Benefits of incorporating in Singapore: Detailed analysis
Singapore is one of the most stable and powerful economies which is well-known for its favorable business policies and relaxed taxation. It has everything that a budding entrepreneur needs to turn their idea into a solid, profitable business.
Moreover, incorporating a business in Singapore isn’t an undoable task. For this reason alone, the World Bank has deemed Singapore as one of the best countries with fair business practices.
So, how easy is it for starting a business in Singapore for foreigners? Let us look at some of the benefits of incorporating in Singapore.
Singapore has straightforward processes and norms for incorporating your business as a foreigner in their country. Following are the requirements to fulfill for successfully setting up a business in Singapore for foreigners.
The incorporating company should appoint a nominee director who will be a representative of the company on behalf of the owner who might not be physically present in Singapore.
They act us as representative directors of the company without partaking in the company’s major decisions.
The minimum age of a registrant who is incorporating a business in Singapore is 18 and there is no maximum age limit.
ACRA awards EntrePass to qualified and talented entrepreneurs for incorporating a business in Singapore.
The eligible candidate should be 21 years of age and have proper educational qualifications and a viable business idea that can change the industry and create job opportunities.
Registrants cannot make the registration by themselves and need to move their applications through an incorporation service. These agents can help them with the documentation process and file the application on their behalf.
Starting a small business in Singapore for foreigners isn’t a remote task. They have to hire directors and company secretaries and manage documentation works as well.
An incorporation service can minimize your responsibilities and take care of them.
The nominee director should be a Singapore citizen or hold permanent residence. While a company can have as many directors as they wish, the position of the nominee director is only reserved for a Singapore citizen or permanent resident with a Singapore ID proof and local address.
After fulfilling the basic requirements for incorporating a business in Singapore, a business owner should come up with a business structure.
The following are the three common types of business structure available based on the ownership structure, liabilities, and responsibilities of the shareholders.
A private limited company is a business structure that doesn’t allow more than 50 shareholders and the shares are not available to the public. Shareholders can be both individuals and corporate entities.
Companies with this business structure have Pte Limited as the last part of their business name. Profit is shared between the shareholders based on the share percentage owned by each. This is the most common business structure in Singapore.
Requirements to register a business as a private company in Singapore:
• A minimum of SGD 1 paid-up capital
• Business activities description
• List of shareholders and shareholders agreement
• Articles of association
• One company secretary and nominal director
• Local address and company stamp
The sole proprietorship is when the shares are owned by a single person who is eligible to receive a salary out of the made profit.
Any person who is above 18 years old and holds an EntrePass can incorporate a business in Singapore under the sole proprietorship structure along with a representative who must be a Singapore resident.
Since it's owned by a single person, it will cease to exist upon the owner’s demise.
LLP is a combination of partnership and corporation where shareholders aren’t held liable for the company’s debts and their personal assets are protected when the company faces a loss.
But when a partner commits a wrongful act, they can be held accountable for that. Business owners love the fact that they can join partners while having the privileges of running a corporate entity.
Each partner receives their profit share as their salaries and pays income tax for the profit share received. The minimum number of partners involved is two, with no maximum limit, and both companies and individuals are allowed to be partners.
Requirements to register as LLP in Singapore are as follows
• Details and address proof of every partner
• Name of the LLP
• Passport/Entrepass for foreign shareholders
There is a reason why entrepreneurs from all over the world prefer Singapore. The social, political and economical factors there are highly favorable for starting a small business in Singapore for foreigners. Benefits of incorporating in Singapore are:
Singapore supports budding entrepreneurs by introducing many tax exemptions, incentives, deductions, and unbeatably low corporate tax rates.
For instance, there is no tax on capital gains or dividends, and the tax rate on profit is 17%. There are many interesting schemes to promote the growth of startups.
Startups get 100% tax exemption on their first SGD 100,000 chargeable income and 50% tax exemption on the next SGD 200,000 income effective for the first three years of their operation.
There is no double taxation when your company generates income from the list of countries Singapore has made double taxation avoidance agreements with.
Singapore allows foreigners or foreign corporate entities to own 100% shares of a company that’s registered in Singapore and operating from there.
There must be one nominal director who should be a permanent resident of Singapore. But shareholders can be foreigners and shouldn’t necessarily be from Singapore.
If every shareholder is residing overseas, they can appoint a manager who stays locally.
