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Starting a Company in Singapore
This comprehensive guide provides information and resources for those seeking to form a company in Singapore. We’ve compiled a list of 14 frequently asked questions to help you navigate the process of starting a company in Singapore. From the different types of companies you can form, to the requirements for incorporation, ongoing compliance, financing and funding options, and tax benefits and incentives, we’ve got you covered.
Whether you’re an entrepreneur or a business owner looking to start a company in Singapore, this article provides detailed information and resources to help you along the way. You’ll find information and resources for each type of company, a timeline of the incorporation process, and helpful tips on how to ensure compliance with regulations. And for our foreign friends, we’ve also included information on the company formation process for foreign businesses. With that in mind, we encourage you to start the process of creating your dream company in Singapore!
Step 1: What are the different types of companies that can be formed in Singapore?
In Singapore, there are several types of companies that can be formed, including:
- Private Limited Company: This is the most common type of company in Singapore and is typically used for small and medium-sized businesses. Shareholders are limited to a maximum of 50, and the company is not allowed to invite the public to subscribe for shares or debentures.
- Public Limited Company: This type of company is typically used for larger businesses and can have an unlimited number of shareholders. Public limited companies are allowed to invite the public to subscribe for shares or debentures.
- Sole Proprietorship: This type of company is owned and managed by a single individual. It is the simplest and most common type of business structure, and it is easy to set up.
- Limited Liability Partnership (LLP): An LLP is a type of partnership in which the partners have limited liability for the debts of the partnership. It is similar to a private limited company but with the added flexibility of a partnership.
- Branch Office: A branch office is a type of foreign company that is registered in Singapore to conduct business activities. It is not a separate legal entity and is therefore not responsible for its own debts.
- Representative Office: A representative office is a type of foreign company that is registered in Singapore to conduct market research or to promote its products or services. It is not allowed to engage in any commercial activities and is not responsible for its own debts.
Each one of these company types has its own advantages and disadvantages, therefore it’s important to consult with professionals to determine which one is the best option for your business.
Step 2: What are the requirements for starting a company in Singapore?
There are several requirements that must be met when starting a company in Singapore. These include:
- Company name: The company name must be unique and not similar to any existing company names. It is also prohibited to use certain words in the company name, such as “government”, “Singapore”, etc.
- Shareholders: A private limited company must have at least one shareholder and a public limited company must have at least two shareholders.
- Directors: A private limited company must have at least one director and a public limited company must have at least two directors. At least one director must be a Singapore resident.
- Company Secretary: A private limited company must appoint a company secretary within six months of incorporation, and a public limited company must appoint a company secretary within three months of incorporation.
- Registered address: The company must have a registered address in Singapore where official communications and notices can be sent.
- Share Capital: A private limited company must have at least one share and a public limited company must have at least five shares.
- Incorporation Documents: The company must submit the following incorporation documents to the Accounting and Corporate Regulatory Authority (ACRA):
- Memorandum and Articles of Association
- List of shareholders, directors and Company Secretary
- Declaration of Compliance
- Fees: The company must pay the necessary fees for incorporation and for the registration of any additional licenses and permits.
It’s important to note that different types of companies may have different requirements, for example, a Sole proprietorship does not require to have shareholders, directors or a company secretary. Additionally, some industries may require specific licenses and permits, so it’s recommended to consult with professionals to ensure all the requirements are met.
Step 3: How long does the incorporation process take in Singapore?
The incorporation process in Singapore typically takes around 2-3 weeks, depending on the complexity of the application and the completeness of the submitted documents. The process is divided into several stages:
- Preparation of the incorporation documents: This includes drafting the Memorandum and Articles of Association, preparing the list of shareholders and directors, and obtaining the necessary approvals and licenses.
- Filing of the incorporation documents: The incorporation documents are filed with the ACRA along with the necessary fees.
- Approval of the incorporation: Once the documents have been filed, ACRA will review them to ensure that they are in compliance with the Companies Act. If everything is in order, ACRA will approve the incorporation and issue a certificate of incorporation.
- Obtaining additional licenses and permits: Depending on the type of business and industry, additional licenses and permits may be required.
It’s worth noting that this process can take less time if all the documents are in order and ready, the more complete and accurate the information provided, the faster the process can be. The process can also be expedited by engaging the services of a professional service provider such as TOP FDI.
Step 4: What are the ongoing compliance and reporting requirements for starting a company in Singapore?
There are several ongoing compliance and reporting requirements for companies in Singapore. These include:
- Annual General Meeting (AGM): All companies are required to hold an AGM within 18 months of incorporation and subsequently once a year. The AGM is used to present the company’s financial statements, elect directors, and transact other business.
- Annual Return: All companies are required to file an annual return with ACRA within one month of the anniversary date of the company’s incorporation. The annual return must include information about the company’s shareholders, directors, and company secretary.
- Financial Statements: All companies are required to prepare and submit financial statements to ACRA annually. These statements must be audited by an independent auditor and must be submitted within 3 months of the financial year-end.
- Taxation: All companies are required to file an income tax return and pay taxes on their income. The tax rate is 17% for companies with an annual profit of less than S$300,000 and 18% for companies with an annual profit of S$300,000 or more. For more information on Singapore’s Tax system, click here.
- Work Passes: If a company hires foreign employees, it must apply for and renew the necessary work passes for these employees.
- Business License: Depending on the type of business and industry, additional licenses and permits may be required.
