How to Start a Business in Singapore

Are you considering setting up a business in Singapore? Positioned strategically in the heart of Asia, Singapore offers easy access to major global markets. Moreover, the country’s business-friendly policies, advanced infrastructure, and highly skilled workforce create ideal conditions for businesses to thrive. It’s no surprise why many entrepreneurs choose this city-state as their base.

If you’re interested in leveraging this opportunity, read on below to learn how to start a business in Singapore.

Disclaimer: The information provided below is for general knowledge purposes only and should not be considered legal, financial, or professional advice. It is advisable to conduct thorough research before making any business decisions.

1. Filing for Business Registration

When you start a business in Singapore, the first step is choosing the right business structure. Here are the common types:

• Sole Proprietorship: Suitable for individual entrepreneurs handling low-risk businesses.
• Partnership: Ideal for two or more individuals collaborating on a business with minimal risk.
• Limited Partnership (LP): A mix of general and limited partners, fitting for professional firms.
• Limited Liability Partnership (LLP): Combines partnership benefits with company liability protection.
• Company: Offers the most flexibility for growth and funding, suitable for larger businesses.

Next, you must register your business name with the Accounting and Corporate Regulatory Authority (ACRA). The application for the business name costs S$15. Once approved, the name can be reserved for 120 days, giving you time to finalise the registration of your business.

Additional Steps for Foreign Entrepreneurs

Foreigners planning to start a business in Singapore must first obtain an EntrePass from the Ministry of Manpower (MOM) before registering their company or within six months of doing so.

Moreover, Dependant’s Pass holders must secure a Letter of Consent from MOM after their business is registered. Additionally, those holding a Foreign Identification Number (FIN) must verify their eligibility with relevant authorities like MOM or the Immigration and Checkpoints Authority before proceeding.

For more information, visit the ACRA’s website here.

2. Financing Your Business

For many first-time entrepreneurs, personal savings may not always be sufficient to fund their business. Fortunately, Singapore offers various loans to start a business that can help cover initial startup costs, purchase equipment, or provide working capital. These loans offer businesses the liquidity they need to operate smoothly, ensuring they can focus on growth and daily operations without financial strain.

Beyond loans, government grants also offer valuable financial support. For instance, the Startup SG Founder scheme provides a S$50,000 grant to first-time entrepreneurs with innovative business ideas, allowing them to focus on developing and growing their businesses without the immediate pressure of securing large amounts of capital.

3. Understanding Employment Laws

Hiring employees is an essential step in setting up a business and facilitating growth and operations. However, there are specific legal requirements you’ll need to adhere to.

Employers are required to contribute to the Central Provident Fund (CPF) for Singaporean Citizens or Permanent Residents who earn more than S$50 per month. On the other hand, if you plan to hire foreign workers, you must obtain the appropriate work permits for their particular job roles.

Additionally, if you plan to hire foreigners, you will need to read up on the laws provided by the Ministry of Manpower (MOM). All companies must comply with the employment quota system, which dictates the allowable ratio of local to foreign workers in your business. For instance, if your business is in the manufacturing sector, the quota is set at 25%, while in the service sector, it is only 8% For more details, please refer to the MOM website here.

4. Registering Your Office Address 

Securing a suitable business address is essential for compliance and operational efficiency in Singapore.

For sole proprietorships, partnerships, and LPs, you can utilise your residential address under the Home Office Scheme, pending approval from HDB or URA. However, companies and LLPs must maintain a registered office address accessible to the public during business hours, although it does not need to be the primary business operation site.

All business entities must register these addresses with ACRA, ensuring they meet legal requirements and are accessible for official communications.

5. Opening a Business Account

In Singapore, every business must have a corporate bank account to manage its finances effectively. Typically, the company’s directors and authorised signatories are responsible for opening these accounts.

One of the first steps involves meeting the deposit requirements, which range from S$0 to S$3,000, depending on the bank and type of account chosen. These deposits are secured by the Singapore Deposit Insurance Corporation, accommodating businesses of various sizes and financial capabilities.

To initiate the process, you’ll need essential documents such as the company’s Certificate of Incorporation, a business profile, details of directors and shareholders, proof of address, and a minimum initial deposit.

This process can take one to four weeks, depending on the complexity of your business structure, the thoroughness of your application, and the bank’s internal procedures.

6. Corporate Taxes and Compliance

For entrepreneurs starting a small business in Singapore, it’s important to understand the corporate tax obligations thoroughly. All companies, whether local or foreign, must pay a corporate tax rate of 17% on any income generated within or remitted to Singapore. Grasping these tax requirements is essential for effective financial planning and budget management.

Set Up Your Business for Success in Singapore

Starting a business in Singapore is an exciting opportunity, and thorough planning is essential to harness the potential of the city-state’s dynamic business environment. To support your continued growth, Validus provides business loans for SMEs incorporated for more than 6 months, giving you the necessary growth capital to meet your business goals.. As your business matures and your financial needs increase, you can also consider our other products where you can pull out capital from your purchase orders and invoices, which help facilitate the smooth cash flow and scaling of your business.

At Validus, our commitment to SMEs goes beyond conventional financial services. As a provider of alternative SME financing solutions helping more SMEs access funds easily and quickly, we’re your strategic growth partner dedicated to fueling the trajectory of your business. Our suite of financial services is meticulously designed to provide SMEs with the robust support they require to not just survive but thrive in today’s dynamic business landscape. From simplifying the process of obtaining working capital loans to innovating how you manage your business expenses, we’re here to ensure that your financial journey is marked by efficiency, transparency, and empowerment.