Singapore Company Incorporation: Choosing the Right Business Structure

Singapore is an enthralling hub of many business entities. Business enthusiasts will be thrilled to know that all these different structures offer them a chance to test their entrepreneurial prospects. However, it is essential to note that the choice of business structure influences multiple factors like tax obligation, your stakeholders’ reputation, the administrative workload, personal liability, borrowing capacity, and potential for business expansion.

Types of Business Entities in Singapore

Private Limited Company

Private limited companies are spread throughout Singapore, allowing entrepreneurs to own publicly traded businesses. In contrast to sole proprietorships and limited liability partnerships, private limited companies are a much more flexible mode of transactions, hence preferred by the majority of the business community.

Features like separate legal identity, limited liability, perpetual succession, and ease of raising capital become the non-negotiable factors for owners choosing private limited companies as their business entity. 

Public Limited Company by Shares

PLC is when a group of more than 50 shareholders own the company. Their shares are open for purchase by the common public. To be approved as an LLC company, submitting a prospectus to MAS (Monetary Authority of Singapore is necessary.

This business entity has similar benefits, like limited liability and competitive tax rates. Moreover, the variety of ways like debentures, bonds, and offering public shares makes raising capital quite accessible for them, hence teh appeal of an LLC for a business enthusiast.

Public Company Limited by Guarantee

In these kinds of companies, an owner’s liability is restricted to the value of assets and money they have agreed to contribute to the company’s assets. However, this business entity does not involve shares; it operates in a way that gives members the freedom not to have to pay as long as the company is operating.

Sole Proprietorship

A considerable part of the business community is interested in investing in self-owned businesses as this arrangement favours small ventures and doesnt require vast sums of funds. However, unlike other business entities familiar in Singapore, this one, an owner and his business are considered as one single entity; hence, the owner bears all the responsibility for any liabilities that the company has to deal with.

The appeal for sole proprietorships revolves around the ease of formation, freedom of control, minimal administrative costs, flexibility, etc. It allows a commoner to experiment and take risks while staying within budget.

Partnerships

As suggested in the name, partnerships allow two or more individuals to lead and invest in a business collectively. In a setting like a partnership, the firm has no separate legal existence from its partners, meaning it will cease to exist in case of a partner’s passing, incapacity, or retirement.

In Singapore, three kinds sof partnerships are joint: General Partnership, Limited Partnership, and Limited Liability Partnership.

Foreign Company Options

Many foreign companies have shown interest in establishing their presence in the country through branch offices, subsidiaries, or representative offices. To make the right choice, one must carefully study the prospects of that foreign company’s future goals in Singapore and how committed it is to executing its plans successfully.

Requirements For Registering a Company in Singapore

Having your company registered in the heart of Asia has its advantages. However, Singapore is known for its complex registration process, especially for foreigners. Don’t you worry! This article will walk you through the entire process, especially private limited companies.

Before starting the registration process, it’s essential to go through all the steps and understand the requirements. Most importantly, you must appoint at least one local director for your company who must be a Singaporean citizen, permanent resident, or an Entrepreneur Pass holder.

Here are all the requirements for registering a company in Singapore:

• At least one shareholder, which can be a person or a company.
• A capital amount of at least 1 Singaporean Dollar.
• A local director who is either a Singaporean citizen, permanent resident, or an Entrepreneur Pass holder.
• A Singapore-resident secretary is appointed within 6 months from the date of incorporation.
• A local address for your company.
• All relevant licenses are required to open your business.

Going through these requirements and ensuring you fulfil them before starting the application process will make it much smoother.

Deciding Your Corporate Structure

Following the initial registration stages, you must choose the proper corporate structure for your business. Here are a few questions that will come in handy when analysing which structure will suit you the best:

• Shareholders> Carefully assess whether the shareholder is a company or an individual. After, you will need to carefully look into the residence status of that shareholder, whether he is a local or a foreigner.

• Directors of the company: One will be required to check if they already hae a resident director. Otherwise, he must contact a professional service provider firm to access a nominee director for the initial stage.

• Initial Share Capital: For Singapore, everyone is required to have a minimum of 1 SGD. Anyone aspiring to secure a visa in Singapore must raise their capital to a sufficient point. 

To successfully ensure that all regulations are met, the firm should carefully verify every background information of the respective shareholders and directors. The following process holds great significance in providing a seamless verification process.

Creating Your Brand Identity

Securing a unique and exclusive brand name is always a very crucial step. The name represents the brand’s identity and must be coherent with the target audience. Moreover, the owner must guarantee that this name follows all the Accounting and Corporate Regulatory Authority (ACRA) guidelines.

As per legal requirements, every business must pay for specific licenses to ensure a smooth operation, especially if it involves financial services, etc. Once engaged with One Visa’s service, business activity will be advised on the SSIC code accordingly to prevent potential complications.

Preparing Your Documents

Having all the necessary documents with you is good once you are ready to start the registration process. Doing this saves you the trouble of running around the house or through your computer and finding each document separately. Here’s a list of all the documents you’ll need for registering your company in Singapore:

• Your company name
• SSIC Code and a small description of your company activities
• Details of shareholders and KYC information
• Details of directors and KYC information
• Your local director’s details and NRIC (if you do not have one, One Visa can provide you with a Nominee Director)
• Registered Singaporean Business Address
• Share capital details
• The company’s constitution

Final Registration Process with ACRA

This registration step is vital, given that all documents are handed over to Singapore government agencies, such as ACRA. For your clarity, this step has been broken down into three manageable parts in the following:

• Shortlist a unique name for your brand.
• Cross-check the availability of your desired name via ACRA’s online name availability search tool.
• The reservation period of this name will remain valid for 120 days.
• Choose the SSIC codes to display your business profile for your company’s primary and secondary business activities.

Name Approval

• Registration fees must be paid after submitting the relevant documents to ACRA.
• As long as your business activities are regulated in Singapore, you can have your application processed in 1-2 days.

Annual Tax Filing

Business owners must be updated with their tax statements as they must fill out annual returns with ACRA, including financial statements and auditor’s reports. Business owners must conduct an AGM every year to maintain the accounts appropriately. Income tax with IRAS must be filed; Singapore companies must register for GST at a specific turnover rate. However, some can register regardless for tax purposes.

Conclusion

Of course, establishing a venture in a country like Singapore opens the door to many opportunities. However, choosing the proper business structure often dictates your success. It is essential to consider that each structure has its distinguished features, and all follow a similar pattern. One needs to follow clear guidelines and tick off every requirement from ACRA; hence, establishing a new venture becomes a tiresome yet worthwhile experience. By carefully selecting a corporate structure, fulfilling legal prerequisites, securing a distinctive brand identity, and staying compliant with annual tax obligations, entrepreneurs can leverage Singapore’s robust economic framework to establish and expand their ventures effectively.