Starting a business can be a daunting task, but incorporating a business can be even more complex. Incorporation means registering a company as a legal entity with the government, which can offer various benefits, such as limited liability protection, tax advantages, and enhanced credibility. Business Incorporation Singapore is a popular destination for entrepreneurs and investors seeking to incorporate a business, thanks to its strategic location, robust legal framework, efficient bureaucracy, stable political environment, and competitive tax system. This article will provide a comprehensive guide to business incorporation in Singapore, covering the main steps, requirements, regulations, and tips.
Choose the Type of Entity
The first step in business incorporation is to determine the type of entity that suits your needs and goals. Singapore offers several options, including sole proprietorship, partnership, limited liability partnership (LLP), and private limited company (PLC). The most common choice is the PLC, which provides the highest level of legal protection, flexibility, and scalability.
Name Approval and Reservation
The next step is to choose a unique and meaningful name for your company, which should comply with the guidelines of the Accounting and Corporate Regulatory Authority (ACRA). You can use ACRA’s online system to check the availability and suitability of your preferred name and reserve it for up to 120 days. It is advisable to have several backup names in case your first choice is not available.
Appointment of Company Directors and Secretary
Every Business Incorporation Singapore must have at least one director who is a resident of Singapore, meaning a Singaporean citizen, permanent resident, or holder of an Employment Pass or EntrePass. The director must be at least 18 years old and of sound mind. The company must also appoint a company secretary within six months of incorporation, who must be a natural person and a resident of Singapore.
Share Capital and Shareholders
Singapore companies must have a minimum paid-up capital of S$1 and can have up to 50 shareholders. The share capital can be increased at any time by issuing new shares or transferring existing ones. Shareholders can be individuals or corporations, and their liability is limited to the amount of their shares. It is essential to have a clear and fair distribution of shares among the shareholders, which can affect their voting rights, dividends, and ownership.
Registered Office Address and Company Constitution
Every Singaporean company must have a registered office address, which can be a physical or virtual address, and must be open for at least three hours during business hours. The company must also have a constitution, which is a legal document that sets out the rules and regulations of the company, such as the purpose, powers, duties, and rights of the directors and shareholders.
Submission and Approval of Incorporation Documents
Once you have completed all the necessary steps, you can submit your incorporation documents to ACRA through its online system or a registered filing agent. The documents include the Memorandum and Articles of Association (M&A), the Declaration of Compliance (DC), the consent forms of the directors and secretary, and the identification documents of the officers and shareholders. ACRA usually takes one to three days to approve the incorporation, after which you will receive a Certificate of Incorporation (COI) and a Unique Entity Number (UEN).
After your Business Incorporation Singapore, you must comply with various regulations and obligations, such as registering for goods and services tax (GST) if your annual turnover exceeds S$1 million, filing annual returns, conducting annual general meetings (AGMs), maintaining proper accounting records, and updating any changes in the company’s particulars or officers. It is advisable to seek professional advice or use software tools to ensure compliance.
Obtain a Company License
Depending on the business activities, companies may need to obtain different types of licenses and permits, such as a trading license, Singapore Business Number (BN) registration, foreign business number (FBN) registration, or Board of Approval (BOA) approval. For example, all companies must register with the Companies Registry upon incorporation and apply for a BOA-issued Certificate of Incorporation (COI); otherwise they will be fined up to S$3,000.
Register for GST
Soon after you are Business Incorporation Singapore, you must register for GST and pay the relevant tax. This may be a new obligation if your annual turnover exceeds S$1 million, and it will only be released once your company is registered. Alternatively, you can register and pay tax at the same time. In addition to paying GST and filing annual returns, companies are subject to a surcharge of S$1,000 per day on any GST overpaid or underpaid that is known by the due date of filing.