How to start a business in Singapore: Complete startup guide 2024

There’s a reason why Singapore is known as the startup capital of Southeast Asia. With its free-market policies, strategic location, and robust entrepreneurial ecosystem, the city-state offers a conducive environment where startups can thrive. 

Singapore has also built a reputation as a global fintech hub and witnessed notable progress in areas like digital payments, which new companies can use to accelerate their growth. For example, solutions like Airwallex can enable regional expansion through its robust financial platform. Airwallex is designed to simplify international payments and financial operations, allowing startups to easily enter and thrive in new markets. 

Before we go deep into fintech solutions, we first need to cover the process of starting a business in Singapore. Keep reading this detailed guide on company registration, timelines to follow, and insights on navigating Singapore’s business regulations. 

How to choose the right business structure

Choosing the right company structure is an important first step. It determines the legal and operational framework of the startup, affecting aspects like taxation, liability, and governance. Here’s a quick guide to choosing a business structure for startups.

Source: https://www.acra.gov.sg/docs/default-source/default-document-library/how-to-guides/before-you-start/comparisons-of-business-entities-13apr22.pdf, https://www.acra.gov.sg/how-to-guides/setting-up-a-local-company/determining-the-company-type

Sole proprietorship

A sole proprietorship is a business owned and managed by one person. Legally, the business is considered the same entity as its owner, which can pose several challenges.

Pros:

• Easy to set up, requiring minimal paperwork compared to other business structures.

• Easy to terminate compared to Partnerships and Companies.

• Owner has full control over business decisions and operations.

Cons:

• Income is taxed at personal income rates, which can be higher than the flat 17% corporate tax rate. 

• Unlimited personal liability for all business debts and obligations

• Purchase of real estate and assets must be done under the sole proprietor’s name, and they are personally liable for property taxes.

• No long-term stability, as the business legally ceases to exist when the owner passes away or retires. 

Partnership

In a partnership, a maximum of 20 individuals or entities come together to run a business. The business is the same legal entity as the partners. It requires a high level of trust, as all partners are equally liable for the actions of a co-partner. 

Pros:

• Easy to set up, with similar requirements and processes as a sole proprietorship.

• Easier to manage than Limited Liability Partnerships and Private Limited Companies.

• No public disclosure. The Partnership is not required to disclose or audit its accounts.

Cons:

• Income is taxed at personal income rates, which can be higher than the flat 17% corporate tax rate. 

• Unlimited personal liability for all business debts and actions of co-partners. Any individual partner can be sued and held legally liable.

• Partners are jointly liable for co-partners’ debts. If one partner cannot cover their share of debt, other parents must make up for the shortfall. 

• Flexible company structure that needs to be decided amongst all partners, which can increase the possibility of conflict.

• No perpetual existence. As the Partnership is not a separate legal entity, it can come to an end if one co-partner leaves, unless all partners agree otherwise.

Limited Liability Partnership (LLP)

A limited liability company (LLP) is a legal entity where the owners' liability is limited to their investment in the company. This structure protects the owners’ personal assets from the company's debts and liabilities. 

Pros:

• Personal liability is limited to the amount of capital contributed by each partner. Partners are also not liable for their co-partners’ actions.

• Perpetual existence. An LLP will continue to exist as a legal entity even if a partner leaves.

• No public disclosure. An LLP is not required to disclose its capital or have their accounts audited.

• Lower registration cost compared to Limited Private Company

Cons:

• Income is taxed at personal income rates, which can be higher than the flat 17% corporate tax rate. 

• Not qualified for government loans or grants.

• Requires at least 2 partners, or the entity will be dissolved.

Private Limited Company (Pte Ltd)

The Private Limited Company is the most common entity for its flexibility and scalability. It’s a separate legal entity that can have up to 50 shareholders. Its shares are not available to the public.

Pros:

• Corporate tax rates apply to profits.

• Tax incentives like the Start-Up Tax Exemption Scheme are available for newly registered companies

• Personal liability is limited to the amount of capital contributed by each partner. Partners are not liable for their co-partners’ actions.

• Perpetual existence even if shareholders or directors resign. Only one shareholder is needed for the entity to exist.

• Ease of raising capital from banks and investors, as it is seen as more credible compared to Partnerships.

• Clear company structure and governance is outlined in the Companies Act, which reduces ambiguity and conflict among shareholders.

Cons:

• Complex incorporation requirements that include documents like a Company Constitution, signed Consent to Act forms, and detailed identifying information about shareholders and directors. 

• Strict statutory requirements compared to partnerships. Companies must comply with all rules and procedures in the Companies Act.

