How to start a business in Singapore – This article explains how to start a business in Singapore and key things you need to know.
What is your business model?
The initial thing that partners/founders need to figure out is whether they will be selling products or services and how they will profit from their venture. Many companies start out with just an idea but no way to monetize their products.
What is Separate Legal Personality and why is it important?
Most business ventures initially start off as a sole proprietorship or a partnership and both need to be registered with ACRA under the Business Names Registration Act. Tax for both entities is taxed at the partner’s personal income tax level.
As the business ventures and risk increases over time, the business owner wants to separate the risk and liabilities at the business level from that of the owner personally so he would then go on to look at other business entities in Singapore with a separate legal personality (I.e. the entity can sue and be sued and can enter into contracts in its own name).
Some entities that have separate legal personality in Singapore include:
- Private limited company/Public Company;
This is the most popular entity set up by business ventures in Singapore as the requirement for capital contribution is relatively low for a Singapore company now but you would need to check if you need to submit accounts annually.
- Limited Liability Partnership;
This is almost like a company and a LLP can be converted into a company later. This entity is sometimes used as a flow-through entity for tax planning purposes. For more details on this, do seek tax advice. There is usually a manager filed with the ACRA system who is responsible for running this LLP. The LLP can sue and be sued in its own name.
- Limited Partnership
This is used for investment vehicles usually for tax flow-through purposes. For more details on this, do seek tax advice. There is usually a general partner who is responsible for running the LP and the investor will be the limited partner. The General partner has unlimited liability while the limited partner has limited liability under this LP structure.
A business entity is set up to generate revenue and profit. Before you commence setting up any business entity, the partners/shareholders should sit down and discuss clearly how they will split the profits and losses and make sure they set up a proper capital structure. Many a unhappy shareholder base has quarreled over this because of such issues.
After determining what business structure to house your new business, you should spend some time looking at LicenceOne to determine if your company/business needs licensing and what application process is required.
Building a business takes time and effort, but hopefully the above tips will help you along your way!
Whichever option is the best for your company, you would want to contact us to register your business on ACRA.
Finally we would want to leave you with a quote from Michael Jordan, NBA Legendary Basketball MVP
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”
About Raffles CPA
Raffles CPA is a niche professional firm headquartered in Singapore with a relentless dedication to help global and local clients in solving their complex business problems in areas of corporate services, accounting, capital market, legal and compliance.