Company Incorporation Singapore

Singapore is a popular choice for entrepreneurs and businesses who wish to begin or expand their operations to East Asia. The sovereign island city-state possesses one of the world’s most rational tax systems. It does not levy tax on capital gains nor on dividends from businesses. This makes it a great option for entrepreneurs who would like to incorporate and open a company in Singapore. You can read more about starting a recruitment company in Singapore.

Three Steps for Starting a Business in Singapore

Starting a business in Singapore involves three primary steps:

  1. Select a suitable business structure
  2. Register the company with Singapore’s national company regulator ACRA
  3. Set up a corporate bank account

Types of Business Structures in Singapore

There are five types of business structures recognized in Singapore. These are:

  • Private Limited Company (Pte Ltd)
  • Sole-proprietorship
  • Partnership
  • Limited Partnership
  • Limited Liability Partnership (LLP)

Private Limited Company

What is a Private Limited Company?

A company refers to any business entity that has been registered under the Chapter 50 of the Companies Act. The three types of companies are:

  • Exempt Private Company: Has 20 members or less. No corporation possesses interests in holding the company’s shares.
  • Private Company: Has 50 members or less.
  • Public Company: Can consist of more than 50 members

Who Can Set Up a Company in Singapore?

A company can be set up by foreign or local individuals. All companies must appoint a local director. If a company wishes to appoint a foreign director, the appointed individual must apply for an Employment Pass.

Who is a Company Best For?

Setting up a company is a great choice for large and flexible business entities. 

Is a Company a Separate Legal Entity?

A company is a separate legal entity.

Who has liability for a Company?

The members of a company have limited liability.

How is a Company Taxed?

A company is taxed at a corporate tax rate.

What are the Challenges of Setting Up and Running a Company?

  • Companies can be more costly to set up compared with other business structures.
  • Additional formalities must be administered when setting up a company
  • Companies must appoint their secretary within 6 months of their incorporation
  • Companies must appoint their auditor within 3 months of their incorporation. They may be exempt from this under special circumstances
  • Companies must maintain numerous record books
  • Companies must file annual returns

Sole-Proprietorship

What is a Sole-Proprietorship?

A sole-proprietorship is defined as a business that is owned by a single individual. This individual usually has the absolute say in business operations.

Who Can Set Up a Sole-Proprietorship in Singapore?

A citizen, permanent resident, employment pass holder, dependent pass holder, or a foreigner can set up a sole-proprietorship in Singapore. Foreigners must meet the additional condition of appointing a local to manage their business.

Who is Sole-Proprietorship Best For?

A sole-proprietorship is a suitable choice for low-risk businesses run by a single individual.

Is a Sole-Proprietorship a Separate Legal Entity?

 A sole-proprietorship is not a separate legal entity.

Who has liability for a Sole-Proprietorship?

The owner of a sole-proprietorship has unlimited liability.

How are Sole-Proprietorships Taxed?

A sole-proprietorship is taxed at its owner’s personal tax rate.

What are the Features of Setting Up a Sole-Proprietorship?

The benefits of choosing a sole-proprietorship as your business structure include:

  • Fast and easy to set up
  • Easy to manage
  • Cheap to register
  • Registration must be renewed annually

Partnership

What is a Partnership?

A partnership is defined as a business entity formed by two or more partners. This type of business may have up to 20 partners at any time.

Who Can Set Up a Partnership in Singapore?

The partnership must consist of at least two Singapore citizens, permanent residents, employment pass holders, dependent pass holders, or foreigners. Foreigners must meet the additional condition of appointing a local to manage their business.

Who is a Partnership Best For?

A partnership is best for firms that provide professional services such as lawyers, accountants, and consultants.

Is a Partnership a Separate Legal Entity?

A partnership is not a separate legal entity.

Who has liability for a Partnership?

The partners in a partnership have unlimited liability.

How are Partnerships Taxed?