• High manpower costs compared to partnerships, as a qualified auditor, bookkeeper, and company secretary must be hired.

• High administrative burden due to ongoing compliance. The company must file annual tax, GST and compliance returns.

How to set up a company in Singapore: A step-by-step Guide

To set up a private limited company, follow these simple guidelines and remain compliant with the Accounting and Corporate Regulatory Authority (ACRA) regulations and the Companies Act. 

Choose and reserve your company name

As a first step, companies in Singapore must get their name approved by ACRA.

Once you have your entity’s name, you can reserve it online through BizFile+. It takes less than an hour if the name follows regulations. However, having a name with regulated words like "legal" or "finance” needs approval from relevant government authorities, which can delay the process.

ACRA has a helpful guide for choosing a suitable company name and checking its availability. 

If your application is successful, ACRA will hold the name for up to 120 days. During this time, you can begin incorporating your company. 

Prepare company registration documents

After the company name is approved, the next step is to prepare the required documents. These must be in English or officially translated into English:

Image source: Left: Certificate of incorporation, Right: Form 45

• Approved company name registration with transaction number

• Choose the correct SSIC code that describes your business activities. The Singapore Standard Industrial Classification (SSIC) is a series of numbers that classifies business activities by sector. 

• Company Constitution (previously known as the Articles of Association). This legal document outlines the rules for the company's internal governance, structure, shareholder rights, and other regulations. If you prefer not to create a company constitution from scratch, you can adapt a model constitution.

• Consent to Act as a Company Director (Form 45), signed by all company directors. Its full name, "Consent to Act as Director and Statement of Non Disqualification to Act as Director," clearly describes its function. It lists the conditions that could disqualify a director and serves as a consent form for those who meet the requirements. 

• Consent to Act as Company Secretary (Form 45B), signed by the company secretary. This document serves as their consent to assume the duties and responsibilities of a corporate secretary for your company.

• Identification documents for all shareholders and directors, including residential addresses. If the shareholder is a company, prepare a business profile that includes the shareholding structure, the authorised representative’s name and ID.

Register with ACRA via BizFile+

Once all incorporation documents are ready, the company can be registered with ACRA through BizFile+. It’s a straightforward process that takes less than an hour. However, if the company registration requires additional approval from another government agency, it may take several weeks to complete.

Here’s the step-by-step process for registering a private limited company. 

Create a business bank account

Once ACRA sends the Certificate of Incorporation, companies can open a corporate bank account with any major bank or a fintech provider in Singapore. A new startup might prefer using a fintech firm like Airwallex for its digital-first approach. Its Business Account is a robust platform that offers multi-currency accounts, high-speed international transfers, Borderless cards, expense management, and batch bill payments - all in one account. Its cost-effective rates let new businesses stretch their financial resources and supports their sustainable growth in these critical early years.

Airwallex’s account opening process is just as seamless as registering a company. Creating an account costs SGD 0 and the business verification process happens entirely online, without an in-person visit. Once all your documents are in, your Singapore Business Account is ready for use in a few working days. 

Obtain the necessary licences

Depending on the nature of your business, you may need to obtain a licence before starting operations. Go Business has a helpful list of licences by industry, and an e-advisor to help you understand which ones your startup needs.

Hire employees according to the Employment Act 

Hiring your first employees requires careful decision-making and adherence to the Employment Act. These labour laws outline the basic terms and conditions of employment, and the rights, duties, and responsibilities of employers and employees.

When to register your business: timing and compliance in Singapore

Every Singapore company must meet mandatory annual requirements to ensure compliance, as outlined in the Companies Act. This guide outlines broad compliance timelines for private limited companies:

• Estimated Chargeable Income - filed 3 months after your Financial Year End (FYE)

• Annual General Meeting (AGM) - held 6 months from FYE 

• Annual Returns Filing - filed  after AGM and within 7 months of your FYE

• Tax Form C or C-S - filed every Year of Assessment by 30 November

For this reason, accurate bookkeeping should be done quarterly, at minimum. This enables the preparation of management reports and statements, such as the Profit & Loss statement. Utilising a fintech partner like Airwallex, which integrates with bookkeeping software like Xero, offers a consolidated view of accounts receivables and expenses in one place.

Starting a small business in Singapore: Plan, register, operate

Starting a small business in Singapore involves a series of strategic steps, beginning with a robust business plan. This plan should outline your business activities, financial projections, and key business metrics. 

Securing capital is the next step, which can be achieved through various means including loans, venture capitalists, or government grants. Singapore offers a supportive environment for startups, with numerous grants and tax incentives that defray initial costs. 

