Essentials to Starting Your Business
Singapore, ranking second in the world for the easiest place to do business, is home to over 400,000 business entities. It is no surprise then that foreigners looking to start their business would choose this thriving metropolitan city as their base to start their operations. Making the decision to move to a new country and setting up your business requires careful evaluation of several key factors. Apart from the feasible studies that should be taken up before starting the business, it is also important to do critical homework on the laws and regulations of the country that may govern your new venture or expansion plans.
The three key factors to remember:
The first step before setting up a business is to conduct an extensive market research to understand the business opportunities that exist for foreign corporate bodies and multinational corporations and weigh the options based on capital, expertise, resources and feasibility.
The common types of business entities registered in Singapore are:
- a) Sole Proprietorship
- b) Partnerships
- c) Limited liability company
The shareholders/owners of a limited liability partnership and limited liability company enjoy the protection of limited liability. Majority of business ventures in Singapore are private limited companies.
For a detailed guide on the different types of business structures, click here.
All companies in Singapore are bound by the Companies Act and required to registered with the Accounting & Corporate Regulatory Authority (ACRA). Foreign companies looking to establish their presence in Singapore can do so either in the form of a branch office, subsidiary company, or a representative office.
Branch office – A branch office is an extension of a foreign company that establishes a place of business in Singapore. It is not a legal entity, with the parent company being liable for the debts and liabilities of the branch office. Opening a branch office helps to facilitate expansions of operations and revenue generation in Singapore for a foreign parent company.
Subsidiary company – A subsidiary company in Singapore is a private limited company that allows either a foreign or local company as its major/sole shareholder. Provisions that allow for 100% foreign shareholding-with shareholder’s liability limited to the values of the shares it subscribes to-makes this type of entity the most preferred choice for foreign companies to register their business in Singapore.
Unlike a branch office, the subsidiary company has a legal identity distinct from that of the parent company and comes into being upon registration under the Companies Act (Cap 50) with ACRA.
Representative office – Companies not yet sure of their business potential in the Singapore market can benefit by setting up a representative office in the city to analyse the environment and gauge its profitability prospects.
A representative office is a temporary establishment that can perform limited activities to allow a foreign/parent company to assess its business viability before registering an office in Singapore. It does not have any legal status and can only serve as a temporary option for companies not yet ready to establish a full-fledge venture in the country. A representative office cannot enter into business contracts, issue invoices/receipts, or offer services to clients etc.
For more details on how to register your foreign company, click here.
Given the three preferred business structures, most foreign private limited companies would choose to register their company as a subsidiary for the following reasons:
- As a separate legal entity, the parent company would be protected from the liabilities of the subsidiary.
- Shares of the subsidiary can be wholly owned by a foreign parent company.
- A subsidiary company is identified as a local Singapore company and hence can benefit from several government incentives, tax subsidies and other attractive schemes available.
Once your business has been officially registered under ACRA, the next step involves setting up a bank account. You can choose from a list of both local and international banks of good standing including HSBC, Standard Chartered, OCBC, DBS among others.
In addition to this, some business ventures would require a special license to operate such as food businesses, childcare centres, moneylenders, financial services etc. These licenses are issued by various Singapore government agencies and must be applied for once your company has been registered with the registrar of companies.
Singapore has been long recognized as an ideal hub for global businesses to set up their headquarters or expand their business ambitions. Strong trade incentives, comprehensive and attractive tax schemes, robust intellectual property laws make this country the easiest place to do business.
Interested to kick-start your business ambitions? Whether you are a start-up looking to establish your first office, or a multinational corporation seeking to expand your presence in Singapore or the Asia Pacific region, our team of professional staff will ensure to deliver service excellence that meet your expectations.
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All materials have been prepared for general information purposes only. The information presented in this document is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice. Professional advisory should be sought before taking or refraining from any action as a result of the contents of this document.