Partnerships are taxed at the owners’ personal tax rate.

What are the Benefits of Setting Up a Partnership?

  • Fast and easy to set up
  • Easy to manage
  • Cheap to register
  • Registration must be renewed annually

Limited Partnership

What is a Limited Partnership?

A limited partnership is defined as a business entity formed by two or more partners. However, one or more partners must function as a General Partner and one must function as a Limited Partner. There is no limit on the number of partners in a Limited Partnership.

Who Can Set Up a Limited Partnership in Singapore?

Limited partnerships can be set up by foreign or local individuals or companies. All Limited Partnerships must appoint a local business manager if each General Partner is residing outside Singapore.

Who is a Limited Partnership Best For?

A Limited Partnership is a good fit for business enterprises where one partner is willing to bear unlimited risk.

Is a Limited Partnership a Separate Legal Entity?

A limited partnership is not a separate legal entity.

Who has liability for a Limited Partnership?

The general partners in a partnership have unlimited liability, while the limited partners possess limited liability.

How are Limited Partnerships Taxed?

Limited Partnerships may be taxed at the owners’ personal tax rate or at a corporate tax rate.

What are the Benefits of Setting Up a Limited Partnership?

  • Fast and easy to set up
  • Easy to manage
  • Cheap to register
  • Registration must be renewed annually

Limited Liability Partnership (LLP)

What is a Limited Liability Partnership?

A limited liability partnership is defined as a business entity in which the liability of the partners is limited. There is no limit on the number of partners in a Limited Liability Partnership.

Who Can Set Up a Limited Liability Partnership in Singapore?

Limited liability partnerships can be set up by foreign or local individuals or companies. All limited liability partnerships must appoint a local business manager.

Who is a Limited Liability Partnership Best For?

A limited liability partnership is best for new businesses who wish to reap the benefits of partnerships and full companies. These entities are typically taxed at individual personal tax rates so they aren’t eligible for the tax exemptions given to companies in Singapore.

Is a Limited Liability Partnership a Separate Legal Entity?

Limited liability partnerships count as separate legal entities.

Who has liability for a Limited Liability Partnership?

The partners are personally liable for each of the debts and losses incurred as the result of their actions. These partners are not personally liable for the limited liability partnerships’ debts or losses if they are incurred by other partners.

How are Limited Liability Partnerships Taxed?

Limited liability partnerships are taxed at the personal tax rates of the partners. Alternatively, they may be taxed at the corporate tax rate.

What are the Benefits of Setting Up a Limited Liability Partnership?

  • Fast and easy to set up
  • Easy to manage
  • Must be registered only once
  • One of the managers can lodge the annual declaration of solvency

What is the ACRA?

ACRA stands for Accounting and Corporate Regulatory Authority. They are the statutory board run by the Ministry of Finance under the Government of Singapore. ACRA serves as the primary regulator for business registration in the region. Anyone who wishes to complete their company incorporation Singapore must follow the process set by ACRA

Registering a Company With ACRA

Registering a company with ACRA involves the following steps:

  • Choose a Company Name and Apply for ACRA Approval

Company founders must select a name for their company and get it approved by ACRA. The ACRA generally approves company names if they meet the following requirements:

  • It is unique, easy to read, and free from obscene or vulgar content.
  • It is not infringing on an existing trademark.
  • It has received additional approval from a higher authority for containing “Finance”, Bank, “Educational”, or similar terms in its name.

Company names can be registered at ACRA’s web portal BizFile+. If the company name is approved, it will be designated for you for a period of 60 days. Company founders who fail to incorporate their company within this period can file an extension request to extend the period for another 60 days with the ACRA.

