Guide to starting a business in Singapore in 2023
Singapore has become the hub spot for entrepreneurs to start their small businesses due to its pro-business agendas.
Every aspiring business person has an idea and is waiting for the right moment to transform that into a potential, growing business.
If you are in that phase and starting a business in Singapore, this guide will help you learn the ins and outs of it.
Knowing the consecutive steps for starting a company in Singapore is necessary to have a smooth start and successful transition to the next stage.
We have compiled the overall process of starting a business in Singapore in 12 simple steps.
Though Singapore makes it easy for newbies and starters, you still need to go through the basic registration process. You will get to know that in detail in this guide.
You need a concrete business plan and strategy before you initiate the registration process.
If you already have an idea, it’s time to review and develop that. You will need a clear business plan in order to attract investors and hire directors.
Ask yourself the following questions to see if your idea is well developed already.
• Do you have a solution that caters to a particular need or concern of customers?
• Who are your direct competitors, and how different is your solution from theirs?
• Is your solution specific to a certain niche and caters to a certain group of audience, or is it common for everyone?
• Are your idea and goals achievable and viable?
Once you have a business plan, you are ready to convince the investors to offer funds for starting a small business in Singapore. There are multiple ways in which you can raise capital for your business.
Here are some of the most common ways to raise funds in Singapore.
A pain-free and quick way to raise funds without collaterals and lengthy formalities that doesn’t require paying back with interest or equity.
You help yourself out here with your own savings or funds obtained from friends or family.
Angel investors are individual, wealthy investors, and VCs are investment firms that screen, select and invest in startups.
For setting up a company in Singapore without funds on their own, they are approachable as a solution. You can shortlist 5 to 10 angel investors or VCs in Singapore, apply on their website, and present your pitch deck to get selected.
If you need assistance more than funding for setting up a business in Singapore, you can enroll in an incubator or accelerator program.
These programs offer early-stage startup support, including mentorship, connection, and collaboration with stakeholders and potential investors.
The major difference between them is that incubators offer long-term support, whereas accelerators support them for a short time and project them in the right direction.
Both incubators and accelerators play a role in developing an idea or a vision into a viable product and act like a school for startups. To get coached by them, you will have to pay money to them.
In order to promote startup growth, the Singapore government has made available many grants and schemes that provide financial assistance to startups.
You can apply for some grants and schemes for enterprise development funds, SME working capital loans, pioneer certificate incentive schemes, IP development incentive schemes, etc.
Though most of the schemes are aimed toward startups who have already crossed the inception stage, grants and loans are still a good way to collect additional capital while starting a business in Singapore.
Suggested read: Guide to research and development tax incentives in Singapore
Depending on how you want to establish authority in your leadership and split the decision-making responsibilities and risks, you will have to choose a business structure.
Any business that operates in Singapore should be registered with ACRA as one of the entities below.
A business will choose Partnership as the business structure when more than 2 partners are running and contributing equally to the business.
There are general, limited, and limited liability partnerships depending on the liability and risks shared among the partners.
General partners have unconditional decision-making freedom and full liability.
Limited partnerships are opposite to the above, where the partners have limited liability and decision-making authority.
Choose Limited liability partnerships when you want to restrict partners' liability but let them partake in decision-making functions.
A private company is a separate legal entity where the shareholders' personal assets are safe from risks when a company faces a loss.
The owner is allowed to retain as much control as they want. Despite the demise of any partner, the entity will still continue to exist.
The private company limited is regarded as the best business structure as it combines the best parts of limited liability partnerships and sole proprietorship.
If you are starting a small business in Singapore and want to have its entire control to yourself without partners, a sole proprietorship is a suitable choice.
When you choose this business structure, your business doesn’t qualify to be called a separate legal entity and is subjected to risks if the business gets affected.
Starting a business in Singapore requires legal registration of your business online. It hardly takes more than a few days to register your business for both local and international registrants.
Local registrants can use the online registration portal of ACRA, and foreign registrants can hire a local registration agency.
The registration steps and required documents slightly differ for foreigners.
• After choosing the business entity type, you must come up with a business name and reserve that online till you initiate the incorporation process. In order to not choose a name that already exists, you can use ACRA’s online directory, Bizfile, and do a search.
• In the same portal, you can register your name with your Singpass ID and password. Once you register, wait till it gets approved by the relevant group of authorities related to your sector.
• Now, make sure you have other key requirements that will be needed during your incorporation or post-incorporation process.
• You should have a registered office address, list of shareholders and their particulars, initial paid-up capital, share certificates, company constitution, company staff, and appointed a company secretary. You should have also arranged the funds required to complete the incorporation process.
To know the registration process in detail, check out our article, How to register a company in Singapore for 2023.
