Singapore has established itself as a global business hub, attracting entrepreneurs from all over the world who are keen on taking advantage of its stable political environment, business-friendly policies, and strategic location. Singapore offers a range of business incorporation options that suit the needs of both local and foreign investors. In this article, we will provide a comprehensive guide to business incorporation in Singapore, including the different types of companies, the process of incorporation, and the benefits of doing business in Singapore.
Types of Companies in Singapore
The first step in incorporating a company in Singapore is to determine the type of company that is most suitable for your business needs. The most common types of companies in Singapore are:
Private Limited Company (PLC)
A private limited company is the most popular type of company in Singapore. It is a separate legal entity from its shareholders, which means that the liability of the shareholders is limited to their share capital. The shareholders of a private limited company have limited liability, and the company has perpetual succession, which means that it can continue to exist even if the shareholders change.
Public Limited Company (PLC)
A public limited company is a company that has shares that are traded on a stock exchange. A public limited company is required to have at least 50 shareholders, and it must file annual financial statements with the authorities.
Limited Liability Partnership (LLP)
A limited liability partnership is a type of partnership where the partners have limited liability. An LLP is required to have at least two partners, and it must have a registered office in Singapore.
A sole proprietorship is a business owned by one person. The owner has unlimited liability, which means that he or she is personally liable for all the debts of the business.
A partnership is a business owned by two or more people. The partners have unlimited liability, which means that they are personally liable for all the debts of the business.
The Process of Incorporation
Once you have decided on the type of company that is most suitable for your business needs, the next step is to incorporate the company. The process of incorporation in Singapore is straightforward and can be completed within a few days. Here is a step-by-step guide to the process of incorporation:
Reserve a company name
The first step in the process of incorporation is to reserve a company name. You can do this online through the Accounting and Corporate Regulatory Authority (ACRA) website. The name of your company must be unique, and it must not be similar to any existing company name in Singapore.
Appoint a company secretary
Every Singapore company is required to have a company secretary. The company secretary must be a resident of Singapore and must be appointed within six months of the incorporation of the company.
Register the company
Once you have reserved a company name and appointed a company secretary, you can proceed to register your company with ACRA. You can do this online through the ACRA website. You will need to provide details such as the company name, the business activities of the company, the registered address, the particulars of the directors and shareholders, and the details of the company secretary.
Open a corporate bank account
After the company has been registered, you can proceed to open a corporate bank account. You will need to provide the bank with the company registration documents and the identification documents of the directors and shareholders.
Register for taxes
Finally, you will need to register your company for taxes with the Inland Revenue Authority of Singapore (IRAS). You will need to provide details such as the company name, the registered address, the business activities of the company, and the particulars of the directors and shareholders.
Over the years, Singapore has developed a range of business-friendly policies that are aimed at spurring economic growth. The government takes a proactive approach in order to improve the business climate in the city-state. For example, the government has enacted free trade agreements with 16 countries and territories, and it has introduced policies to encourage investments from foreign investors.
Singapore is located between two of Asia’s most dynamic economies, China and Japan. It boasts an optimal location for producing electronic components, hardware systems development, software development, and data center operations. With a high level of skilled manpower and talent available in Singapore, entrepreneurs can also take advantage of this Asian business hub’s skilled workforce by hiring workers from Singapore on short term contracts.
Income tax rate
The income tax rates in Singapore are unified at 25%. There are a wide range of tax credits and incentives available to businesses in Singapore.
Corporate tax rate
Companies in Singapore pay a flat corporate tax rate of 17% on their taxable income. However, companies can also choose to be taxed at a lower rate of 15% if their profits are derived from specific sectors such as the manufacturing industry, the sale of medical devices and healthcare products, or the provision of training services.
Personal income tax rates in Singapore range from 0% – 20% depending on the income level and personal situation. In addition to the personal income taxes paid by individual citizens, residents and non-residents who earn a certain amount of money are required to pay taxes on an additional 4%.
A wide range of goods and services are exempt from the GST. These include basic food items, healthcare services, education and training services, financial services, residential properties and residential property leasing.