Opening a business in Singapore is a multi-step process that involves a number of crucial factors. Singapore is the best place in the world to start a business. The country is known for its strong economy, outstanding tax system, 100% foreign ownership policy, and smooth incorporation process. If you are considering setting up a business in Singapore, you will need much more than just a good idea. However, the process can be simple if you are well-prepared and organized.
In this business guide, we will walk you through the complete process of opening a business in Singapore. Whether you’re a foreigner or local, this article will provide you with all the information you need to know before starting a business in this thriving country.
How to Start a Business in Singapore
Here are the steps to open a business in Singapore.
1. Make a Solid Business Plan
Before setting up a business, you need to be ready for bumps along your business journey in Singapore. Prepare an excellent business plan and know how to make it successful. You must be certain of what and why of your business. There are challenges and risks attached to being an entrepreneur. So, when times get tough, remember why you started a business.
Before you begin funding and starting your Singapore company, you need to invest time in research and planning, have a clear understanding of your target audience and their needs, have a marketing plan, knowledge of competitors, and financial forecasts.
2. Raise Capital
After creating a business plan, it is time to work out how you will fund and finance the business. You have different financing options, including using your savings, applying for a business loan, or getting financial support like grants from government organizations. As you consider your options, it’s important to divide your costs into capital costs (one-time payments) and fixed ongoing costs.
The amount of required capital may vary depending on the type and size of the business. In Singapore, registering a business has low entry barriers. You can register a company with a paid-up capital of S$1.
3. Register Company Name
The next step is to choose your business name and validate it with ACRA. First, confirm on ACRA’s BizFile+ portal that the chosen name is not already in use. The ACRA charges S$15 to reserve the company name and will hold the name for a maximum of 120 days.
4. Get a Registered Office Address in Singapore
Every company in Singapore must have a registered office address. When registering your company with ACRA, you must provide your residential and business address. You can rent a virtual office address or use a co-working space.
If you have a small business with 2-3 employees, you can register your home as an office space. However, you may have to apply for a Home Office Permit and get approval depending on your property type.
5. Register Your Business
The next step to open a business in Singapore is to register your company on ACRA. First, choose your business structure from sole proprietorship, partnership, or private limited company. Each business entity has its own pros and cons, so always research the business landscape before choosing the business structure.
If you are starting a sole proprietorship business or partnership business, you can do it yourself in the BizFile+ portal of ACRA. For complex legal business entities, it is best to seek professional advice.
If you want to know the complete Singapore company registration process, read our “How to Register a Company in Singapore for Foreigners” guide.
6. Open a Business Account in Singapore
Business is all about transactions. Setting up a business account is a crucial step in starting a business that no business owner should overlook. Most business types require you to open a separate business bank account to keep your personal finances separate from business.
As a regional financial hub, Singapore offers entrepreneurs a good range of banking options. The country is home to major banks, neobanks, and fintech companies. All of Singapore’s financial institutions provide the best business accounts with variable features and fees. Find the list of best business accounts in Singapore 2024 here.
If you are looking for a feature-rich, best business account in Singapore, check out Fazz Business Account. Fazz Business is a leading neobank in Singapore, offering fair and inclusive fintech solutions to businesses worldwide.
Fazz Business Account is a multi-currency account that allows you to conduct business smoothly beyond borders with free local transfers and better FX rates for international transfers. Open your account online easily within a few minutes, with no minimum balance requirements, no subscription fees, and no admin fees.
7. Hire Employees for Business
Once your business is up, it is time to hire some additional help. Employees are an essential part of any business since they help you with daily business activities and operations. You can find talent through online recruitment portals and agencies.
Moreover, you need to consider the regulations set by the Ministry of Manpower (MOM) during hiring, such as the Employment Act and paid leave entitlement. The Act covers maximum working hours per week, number of sick leaves, and regularity of breaks.
8. File Corporate Taxes
As a business, you must file your corporate tax, depending on the business entity type. Singapore’s corporate tax system is one of the most business-friendly in the world. This is a flat 17% rate for all businesses. The corporate tax filing process is done online through the IRAS e-filing portal.
If your annual profits are less than S$5 million and you do not have any chargeable income, you do not need to file. However, if you’re exempt, keep an eye on any changes to avoid late payment penalties.
The Common Challenges you may face when Opening a Business in Singapore
Singapore offers the easiest business registration process, which attracts investors to open a business here. However, despite being an outstanding business destination, there are some challenges faced by business owners when opening a business in Singapore. Let’s explore them so you know how to avoid and overcome them on your business journey.
- High costs for rent, internet, electricity, raw materials, and labor
- Poor cash flow management and lack of capital
- Meeting strict eligibility criteria for business incorporation
- Getting financial help for growth and expansion plans
- Labor shortage and difficulty in retaining quality employees due to competitive job market and different culture
- Finding the right marketing strategies to promote the products or services
- Doing international trade because of government import restrictions on certain goods
How to Open a Business in Singapore as a Foreigner
Foreigners can open a business in Singapore without any restriction and own 100% of the shares. Singaporean authorities require foreigners to have at least one Singapore-based resident director to open a business. The director can be a legal resident or a citizen. In addition, you will have to provide a registered business address in Singapore.
If you are a legal resident in Singapore and hold a work pass or permit, you can start a business alone without needing a director. On the other hand, you can open a business from overseas and hire a nominee director service to fulfill all legal requirements required to start a business.
If you are not living in Singapore but need a local business bank account for smooth transactions, you can open a Fazz Business multi-currency account online to make free local transfers in SGD and get paid like a local without any hassle.
How to Open a Business in Singapore as a Local Entity?
A local entity can open a business in Singapore following the above eight steps. Here are the requirements for locals to start a business in Singapore.
- Have at least one company director who is 18 years old and a Singapore citizen
- Have at least one local resident director
- Have a minimum of 1 shareholder
- Provide a minimum paid-up capital of S$1
- Get a registered office address
- Get a business name approval from ACRA
Opening a business in Singapore is an exciting journey, and the process is fairly straightforward. With the right guidance, your dream of setting up a business in Singapore can be successful. This guide will help you on your journey to get your business up in Singapore’s thriving market. Once you are set up here, you can also get loans and other financial services to grow your business!