• Foreigners can either relocate to Singapore with an EntrePass/employment pass or hire a local director as a nominee for starting a business in Singapore.
• If you run the business from your home country, you will choose a nominee director who is a Singaporean and above 18 years of age.
• Hiring a registration officer/agency can simplify the rest of the process for you as it requires Singpass to carry out the registration process online.
• Other than this, the registration process is pretty similar to what local business owners follow.
The incorporation process for starting a business in Singapore includes registering your office location.
The address will be used in letterheads, email signatures, and other official documents of your company.
Some criteria that your office location should meet are,
• The office address cannot be a P.O. box.
• The office should be a physical location in Singapore.
• The chosen office location should have your office that runs at least 5 hours a day during all business days.
The companies are allowed to have either a physical office with administrative personnel or a virtual office.
Companies operating overseas that don’t need an actual office and focus on reducing overhead costs can consider choosing a virtual office.
Locals, under the home office scheme, are allowed to register their home address as the office address.
However, your privacy will get compromised as your address will be visible in records to the public. For this reason, business owners prefer having a registered office even if they run their business from home.
For foreigners, they can make use of corporate service providers who will help with office address service.
Along with providing you a registered address, they will also upload and transfer the mails your address receives.
They can also use the company secretary provider’s office address as the business' registered address.
The best part about opening a business in Singapore is that you can create branding and attract leads for your business online, and operate it pretty much from anywhere.
This step involves doing the following steps that mold your business and brand identity.
• Creating your business logo, slogans, and other unique identification factors.
• Answering questions that separate you from your competitors and identifying unique value propositions
• Customer and market research, analysing market needs, pain points, customer requirements, etc.
• Carving your presence through social media, websites, blogs, and other physical and digital media.
You might have done the research part way before incorporating your company.
But you are in a different place now as your business is no longer an idea that exists on paper. Hence, doing it again with your team is essential.
Certain business activities in Singapore require you to obtain permission or licenses from the appropriate authorities.
You can apply for industry-specific licenses if you have already registered your business in Singapore.
Following are the types of licenses that are currently distributed to the specified activities next to it.
If you are setting up a business in Singapore that falls under any of the following categories, you will be required to obtain a permit before initiating your operations.
A smart business person knows how they should never mix up business and personal finances. It’s not only a lazy practice but unprofessional too.
You will need a business bank account to separate your business money management from personal financing.
Open your business bank account with a business or corporate bank section when you are setting up a business in Singapore. Banks like DBS, HSBC, Standard Chartered, Barclays, and other private banks help create bank accounts for entrepreneurs starting a business in Singapore.
• Business bank accounts tend to have restrictions when it comes to the transaction amount limits, minimum balance to be maintained, the number of transactions made, etc. Make sure you are well updated on the plans and whether they suit your current financial state of affairs.
• In order to attract business clients, banks provide a wide range of opening offers and free credits. Cash in on this and negotiate a better deal with the selected banks.
• When you are selecting a bank for business banking services, check their reliability, credibility, creditworthiness, and overall reputation. Look for online reviews, talk to peers, and look into their expertise with both national and international levels of services.
• Along with this, make a note of the business banking services they offer that you might need when you grow your business in the future. Some common services to consider are internet banking, international ATM withdrawals, credit and debit cards, money management tools, 24/7 support, their experience in your niche, and proximity of the branch.
• The certificate of incorporation
• Resolution signed by the company board of directors
• Articles of association and company’s memorandum
• ID proof of all directors and the copies of passport
• Residential address proof of the directors
As we have seen earlier, Singapore strives to provide better financial facilities and growth opportunities to startups with sophisticated and high-end products/services.
If you fall under one of these categories, you will be eligible for Singapore grants offered by the related departments of the Singapore government.
Check your eligibility and apply at the earliest as it is highly competitive to get through.
Some of the government initiatives that power startups in Singapore on their way to becoming a Unicorn are:
This supports early-stage startups in development under any of the following areas: core capabilities, innovation and productivity, and new market capture. You will be eligible for this if you are just setting up a business in Singapore.
This scheme helps startups who are in the establishment or development stage, with a maximum grant amount of SGD 300,000.
They choose groundbreaking startups with exceptional ideas that fill the gap and fulfill a current need. You should have a clear business model, unique selling proposition, market research results, and an explicit proposal of your solution.
This grant majorly focuses on helping companies achieve digitalization with the adaptation of technological solutions.
Any startup that wants to make use of IT solutions or advanced equipment can get covered up to 70 to 80% of the approximate estimated costs.
Organized and offered by the National Framework for Innovation and Enterprise, this grant focuses on the growth of seed-level VCs who thereby invest in deserving tech-based startups.
