How To Start Your Own Business in Singapore

This was originally posted on Planner Bee.

Starting your own business is a thrilling venture, filled with opportunities and challenges. Singapore, with its vibrant economy and business-friendly policies, is an excellent place to turn your entrepreneurial dreams into reality.

This article will guide you through the essential steps in starting your own business in Singapore.

Assessing your business idea

The first step in starting a business involves conducting thorough market research to understand the demand for your product or service, your target audience, and your competition. Evaluate the feasibility of your business idea by analysing financial aspects such as start-up costs, potential revenue, and profitability.

Market research can be done through surveys, focus groups, and analysing industry reports. Understanding the needs and preferences of your potential customers will help you tailor your offerings and create a competitive advantage. Additionally, consider the timing and whether the market conditions are favourable for launching your business.

Read more: When Should You Start Your Own Business?

Choosing the right business structure

Selecting the appropriate business structure is a critical decision that affects your liability, tax obligations, and administrative requirements. In Singapore, you can choose from several business structures:

• Sole proprietorship: Owned by one person, simple to set up, but the owner is personally liable for all debts and losses.
• Partnership: Owned by two or more individuals, sharing profits and liabilities. There are general and limited partnerships.
• Limited liability partnership (LLP): Combines the benefits of a partnership with limited liability for the partners.
• Private limited company (Pte Ltd): A separate legal entity with limited liability for its shareholders. It is the most common structure for businesses looking to scale.

Consider factors such as the level of control you desire, liability protection, tax implications, and the administrative burden when choosing your business structure.

Registering your business

Once you have decided on your business structure, the next step is to register your business with the Accounting and Corporate Regulatory Authority (ACRA). Here’s how you can do it:

1. Reserve your business name

Ensure that your chosen business name is unique and complies with ACRA’s guidelines. You can reserve your business name online through ACRA’s BizFile+ portal.

2. File necessary documents

Prepare and file the required documents, which vary depending on your chosen business structure. For a private limited company, for instance, you’ll need the company’s constitution, details of directors and shareholders, and registered office address.

3. Register your office address

As part of your ACRA registration you’ll also need to add a business and residential address. If you intend to work from home you may need approval, depending on the property type. For example, if you’re living in an HDB flat you’ll need to get the go-ahead before you can register your home as a business.

At this stage you’ll also need to add your residential address, or an alternative address where you can be contacted if you don’t want your home address to be on public record.

4. Pay registration fees

The fees vary based on the business structure. For example, registering a sole proprietorship costs S$100, while a private limited company costs S$300.

5. Receive approval

After submitting your application and paying the fees, ACRA will review your application. Upon approval, you will receive a Unique Entity Number (UEN) and a Certificate of Incorporation.

Not all businesses are required to register with ACRA. The following businesses are exempt:

• A sole proprietor operating under your full name
• A partnership trading with your full names
• Institutions, authorities, persons or funds that are tax-exempt (as identified by Singapore’s government)
• Societies or cooperatives registered as such with the government agencies.
• Mutual benefit organisations
• Trade unions

Understanding legal and regulatory requirements

Compliance with legal and regulatory requirements is crucial to operating your business smoothly. Depending on your industry, you may need specific licences and permits. Common requirements include:

• Business licences: Certain industries, such as food and beverage, retail, and healthcare, require specific licences. Private schools, meanwhile, must receive approval from the Ministry of Education for relevant business licences.
• Permits: If you plan to make structural changes to your premises, you may need building permits.
• Office hours: For incorporated local companies, ACRA requires your registered office address and its opening hours, which should be at least three hours on a business day.
• Customs: If you export from or import into Singapore, your business must register with Singapore Customs.
• Industry regulations: Adhere to industry-specific regulations to avoid penalties and legal issues.
• Tax requirements: Register for Goods and Services Tax (GST) if your annual turnover exceeds S$1 million. Ensure you understand corporate tax obligations and deadlines.
• Singapore Central Provident Fund (CPF): This is Singapore’s national pension fund. Ensure you comply with requirements pertaining to the CPF.

Securing funding and financial management

Securing adequate funding is essential for starting and growing your business. Consider the following funding options:

• Personal savings: Using your savings is the simplest way to fund your business, but it involves significant personal risk.
• Bank loans: Commercial banks offer various business loans, but you need a solid business plan and collateral.
• Government grants: Explore grants and subsidies offered by the Singapore government, such as the Startup SG Founder scheme.
• Angel investors and venture capitalists: These investors provide capital in exchange for equity, ideal for high-growth startups.

On that note, unless you’re a sole proprietor who is okay with receiving payment in your personal bank account, you’ll have to open a business bank account.

Maintain accurate financial records and monitor your cash flow to ensure the financial health of your business. Consider hiring an accountant or using accounting software to manage your finances effectively.

Assembling the team

Once your business is up and running, you might find it necessary to hire additional help. If you’re planning to employ staff in Singapore, your first step is to apply for a Central Provident Fund (CPF) submission number, which can be conveniently done online through BizFile.

It’s essential to understand the processes and requirements for both employee and employer CPF contributions and know when they are applicable. Additionally, determine if you need to purchase work injury compensation insurance, which depends on the type of work and your employees’ income.

Last but not least, keep in mind that different regulations apply when hiring foreign workers, so make sure to gather all necessary information to ensure a smooth hiring process.

Tax obligations

How you go about filing your business taxes will depend on your business entity type. If you’re a sole proprietor or in most types of partnerships, your business is not considered a separate legal entity from a tax perspective. That means it’s easy to file your taxes with IRAS online through SingPass.

If you have a registered company you’ll need to follow a separate tax filing process that is done online via IRAS’s e-filing portal.

Read more: Navigating Business Taxes: A Guide for Small Business Owners in Singapore

Starting your own business in Singapore is an exciting journey that requires careful planning, dedication, and a clear understanding of the local business landscape.

With the right approach and mindset, you can turn your entrepreneurial dreams into a thriving business in Singapore.