  • Gather Relevant Documents for Setting Up the Company

Relevant documents include:

  • Proof that the company name has been registered with the ACRA.
  • A short description detailing business activities.
  • Details for the business’s registered address in Singapore.
  • Information on the company shareholders
  • Information on the company directors
  • Details on the company secretary
  • Any foreign entrepreneurs founding the company are required to submit their passport and their overseas residential address.
  • Foreign companies are required to submit Articles of Associations and a Memorandum
  • Any Singapore residents founding the company  are required to submit a copy of their Singapore identity card.
  • Send the Application to ACRA

After gathering the relevant documents, the company registration application can be submitted at BizFile+

Registering a Company Using BizFile+

BizFile+ has streamlined the company registration process. Company founders must follow some key steps when using the online service. These steps are:

  1. Visit the website and login using your SingPass ID
  2. Apply for your company name (if this step hasn’t already been completed)
  3. Complete the incorporation process
  4. Complete the endorsements
  5. Pay ACRA fees

Visit the Website and Login Using Your SingPass ID

Visit the ACRA website and register for a SingPass account. This account enables you to access e-services offered by the Singapore Government. This SingPass will enable you to finish the registration process at the BizFile+ portal.

Note that only Singapore residents have SingPass IDs. Foreigners who wish to self-register their company will need to hire a Singaporean filing agent to file their application with the ACRA on their behalf.

Apply for Your Company Name

Applying for your company name is a straightforward process and can be completed at BizFile+. Visit the website and follow these steps:

  • Select “File eServices” on the BizFile+  homepage
  • Select “Local Company” using the drop-down menu
  • Select “Application for New Company Name”
  • Fill out your SingPass account details and password

If you have followed ACRA’s requirements for choosing a company name, you can pay a S$15 fee to reserve the name. You should then receive a transaction number for your approved company name application. 

The company approval process is typically completed in under half an hour. If your application is referred to another department or ministry, the approval process may take anywhere from 2 to 4 weeks.

Complete the Incorporation Process

Once the company name has been approved, the company registration process can be initiated. This step is also performed on BizFile+. The steps are as follows:

  • Visit the BizFile+ home page and select “File eServices”
  • Select “Incorporation of Local Company”
  • Enter the transaction number received from the company name approval process.

You will then be shown an e-form containing many sections. Under the Company Details section you must select/fill out:

  • Company type
  • The proposed company name
  • The company’s financial year-end
  • Details for the Officers and Shareholders
  • SSIC code number

The SSIC code number in the form refers to the Singapore Standard Industrial Classification code. This code number can be found by typing in your business activity type on the BizFile+ website.

Complete the Endorsements

Key company stakeholders such as shareholders, directors, and the secretary must visit the BizFile+ portal and consent to the company incorporation application. To perform this validation, they must use their individual SingPass IDs.

On the BizFile+ portal, they must choose the option relevant to them. This includes:

  • Endorsement by shareholder
  • Endorsement by director
  • Endorsement by secretary

Any individual who is serving as both a director and a shareholder must perform the validation twice. Once as a director and once as a shareholder. 

Pay ACRA Fee

After filling out the aforementioned sections on the BizFile+ portal, you will be allowed to preview the information entered in your application. Once you have verified the information is correct, select “Confirm”. You will then be brought to a fee payment menu. Select “Online Payment” followed by “Pay Now”.

You can then enter your name and application number and continue with the payment. ACRA charges a fee of S$300 to register a private limited company. Once the payment has been completed, you will be shown an acknowledgement page and will receive a receipt. 

Setting Up a Corporate Bank Account

Setting up a corporate bank account is one of the final steps for company incorporation in Singapore. Singapore has over 120 commercial banks for companies to choose from. Only five of these banks are local, while the remainder are foreign. Some of the popular foreign banks include HSBC, Citibank, Standard Chartered, and ABN Amro.

