Incorporating a Company in Singapore
What is the meaning of an incorporated company in Singapore?
Incorporation is the legal registration or formation of a company (or corporation) in Singapore.
An incorporated company is different from a sole proprietorship.
A sole proprietorship does not separate owner and business—which means that the assets and liabilities of a business are owned personally by the business owner. The owner is liable for all debts and liabilities of the business, so if the business cannot pay, the personal assets of the owner are not protected and can be used to pay for the business’ debt.
An incorporated company, also known as a corporation, is a separate legal entity that is owned by its shareholder(s), managed by a director or a board of directors, and operated by its officers. This corporation is formed as a separate legal entity from the owner of the business, which means that the owner’s assets are protected against the corporation’s debts and liabilities when all legal formalities are followed.
Corporations have terms like “Inc.” (Incorporated) or “Pte Ltd.” (Private Limited) at the back of their names, to tell you what type of business entity it is.
Why would a company consider incorporating in Singapore?
As mentioned above, an incorporated company is advantageous because its assets and cash flows are legally separate from the owner, protecting the owner from potential debts and liabilities of the business. Apart from this, there are many other benefits of incorporating in Singapore. These include:
1. Achieving significant tax benefits
Incorporated companies are taxed lower rates than the owners of a sole proprietorship. There are many significant tax benefits for Singapore companies. For the first three years of tax filings, corporations do not have to pay tax on the first $100,000 taxable income per year. Every year, corporations also only have to pay a small 8.5% of tax on their first $300,000 profits per year. Companies can also claim tax deductions on their Research & Development (R&D) expenses.
2. Allowing simple transfer of business ownership
Incorporated companies in Singapore can easily transfer either full or partial ownership to another party. This is quick and accessible compared to sole proprietorships or partnerships where it is difficult to transfer business ownership because assets, permits and licenses have to be transferred separately and individually.
3. Ensuring perpetual existence
An incorporated company will continue to exist regardless of the status of its shareholder(s) or director(s), unlike a sole proprietorship where the retirement or death of the owner also results in the death of the business. Companies are ensured continued succession regardless of shareholder(s) status.
4. Ability to raise capital
Because companies can raise capital through shareholder stocks and shares, investors trust companies more—unlike a sole proprietorship which is backed by a single owner’s income and assets. With the ability to raise capital from shareholders, business financing and other funds, incorporated companies have great potential to expand their businesses.
5. Attaining better credibility
The terms “Inc.”, “Pte Ltd.”, “LLC” (Limited Liability Company) and other similar terms placed at the end of a company name in Singapore gives a business credibility and legitimacy. Other businesses are also not allowed to use a name that is the same as or similar to an incorporated company—which means that an ideal name can be secured with the early incorporation of your business. After incorporation, you can choose to further secure your business name with copyright.Overall, incorporated companies in Singapore are more protected and secured, enjoy greater benefits, and have greater potential for business expansion and success.
Can a foreigner incorporate a company in Singapore?
Yes, a foreigner can set up a company in Singapore. There are different ways a foreign business might want to set up in Singapore. A foreigner can move his/her business to Singapore by transferring registration, registering a branch office, setting up a representative office, or incorporating a subsidiary company.
For a foreign business wanting to incorporate a company and establish itself in Singapore in the long-term, the third option of incorporating a subsidiary company is the most applicable.
A subsidiary company is a Singapore incorporated private limited company and is a separate legal entity from its parent company overseas. Similar to the relationship between owner and company, the parent and subsidiary companies also function as two separate entities which means that the parent company is not liable for the acts or omissions of the subsidiary company. The foreign parent company is thus considered to have limited liability.
When foreign businesses incorporate as subsidiary companies in Singapore, they benefit the same way as local Singapore incorporated companies, such as becoming eligible for significant tax benefits (as mentioned earlier). Subsidiary companies can be owned fully by foreign companies.
Process of Business Incorporation in Singapore
What are the requirements for incorporating a company in Singapore?
There is not a lot of difference between registering a local and foreign business in Singapore. Both have to abide by the same basic guidelines.