One of the main benefits of incorporating is Singapore is the ease of incorporation. You don’t have to visit the country and stay there for incorporating your business. The whole incorporation process happens through the ACRA’s online portal.
You can finish it within one hour when you get assistance from an external agency for incorporating a business in Singapore. There are centralized document management systems where documents can be uploaded.
These service companies also help you with hiring directors and the company secretary.
Singapore is a country that offers umpteen funding options to new startups for both citizens and foreigners.
Some major funding options utilized by startups in Singapore are crowdfunding, bootstrapping programs, getting help from investors and VCs, accelerators, and incubator programs.
Obtaining business loans from private and public banks is also easily accessible. These quick and struggle-free funding options make setting up a business in Singapore for foreigners easier.
Selected startups can avail of grants and equity funding from government-run boards like the Startup Productivity and Innovation Board (SPRING). Collaborating with large Singapore companies and the Singapore government, this board offers a variety of funding programs, business loans, and cash grants.
Their regulations and compliance policies for both incorporating and running a business are very easy to follow without any red-tapism.
After incorporating your business, you will need a workforce to begin the operations. Hiring a well-talented workforce won’t be an issue here as Singapore is a land filled with a highly-skilled, dedicated, and productive workforce.
Their educational boards and system are amazing, and send out highly educated professionals every year. They are known for their hard work and loyalty.
Since the majority of the workforce is well-versed in English, communication also won’t be an issue.
Singapore is filled with monumental buildings and mind-blowing infrastructure. In 2021’s infrastructure index, Singapore has obtained the number one position when compared to all other countries in the world.
So, starting a business in Singapore for foreigners won’t be a big deal as they can find perfectly designed workspaces in prime locations.
Paid-up capital is the total amount collected from shareholders for their allocated shares. The best thing about incorporating a business in Singapore is its low paid-up capital. The total paid-up capital required during the incorporation process is SGD 1.
Small companies with a lesser number of partners won’t be able to gather capital amounts instantly. This low capital will be favorable for them.
Authorized capital is the total amount of valuation of every share of the company. If a company has 10 shares and each is valued at SGD 100, then the authorized capital is SGD 1000.
Companies have to specify the value of authorized capital during the incorporation. After the Commandment Act 2005 was introduced, the authorized capital was abolished and companies were required only to work on the paid-up capital.
The authorized capital was removed mainly because it set a cap on the overall value of company shares which can be neither reduced nor increased.
Ever since the amended Act came into force in 2015, businesses that declare themselves as small companies are not mandated to hire an auditor and conduct annual, internal audits. The criteria they have to meet are:
• The annual revenue shouldn’t exceed SGD 10 million and the value of the company’s assets for the auditing period should not exceed SGD 10 million.
• The total employee count should not exceed 50.
Groups of companies are eligible for audit exemption given their consolidated values of the above requirements don’t exceed the above-mentioned threshold.
Singapore encourages entrepreneurs and professionals to move into their country and contribute to their growth and development. It is easy to apply for a work and entrepreneurship visa to move there for employment purposes.
Relocating to the country to run the business or relocating employees to manage the operations will not be challenging.
So, it’s evident that setting up a business in Singapore for foreigners is an achievable task. But starting a business in Singapore or in any other country doesn’t end with the incorporation process.
What follows are other secondary tasks that are paramount to running a business. The company needs a business bank account and access to a payment method that’s accepted by every business user in Singapore.
Your accounts payable are sorted when you rope in automated and streamlined expense management and reporting system. Volopay is that application that has the ability to set your finances and accounting right from the start.
Volopay has every accounting feature that a small or mid-sized company needs to send money to its vendors and make other business payments. Here are the features and modules it contains:
• Easy to schedule local and foreign transactions with a bill pay system
• Competitive FX charges
• Vendor management system
• All-in-one dashboard with the user and admin-level controls
• Unlimited virtual corporate cards and physical cards to make recurring and one-time online payments effortless
• Systemized reimbursement portal
Other than this, Volopay offers no-collateral credit up to SGD 500,000 that one can use to fill their cash flow gaps and make payments from the Volopay application.
It only takes a few minutes to apply for credit and once approved the credit will be added to your Volopay corporate cards.
Though Singapore is a pro-funding company, getting unsecured loans and credit can take you time and involve a heavy documentation process.
Volopay cuts all these difficult steps and makes you eligible to get credit by reviewing your profile with simple criteria. Get ready for a more optimized business banking experience after incorporating your business in Singapore.