Some of the documents you will need when setting up a corporate bank account include:

  • Filled-out Corporate Account Opening forms that have been signed by authorized signatories where appropriate.
  • A Board of Directors Resolution that sanctions the account opening as well as the account signatories. These must be prepared by the company secretary.
  • A certified and true copy of the resolution that sanctions the account opening. This includes the account signatories.
  • A certified and true copy of the incorporation certificate obtained earlier. This document must be certified by one of the company’s directors or the secretary.
  • A certified and true Copy of business profile obtained from the company registrar. This document must be certified by one of the company’s directors or the secretary.
  • A certified and true copy of the company’s Articles of Association and Memorandum. This document must be certified by one of the company’s directors or the secretary.
  • Certified and true copies of the passport and residential addresses of the signatories, directors, and the ultimate beneficiaries. A Singapore IC must be provided if any of the aforementioned individuals are Singapore citizens.

Considerations When Choosing a Bank for Your Corporate Bank Account

When choosing between Singapore’s 125 banks for your corporate bank account, the following considerations should be kept in mind:

Ratings and Reputation

Many corporations choose to open corporate bank accounts with banks that possess a high reputation and have ratings to back them up. You should look for banks with a good history and an international presence. Many banks tout themselves as the “best” after offering their clients great corporate account packages. It is always wise to consider researching each bank carefully and looking out for any potential red flags.

Areas of Expertise and Specialization

Your bank of choice should possess some experience with helping businesses similar to your own. Such banks may also offer special services that cater to businesses in your industry. They employ specialists who can offer advice and guidance regarding different financial matters concerning your business. For example, many banks have advisers who are experienced at giving advice to small business owners.

Types of Accounts and Services

Different banks may offer specific types of accounts and services. This includes investment and savings accounts. Some may also offer foreign currency accounts, which may be beneficial for businesses operated by non-Singaporean individuals.

You should also consider the types of business credit cards and debit cards the bank offers, the size of their ATM network, and their branch distribution across your business region. Banks may also vary in terms of their daily transaction limit, which may affect your ability to perform day-to-day business activities.

Wealth Management and Other Options

Business owners may also be interested in using wealth management services at some point. This is vital if you are seeking personalized services and professional guidance on asset management. 

An international commercial bank may be a good choice if you are seeking international trading, payment, and financing services.

Automated Services

The vast majority of banks offer their clients automated services such as online banking. Certain banks may also offer additional automated services that may help you in your day-to-day business operations. This includes online check deposits, payment collection services, and payroll check cuts.

Locations

Banks may also differ in terms of their location distribution throughout Singapore. You should ideally choose a bank that has multiple branches in your business region. Such banks should also be close to areas where your key stakeholders such as shareholders, directors, and secretary reside. This helps ensure crucial banking services can  be sought out on short-notice.

Customer Service Availability

Some banks offer customer service hotlines that are available only during business hours. Other banks may offer customer service hotlines that are available 24/7. Round-the-clock customer service can be vital if you require urgent banking services outside of routine working hours.

Fees and Interest Rates 

Banks will also differ in terms of their fees and the interest rates they offer. It is vital to research the fees for each bank you are considering before making your choice. Seemingly minor account and transaction fees can add up over time and impact your business’s total annual expenditures. Some banks also charge high account opening fees which can be avoided by choosing a different bank.

Minimum Balance and Initial Deposit

Many banks require a minimum balance for opening business accounts. This requirement can be difficult for smaller businesses to achieve, so it is wise to choose a bank that offers a good balance of low minimum balance and low fees.

Company Formation FAQs

  • Is company formation in Singapore a complicated process?
  • How much capital do you need for a subsidiary set up a company in Singapore?
  • Do I need a physical office in Singapore or can I use a virtual office?
  • How easy is it to recruit staff in Singapore?
  • How easy is it to close a Singapore company?

Branch and Subsidiary Information

Open a Subsidiary in Singapore

Need Help With Company Incorporation Singapore?

Incorporating a business or company in Singapore can be a complex and time-consuming process. Please get in touch with Open A European Company for assistance with this. Our experts are familiar with Singaporean laws and regulations and can streamline the business incorporation process. Contact Open A European Company today.

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