The big difference is, foreigners cannot register their companies by themselves online. Instead, they have to use a corporate service provider to assist them with the online procedure.
These are the basic compliance guidelines for both local and foreign businesses to incorporate in Singapore:
1. At least one resident director in Singapore
All Singapore corporations must appoint at least one person above 18 years old, who ordinarily resides in Singapore, as director of the company. This means that the director can either be a Singaporean citizen, a Singapore permanent resident, or a person who possesses Employment Pass, Entre Pass or Dependant’s Pass.
Foreigners can apply for an employment pass, entre pass or dependant’s pass by submitting a physical application to Singapore’s Ministry of Manpower at any SingPost station. They can do this themselves or through a company representative. If you are a foreigner, you can also use incorporation services in Singapore to help you with the process or temporarily use a local director appointed by the corporate service provider until you get your pass.
2. At least one shareholder
A Singapore corporation must have at least one shareholder. The shareholder can be local or foreign, and either person or legal entity. All companies in Singapore can have a minimum of one to a maximum of 50 shareholders.
3. At least one resident company secretary
Singapore’s corporations must appoint a qualified company secretary within the first 6 months of incorporation, who ordinarily resides in Singapore and is above 18 years old.The role of the company secretary cannot be vacant for more than 6 months at any time, and cannot be filled by a person who is a sole shareholder or director of the company.
The company secretary will be in charge of board and general meetings, the company’s book of accounts, and ACRA compliance etc. This resident company secretary can be appointed by you, or through a corporate service provider which can help you appoint a secretary according to Singapore’s guidelines.
4. Minimum paid capital of $1
The minimum paid capital or share capital of a Singapore company is at least $1, and this amount can be increased after incorporation.
5. Physical registered Singapore address
To incorporate in Singapore, you need to provide a physical Singapore address as the registered address of the company. This address can be either a commercial or residential address, in which the residential address can be either a private or public property.
During normal office hours, the corporation’s registered physical address must be in operation and accessible to the public. These are all five basic requirements that a business needs to uphold for incorporation in Singapore.
What are the documents required to incorporate a company in Singapore?
On top of making sure that you fulfil all requirements, you also need to submit the following documents to ACRA to incorporate your business in Singapore:
- Company name
- Brief description of business activities
- Shareholders’ particulars
- Directors’ particulars
- Registered address
- Company secretary’s particulars
- Company constitution
These documents can all be submitted online and will be processed by ACRA in about 1-2 days. You can submit these documents by yourself using your SingPass account to login to ACRA’s Bizfile+ website. Foreigners who do not have a SingPass account (non-permanent residents and non-passholders) can engage a corporate service provider to help fill and submit your necessary documents and assist you in the incorporation of your business.
This service is also useful for speeding up the registration process for Singapore residents.
Usually, a corporate service provider will require a basic set of documents to help you file your documents to ACRA.
For example, Express Corporate Services requires these documents from you to incorporate your company:
- Identity documents, passports and proof of address of directors and shareholders
- Mobile number and email address of directors and shareholders
- Completed Incorporation Form and Customer Questionnaire Form
If you need help with registering your business in Singapore, contact Express Corporate Services for more information about our incorporation services here.
How much does it cost to incorporate a company in Singapore?
The basic price of incorporation in Singapore is made up of
- Company name application fee
- Registration fee
- Costs needed to comply with Singapore’s basic incorporation guidelines (appointing a resident director and company secretary, and registering Singapore physical address)
Company name application & registration
To incorporate your business, you must first choose a company name according to ACRA’s guidelines. According to ACRA’s guidelines, the name of your company should not be too similar to an existing name of a corporation, cannot be vulgar, obscene or offensive, and cannot be a name prohibited by the Ministry of Finance. You can search Bizfile+ to check if your chosen name is available.
The company name application fee is $15, and ACRA also charges an additional $300 registration fee. This means that you pay a total $315 of administrative fees when you register your company.