- Changing of company information: Companies are required to inform ACRA of any changes to its information such as change of directors or registered address within a certain period.
It’s important to note that non-compliance with these requirements can result in penalties and fines, so it’s important for companies to stay informed and ensure they are meeting all the necessary compliance and reporting requirements in a timely manner. Consultation with professionals can help companies to stay on top of these requirements.
Step 5: What are the penalties for non-compliance with company formation regulations in Singapore?
Penalties for non-compliance with company formation regulations in Singapore can include fines, penalties, and even imprisonment in some cases. Penalties can vary depending on the nature and severity of the non-compliance, but they can include fines of up to S$5,000 and/or imprisonment of up to 2 years for non-compliance with certain provisions of the Companies Act. Additionally, the company may be subject to penalties for non-compliance with other regulations such as tax and immigration laws.
Step 6: What financing and funding options are available for starting a company in Singapore?
When starting a company in Singapore, there are several financing and funding options. They include:
- Bank loans: Companies can apply for bank loans from local banks and financial institutions. For more information on banking options in Singapore, click here.
- Venture capital: Companies can seek funding from venture capital firms that invest in start-ups and small businesses.
- Business grants: Companies can apply for business grants from government agencies and private organizations.
- Angel investors: Companies can seek funding from individual investors who provide capital in exchange for equity.
- Initial Public Offering (IPO): Public limited companies can raise capital by listing their shares on the Singapore Stock Exchange (SGX).
Step 7: How can I find more information and resources on company formation in Singapore?
You can find more information and resources on starting a company in Singapore by visiting the website of the ACRA’s website at www.acra.gov.sg, which provides detailed information on the incorporation process, ongoing compliance requirements, and penalties for non-compliance. Additionally, you can consult with professional service providers such as lawyers and accounting firms for personalized help and guidance.
Step 8: Are there any tax benefits or incentives for starting a company in Singapore?
Yes, there are several tax benefits and incentives for forming a company in Singapore. These include:
- Low corporate income tax rate: Singapore has a corporate income tax rate of 17% for companies with an annual profit of less than S$300,000 and 18% for companies with an annual profit of S$300,000 or more.
- Double Taxation Agreements: Singapore has signed more than 80 double taxation agreements with other countries to avoid double taxation of income earned in Singapore.
- Tax exemptions and incentives: Companies in certain industries such as biotechnology, renewable energy, and research and development can qualify for tax exemptions and incentives.
Step 9: What are the differences between private limited companies and public limited companies in Singapore?
The main differences between private limited companies and public limited companies in Singapore are:
- Shareholders: A private limited company has a maximum of 50 shareholders while a public limited company can have an unlimited number of shareholders.
- Inviting public to subscribe for shares: A private limited company is not allowed to invite the public to subscribe for shares while a public limited company can invite the public to subscribe for shares.
- Disclosure of financial information: A private limited company is not required to disclose its financial information to the public while a public limited company is required to disclose its financial information to the public.
- Size of the business: Private limited companies are usually used for small and medium-sized businesses while public limited companies are usually used for larger businesses.
Step 10: Can a foreign national incorporate a company in Singapore?
Yes, foreign nationals can incorporate a company in Singapore. However, at least one director must be a Singapore resident. Additionally, a foreign-owned company may be subject to additional regulations and may require certain licenses and permits depending on the nature of its business activities.
Step 11: Is it necessary to have a local director for a company in Singapore?
It is necessary to have at least one local director for a company in Singapore. The local director must be a Singapore resident and must also be a natural person (not a corporate entity). The local director will be responsible for ensuring that the company is in compliance with all regulations in Singapore.
Step 12: Are there any restrictions on the type of business activities a company in Singapore can conduct?
There are some restrictions on the type of business activities a company in Singapore can conduct. For example, companies are prohibited from engaging in illegal activities or activities that are harmful to the public. Additionally, certain industries may be subject to additional regulations and may require specific licenses and permits. For example, companies in the financial and healthcare industries are subject to stricter regulations.
Step 13: How can I ensure that my company is in compliance with all regulations in Singapore?
To ensure that your company is in compliance with all regulations in Singapore, you should stay informed about the relevant laws and regulations, and consult with professionals such as lawyers and accountants. Additionally, you should establish internal controls and procedures to ensure compliance and conduct regular audits to identify any areas of non-compliance.
Step 14: Are there any special considerations for forming a company in certain industries in Singapore?
Yes, there are special considerations for forming a company in certain industries in Singapore. For example, companies in the financial and healthcare industries are subject to stricter regulations, and may require specific licenses and permits. Additionally, companies in certain industries such as biotechnology, renewable energy, and research and development may qualify for tax exemptions and incentives. Therefore, it’s important to consult with professionals and conduct research to understand the specific regulations, requirements, and incentives for the industry you want to form a company in Singapore.
Conclusion
Starting a company in Singapore can seem like a daunting task, but with the right guidance and resources, it can be a smooth and straightforward process. We’ve covered 14 frequently asked questions on company formation, including the different types of companies that can be formed, the requirements for incorporation, ongoing compliance and reporting requirements, financing and funding options, and tax benefits and incentives.
With all this knowledge in your pocket, you’re ready to take the first step towards creating your dream company in Singapore. Remember, it’s always best to consult with professionals to determine which type of company is the best fit for your business and to ensure all requirements are met. For more information on company formation in Singapore, visit TOP FDI.