The maximum grant amount of this initiative that is invested in VCs is SGD 10 million.
A Singapore-incorporated company is supposed to hire an auditor within three months from the date of incorporation and a company secretary within six months.
When you are opening a business in Singapore, you will also hire other important members who will act as pillars in the early stages of your business.
When hiring and employing people in Singapore, as an employer, you must adhere to certain regulations laid down by the government to protect the workers' rights.
Following are some of the responsibilities and obligations of an employer while hiring an employee in Singapore.
• While hiring an employee. the employer is required to create an employment contract that carries the terms and conditions between the employer and employee. This contract should contain the package information, employee benefits, expected code of conduct, designation, duration of employment, and other details specific to the position.
• You should also note that the employer is responsible for the CPF contribution of the employee where the employers’ contribution percentage is 20%, capped at SGD 10,200 per year.
• According to the Income-Tax Act, the employer must report their employees' monthly wages. The employer should fill the form IR8A, Appendix 8A, and Appendix 8B every year around March 1. The employer does not need to hold income taxes of employees as it’s the responsibility of the employee to pay taxes by mid-April every year.
• You are allowed to hire both part-time and full-time employees and can even employ students as interns.
• The minimum age eligible for employment is 17 years, but children of age 13 to 17 are also permitted, depending on the type of the job. The retirement age is 62 years.
• You are allowed to hire foreign professionals who are the skilled, unskilled, and semi-skilled workforce.
After opening a business in Singapore and registering it, it’s time to work on creating your online presence.
This means creating your online portfolio, website, social media profiles, and other marketing collateral. In today’s digital era, everyone has a phone, and even a basic purchase starts and ends with a phone.
Having an online presence is important to cut through the noise and draw in more visitors.
Receive reviews from your customers and publish them on your website as testimonials. Get reviews on Google and other review sites that customers from your niche regularly check in.
Start being active in responding to reviews and customers’ general inquiries. Just having a website and social media profile alone won’t fetch you results.
You should have a workable SEO, content, and digital marketing strategy to target and attract the right people. If organic targeting takes time, strategize and execute search engine and social media ads.
After setting up a business in Singapore and getting that up and running, you still have some tasks to finish.
Once you see revenue, you will have to register at IRAS and start paying taxes for the past financial year (year of assessment).
Any company in Singapore is taxed at 17% on their tax-applicable income. Known as a tax haven country, Singapore offers many tax benefits and exclusions, especially for new startups with a low revenue range.
The company is exempted from paying tax on the first SGD 100,000 chargeable income. And there is a 50% tax exemption available on your next SGD 200,000.
You can avail of this exemption within the first three consecutive years of your incorporation.
Here is how your business will register and pay taxes for the first time in Singapore.
• Before filing taxes, every company must declare their Estimated Chargeable Income (ECI) before filing taxes. IRAS will send this notification before the end of the financial year approaches.
• Those who do qualify for a tax exemption are not required to file the ECI, and they won’t receive a notification either.
• Many new companies won’t close their year-end accounts around the end of their first fiscal year. Hence, the notifications will be only sent during the next year. But the company is required to file the ECI for its first and second financial years after its incorporation.
• After this step, IRAS will send you the next notification to file the form C-S or Form C-S lite
Suggested read: Best business bank account for eCommerce in Singapore
When you are ready to kickstart your journey as an entrepreneur and in the process of setting up a business in Singapore, you need to concentrate on the above mentioned things.
While most of them are conventional and don’t require second opinions, choosing your business account and banking services isn’t one of them.
Many entrepreneurs, when they are starting a small business in Singapore, think that they don’t need a business account as their transactions are low in numbers and value.
What they forget to foresee is the increasing demand for professional financial services as they grow. We have already seen the impact of not using a business account for small business banking in Singapore.
So, how can you get yourself a business account effortlessly whilst starting a business in Singapore?
Here is the solution. Leading startups and enterprisers prefer Volopay for their business account and money management needs.
What looks like low transactions might shoot up anytime and even include international payments.
Volopay will support your business in any stage with accounts payable management, budgeting, credit borrowing, and lots more.
It has multi-currency accounts that let you store funds in different currencies that you will send payments in. You can schedule payments, create and use n number of virtual corporate cards, reimburse your employees, and do anything related to payments seamlessly.
Cash flow management is one of the pressing concerns of new business owners. When you are starting a business in Singapore, you still look for financial assistance from multiple sources.
The odds of overspending and going overboard with money management are high during the beginning stage of your business.
You need a suite like Volopay that helps you keep track of payments, create data-centric budgets, and control all your finances in one spot.
You achieve financial freedom and organization that contributes to your business success and growth.