The entire registration process occurs online through ACRA’s Bizfile+ portal. Again, foreigners with no SingPass will not be able to register on their own and will need to engage a corporate service provider to help them with their registration. Singapore residents can also use incorporation services for ease of registration.
Corporate service providers in Singapore usually charge about $500 -$1,000 for assistance with incorporation. This will cover filing all necessary documents and applying through the ACRA portal on your behalf.
Basic compliance guidelines
To be eligible for registration, your business must follow some basic requirements. This is inclusive of appointing a resident director, a resident company secretary, and registering a physical Singapore address.
If you use a corporate service provider to help you register your business online, you can also engage the same provider to take care of these requirements. Most providers offer services of appointing a resident director, company secretary and helping you register a physical Singapore address as part of a basic package. For example, a package for local residents could include:
If you do not require a package, you can refer to the estimated costs of specific incorporation services in Singapore here:
Overall, these are the basic costs for registering your company in Singapore. There are also further costs associated with maintaining your company, which we will cover in the sections below.
Request a quote from Express Corporate Service for incorporation services in Singapore.
How long does it take to incorporate a company in Singapore?
Incorporating a company in Singapore can take as little as one day if all documents have been prepared beforehand. On your own, you might need some time to get all these documents in order, but a corporate service provider like Express Corporate Services can help you ready your documents quickly.
All you need to do afterwards is sign the necessary documents and hand them back to your corporate service provider. They will help you to file and submit these documents to ACRA online, and the approval and official incorporation can take place almost immediately after that.
After Incorporation What Next?
What do I need to do for my company after incorporation in Singapore?
Incorporating your business in Singapore is only the first step! There are many other tasks to deal with after incorporation, like applying for Singapore’s Goods and Services Tax (GST), keeping proper records and accounts, and filing annual documents to the Inland Revenue Authority of Singapore (IRAS) and ACRA.
Maintaining your company post-incorporation requires consistent and detailed recording of the company’s finances. This can be done on your own, or with the assistance of an accounting and bookkeeping service provider in Singapore.
Here is a breakdown of some of the important actions you should take to keep your company in order:
1. Apply for Goods and Services Tax (GST)
Singapore Goods and Service Tax is a consumption tax that is imposed on the import of goods as well as on almost all supplies of goods and services in Singapore. GST registration does not apply to all businesses, but is compulsory for those that fall under these categories:
- Taxable turnover for the past 12 months exceeds $1 million, or
- Taxable turnover is expected to exceed $1 million in the next 12 months
There are some exceptions to these conditions, and companies can also voluntarily apply for GST even if they are not required to.
2. Apply for business licenses and permits
Some types of businesses in Singapore require licenses and permits to operate. Retail, real estate, travel, construction, telecommunications—these are some industries that require licenses to begin operations.
You should check if your business requires a license or permit, and register for them before you open for business.
3. Do consistent bookkeeping and accounting
Doing consistent bookkeeping and accounting for the sales and expenses of your business is of great importance to all companies in Singapore. It helps you to track how your business is profiting and enables you to make necessary adjustments to streamline costs and drive your business in the right direction.
Keeping proper accounting records is not only beneficial but necessary by law. You need proper accounting records to accurately register for GST and the file for key annual documents required by the Inland Revenue Authority of Singapore (IRAS) and the Accounting and Corporate Regulatory Authority (ACRA).
If companies do not comply with these annual filing requirements, they will have to pay fines and suffer penalties.
The key point is that accounting and bookkeeping are important and beneficial to every Singapore company. Bookkeeping and accounting are tedious, especially for bigger companies, and companies can make it easier by outsourcing these services to an accounting service provider.
4. Appoint an auditor
An auditor is in charge of performing an audit on the company’s accounting records that is in line with specific internal procedures and regulations of the corporation as well as government standards. The auditor is appointed by the corporation and is independent of the corporation that is being audited.
