign firms not yet ready for a full physical presence.
Subsidiary Company
Wholly owned by a foreign parent company, subsidiaries are considered separate legal entities in Singapore. This allows for isolated liability exposure but requires more regulatory compliance.
Think about your long-term business goals, funding resources, and desire for operational independence when choosing the right structure. Consulting with an adviser can help narrow options.
2. Find the Right Office Location
Another big decision is where to establish your physical office space in Singapore. Location is key – your address can affect hiring, logistics, taxes, and even branding. Here are popular options to consider:
Central Business District
For major corporate presence and prestige, it’s hard to beat Singapore’s downtown financial hub. Expect sky-high rents but unparalleled access to infrastructure and global firms.
Industrial Estates
If you need manufacturing facilities or warehousing, industrial estates offer affordable rents with transport links. Consider Jurong, Defu Lane, or Tai Seng.
Commercial Space
For a sales office or shared coworking space, look to mixed-use buildings in areas like Raffles Place, Shenton Way, Tanjong Pagar or Marina Bay. Lots of flexibility at mid-range cost.
Virtual Office
Get a business address and mail handling without the overhead. Virtual offices allow new companies to maintain professional image with low startup costs.
Think carefully about your business needs, budget, and growth projections when weighing office space options. Don’t commit to a long lease until you’re sure it’s the right fit.
3. Choose the Right Corporate Bank Account
Opening a business bank account is essential for company operations in Singapore. You’ll need an account to pay vendors, collect payments, and separate company finances from your personal funds.
Major banks like DBS, OCBC and UOB all offer corporate accounts with varying fees, interest rates, and functionality. Comparison shop to find the best match for your projected account activity and balance.
Some factors to consider when choosing a bank:
- Account minimum balance and monthly fees
- Interest rates on deposits
- Available services (online banking, foreign exchange, etc)
- Access to financing products like business loans
- Support for international transactions
- Branch and ATM availability
Be prepared to provide extensive documentation when applying for a corporate bank account in Singapore, including business licenses, director and shareholder identity verification, and letters of reference.
4. Handle Employee Hiring and Payroll
Expanding your team is an exciting milestone for a new business. Singapore’s skilled labor force and business-friendly employment regulations make hiring relatively straightforward.
You’ll need to register with the Ministry of Manpower and adhere to the Employment Act regarding compensation, benefits, leave, and overtime. The Central Provident Fund (CPF) mandates employer and employee contribution to retirement savings.
For payroll, you can handle internally or outsource to an external vendor. Payroll software and direct deposit simplify the process of paying staff accurately and efficiently.
When hiring foreign employees, additional work passes and immigration requirements apply. Consulting an HR adviser can help you remain compliant across these various labor regulations.
5. Pick the Right Accounting and Tax Services
As a Singapore company, you’ll need to adhere to various accounting, record keeping, reporting, and tax requirements. While you can handle internally, most firms enlist professional help to remain compliant.
- Accounting: External accountants can maintain mandatory records and produce unaudited or audited financial statements on request.
- Corporate tax: Singapore’s corporate tax rate is 17%, with exemptions available. File Form C annually.
- GST: Companies with over $1 million in taxable turnover must register for 7% GST. Handle registration, returns, and payments.
- Employment taxes: Calculate monthly CPF contributions, personal income tax withholding, and skilled worker levies accurately.
Choose an experienced corporate services firm you trust to ensure tax and compliance obligations are met efficiently and accurately.
6. Obtain Proper Business Licenses
In Singapore, business activities are regulated through licenses and permits issued by government agencies. Certain industries require additional approvals.
At minimum, you will need to register for:
- ACRA: Company registration and annual filing with the Accounting and Corporate Regulatory Authority.
- IRAS: Corporate tax registration with the Inland Revenue Authority of Singapore.
- SCDF: Fire safety compliance with the Singapore Civil Defence Force.
Depending on your specific business activities, additional licenses may be required from entities like Enterprise Singapore, Urban Redevelopment Authority, National Environment Agency, and more.
Use official government resources like the GoBusiness Licensing portal to determine all approvals required for your company’s particular scope of work.
7. Protect Intellectual Property
If your Singapore company deals in proprietary products, technologies, or content, it’s vital to protect that intellectual property legally. Options include:
- Trademarks: Register trademarks and brand names with IPOS, Singapore’s IP office.
- Patents: Apply for patent protection on innovative functional creations and inventions.
- Copyrights: Automatically granted to original artistic and literary works in tangible form.
- Geographical indications: Protect unique goods originating in a specific place.
- Trade secrets: Take reasonable measures to protect commercially valuable confidential information.
Strong IP protections help safeguard your competitive advantage and prevent copying or misuse of your work. Allow time and budget to handle properly.
8. Consider Business Insurance Needs
While not mandatory, commercial insurance can protect your Singapore company from unexpected losses and liability exposures that could threaten operations or trigger bankruptcy. Policies to consider include:
- Property insurance to cover office assets in case of damage or theft.
- Commercial general liability insurance to protect against injury lawsuits, defamation claims, etc.
- Errors and omissions policies for service providers and consultants.
- Business interruption insurance to replace lost income from disasters or disruptions.
- Group health, disability, and life insurance for employees.
- Directors and officers coverage for management liability.
Work with an experienced insurance broker to conduct a needs assessment and implement adequate coverage at reasonable cost.
Conclusion
Forming a company in Singapore involves careful planning across many functional areas – legal structure, location, banking, hiring, taxes, licensing, IP, and insurance among them. While the process may seem daunting, thousands of businesses complete it smoothly every year with proper preparation. Follow this guide, allow sufficient lead time, and seek expert support to ensure your Singapore company launches successfully. For any questions unanswered here, connect with an advisor for personalized guidance. The time and effort invested upfront will pay dividends for years to come. To your new venture!
Frequently Asked Questions
What are the most common business structures in Singapore?
The most common structures for foreign companies registering in Singapore are private limited companies, branch offices, representative offices, and subsidiary companies. Each has pros and cons regarding liability protection, taxes, and regulatory requirements.
What documents do I need to open a corporate bank account?
To open a business bank account in Singapore, be prepared to provide incorporation paperwork, business licenses, director and shareholder identity verification, letters of reference, and initial deposit funds.
Do I need to register for GST in Singapore?
If your company’s taxable turnover exceeds S$1 million, you must register for GST within 30 days and collect 7% tax on sales of most goods and services.
How do I properly hire foreign employees in Singapore?
To hire foreign workers in Singapore, you must obtain valid work passes like an Employment Pass or S Pass through the Ministry of Manpower based on qualifications, salary, and quotas.
What types of business insurance should I consider?
Top insurance policies for Singapore companies include property, commercial liability, errors and omissions, business interruption, group health and life, and directors and officers coverage.
How do I protect intellectual property created by my company?
IP like trademarks, patents, copyrights, and trade secrets can be protected through registration with IPOS and taking reasonable secrecy measures.
What are the main compliance obligations for new companies?
Key compliance tasks include ACRA company registration, corporate tax registration with IRAS, licensing through agencies like Enterprise Singapore, annual filings, and adhering to employment regulations.
What should I look for when choosing office space?
Consider your budget, hiring needs, logistics, image, and potential for growth when weighing factors like cost, location, facilities, and lease terms for your Singapore office.
How much lead time do I need to form a company?
Allow 2-4 months to thoroughly prepare for company formation in Singapore. Enlist professional help to ensure adequate time for planning, documentation, approval, and pre-launch compliance.
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