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Expats Owning and Operating a Business in Singapore

Author: Jim Newham
Submitted: March 2015

Singapore came first in the World Bank’s 2015 Ease of Doing Business survey, and near or at the top of most other rankings. This is because the government has made every effort to make starting and running a business in Singapore as easy as possible. There is a wealth of information available, including the government’s own Enterprise One site, which is an excellent place to start. Nevertheless, for best results, make sure to do thorough research and start planning well in advance!

Setting up a representative office, which establishes a company’s presence, is also quite a painless procedure in Singapore. For more details, see the Enter Singapore Business website.

 

Immigration Matters

If you want to start your own business in Singapore, the first step is to ensure you have the legal right to live and work in the country. There is no need to be a Singaporean resident to register a business in the country. However, If you want to be involved in the day-to-day running of a company, you will need to obtain an employment pass or an EntrePass. In addition, you will soon find that you need a SingPass to be able to function properly in the country.

 

Business Plan

A top-quality business plan will give you the best possible launch into the highly competitive Singaporean market. Moreover, potential investors and business partners will often insist on seeing a business plan. To start writing one, you must first ensure you have a clear view of what it is you want to do, and how feasible this business idea is. You will need to research the businesses that already operate in your field in the local area, and determine your potential customers and partners. Additionally, you should think through your best financing options.

Based on your research, you should be able to fill out your business plan to around 3-5 pages. The full plan should set out your business objectives, target market and commercial strategy, and include financial projections and potential obstacles. For further guidelines and sample business plans see the government’s Enterprise One site.

 

Legal Structure

Another important step is to decide which legal structure your business will adopt. This will determine the benefits you enjoy and the nature of your legal, financial and tax obligations. The most common business types in Singapore are sole proprietor and the various types of partnership.

Sole Proprietor

The advantage of setting up your business as a sole proprietor is that it is cheap and easy to set up. Furthermore, you have full ownership and control over the business and all after-tax profits are yours. On the other hand, you are personally liable for all the losses your business makes and legal action can be taken directly against you. Additionally, you have additional responsibilities such as keeping business records.

Partnership

There are three types of ‘partnership’ business structure in Singapore: partnership, limited partnership and limited liability partnership. Firstly, partnerships can be owned by two to twenty individuals or companies. As with sole proprietors, profits are taxed at the personal income tax rate. The partnership is not a legal entity; all partners are personally liable for any debts and can be made liable for other partners’ debts too.

Limited partnerships are similar to partnerships, except that there is no limit to the number of partners, and there are two types of partner: general and limited. A general partner usually manages the business, is personally liable for debts and can be sued. Limited partners are not personally liable and can take part in the business or not as they choose. Note the general partners do not need to be registered with the Accounting and Corporate Regulatory Authority (ACRA – see below), though limited partners do.

The limited liability partnership is somewhat more corporate; it is regarded as a legal entity and liability is limited for all partners. The partnership’s income is taxed at the corporate tax rate, which individual income is charged at the personal income tax rate.

Company

The other legal structure in Singapore is the company. This comes in two forms: private with up to 50 owners or public with an unlimited number of owners. The company must have at least one shareholder and director. Setting up a company requires longer than the other types as more procedures are required.For more information on all these different legal structures, see this Enterprise One page. This website also gives advice about business structures and many other business-related matters, as does Bizfile.

 

Setup and Registration

Once the above stages are complete, you should be ready to start setting up your company. At this point, you may want to consider hiring a lawyer or an accountant to help you, though as setup and registration is relatively simple in Singapore, it is feasible to do it yourself.

You will need to register your business at the ACRA. For details of the individual steps of registration, see this Enterprise One page. The registration fee is from S$300 to S$1,200. After this, you will have to register for corporate income tax or personal income tax, depending on your business structure. To read more about tax for expats in Singapore, see Taxation.

 

Employing Staff

If you want to employ someone (including yourself) to work in your business you will also need to register as an employer. As an employer, you will have to ensure that your business complies with Singaporean labour regulations. You should familiarise yourself with different types of contracts, minimum wage requirements, equal opportunity policies, work permits, insurance payments and recruitment options. Note that if you employ freelance workers, you will not have so many legal obligations as they will be liable to pay their own tax and insurance.

 

 

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