Appointing an auditor within the first three months of incorporation is mandatory for all companies, except the companies that are considered ‘small company’ or ‘small group’. This means that the companies exempt from appointing an auditor must fulfil at least two of these conditions:
- The company has a total annual revenue of less than $10 million
- The company has a total asset of less than $10 million
- The company has a maximum of 50 employees
Auditing is beneficial to a company also because it ensures that the company’s financial statements are credible and fair, and gives confidence to a company’s shareholders. The tasks stated above are only some of the actions a Singapore company needs to take after incorporation. Already, these few tasks show the crucial importance of keeping track of the company’s finances and accounting records.
Your company can handle these accounting tasks on your own or outsource these tasks to an accounting and bookkeeping service provider in Singapore.
More conveniently, you can simply engage a corporate service provider in Singapore to cover all necessary incorporation tasks. These service providers do not just assist companies with the initial registration process, they also can provide accounting and bookkeeping services after registration—functioning as a one-stop solution to all of a company’s basic needs.
Get a quote from Express Corporate Service to engage accounting and bookkeeping services for your company in Singapore.
Why are outsourcing accounting and bookkeeping services good for your Singapore company?
Given, accounting and bookkeeping are necessary tasks for every company—but should companies handle these tasks on their own or have an external accountant and bookkeeper do it for them?
To help you make an informed consideration, we first give you an overview of the roles and responsibilities of accountants and bookkeepers.
Roles of an accountant
An accountant is responsible for more than filing tax returns and necessary documents at the end of the year.
In the first place, the filing of the Estimated Chargeable Income, Corporate Income Tax Returns, and Annual Returns documents are not simple one-off tasks that you complete one time in a year. These documents can only be properly filed when accompanied by the thorough keeping of proper account records throughout the year.
On top of filing key documents, accountants assist a company with many other tasks. Accountants calculate costs spent and set suitable fees for the company’s products and services. They estimate future profits and make financial predictions for the coming months and years. Accountants also help to streamline costs by investigating all costs associated with the company’s operations. This includes office rent, utility bills, loan repayments, and supplier fees etc. They assist the company in making the best use of government tax reliefs by giving advice on the tax exemptions and reliefs that the company is entitled to.
In summary, an accountant produces financial reports and numbers that allow the corporation to make effective financial decisions and maximise profits.
Roles of a bookkeeper
An accountant produces reports and analysis of the company’s finances using the records handed to them by bookkeepers.
A bookkeeper provides accountants with necessary records that function as the basis for making financial forecasts or suggestions to streamline costs etc. The bookkeeper’s records are the foundational block for the accountant’s tasks—that is the fundamental role of the bookkeeper.
Why are outsourcing accounting and bookkeeping services good for your Singapore company?
Accountants and bookkeepers’ responsibilities are tedious and time-consuming, and require professional knowledge and expertise. Many companies in Singapore choose to outsource their accounting and bookkeeping to an external accounting and bookkeeping service provider because it allows the company to stay focused on their central business goals, save time and costs, and make successful long-term decisions informed by detailed financial reports and expert advice.
Hiring an in-house accountant is a possible option, but outsourcing helps save the costs of supporting an employee’s additional monthly salary. When you outsource accounting and bookkeeping, you pay a single flat fee for one year’s worth of accounting and bookkeeping services, send in your financial information online at the end of each month, and receive comprehensive financial reports from your outsourced service provider.
Outsourcing accounting and bookkeeping services is preferable for most companies in Singapore.
Contact Express Corporate Services at kanara88@gmail.com for accounting and bookkeeping services in Singapore.
Conclusion
All in all, incorporating a company in Singapore does not have to be a difficult process.
For both foreign and local businesses alike, incorporation is easy—as long as you have the necessary knowledge and support. Engaging a corporate service provider is a simple and cost-saving solution for the smooth formation and maintenance of a corporation in Singapore. Your provider will assist you in the initial registration process to sustaining your company in the long-term.
Lay a firm foundation for the growth of your business by choosing a reliable corporate service provider to cover all your company’s basic needs.
Express Corporate Services offers incorporation services in Singapore at competitive rates. You can view our website, email kanara88@gmail.com, or call (+65) 6677 8653 for enquiries, or ask for a quote here .
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