Foreign-owned businesses are not eligible for government grants. However, innovative startups can readily obtain venture capital funding, as Singapore is the region's leading hub for such investments.

Managing your business’s costs is essential for sustainability. This includes budgeting for operational expenses, such as rent, utilities, and salaries. Tax obligations are another important consideration, and it's advisable to familiarise yourself with the local tax laws and regulations. 

Finally, selecting the right product or service to offer is critical. Conduct thorough market research to understand the demand and competition in your chosen industry. With careful planning and execution, starting a small business in Singapore can be a rewarding endeavour.

Starting a business solutions (B2B) company in Singapore: Meeting the demand for innovation

Singapore's status as a business hub offers vast opportunities for B2B firms, due to the presence of regional offices and startups.  Entrepreneurs with fresh, innovative solutions are likely to stand out in this competitive market.

Assuming you already have a business model and a tech idea worth expanding, here are some other considerations to starting a B2B company in Singapore.

• Licences and permits. Depending on the nature of your tech or service business, you may need to obtain specific licences. For example, if you're providing fintech services, you might need a licence from the Monetary Authority of Singapore (MAS).

• Leverage government grants. The Singapore government actively supports innovation through various grants. For example, the Startup SG Tech Grant can fund up to SGD 500,000 for B2B companies developing new technology for healthcare, transport and food science industries.

• Use the Tech@SG scheme to recruit foreign talent. With tighter controls on employment pass (EP) issuance, it can be hard to find the specialised talent you need. If you have a digital or tech product as your core offering, the Tech@SG programme can help you hire overseas employees for your core team. Eligible companies can receive up to 10x new EPs over two years for foreign employees.

• Expanding beyond Singapore? Keep the region’s diversity in mind. Startups expanding to the Southeast Asia market need a nuanced approach to market sizing. Estimating your total addressable market (TAM) and go-to-market strategy (GTM) demands sophisticated methods that consider the region's vast diversity. Given the variety of languages, regulatory landscapes, and consumer preferences, entrepreneurs must adopt customised data-driven approaches for each country.

Where to Set Up Your Business: Choosing the Right Location and Office Addresses in Singapore

When selecting a business address in Singapore, consider the nature of your business, target market, budget, and legal requirements. You have 3 options to choose from:

• Residential address. Your home address can be a cost-effective solution for sole proprietorships and other micro-scale businesses. However, you need to apply for the Home Office Scheme before you register your company. If you own or rent a Housing Development Board (HDB) flat, you must obtain HDB approval before applying for the Home Office Scheme. 

• Virtual address. If you’re based overseas, a virtual office provider can provide a business address without renting physical office space. Virtual offices also offer mail collection and forwarding services, ensuring that you won't miss critical communications from ACRA.

• Commercial spaces. Renting offices at a commercial building or coworking space provides a professional setting for your operations. Consider the location's accessibility to clients and its proximity to business districts. Additionally, the space’s suitability to your operations, potential for growth, and alignment with your budget.

Forming a company as a foreigner: Navigating Singapore's business registry and regulations

Starting a business in Singapore as a foreigner is a straightforward process, even if you are residing overseas. On top of ACRA registration requirements, here are some regulations to keep in mind.

Foreign entrepreneurs living in Singapore

As a foreigner residing in Singapore, you have the opportunity to start a business, register for a specific entity, and apply for the appropriate work pass, based on the type of visa you currently possess. 

If you have an Employment Pass (EP) or Work Pass (WP), you can still own a share of the company you started. However, you cannot be a company director or get an EP for the company you hold shares in.

Dependent Pass (DP) or Long-Term Visit Pass (LTVP) holders can register a sole proprietorship, partnership, or company. Then, you need to apply for a Letter of Consent (LOC) from the MOM to run the business.

Foreign entrepreneurs outside of Singapore

It’s possible to open a company in Singapore even if you reside and wish to remain overseas. However, you would need to hire a company incorporation service like Sleek or Osome to register your business. These firms can also offer a locally resident director and company secretary for your private limited company.

If you prefer to relocate to Singapore and manage the business yourself, you can do so through an EntrePass - a new visa for entrepreneurs running a tech or venture-backed company. You can apply for the pass before company registration, though you would need to do so within 30 days.

Those who don’t qualify for an EntrePass can get an Employment Pass, as long as you meet the requirements.

Conclusion: Your next steps to entrepreneurial success in Singapore

Starting a business in Singapore is a rewarding journey that begins with choosing the right business structure, registering your company, and complying with local regulations. 

As you embark on this exciting venture, streamline your financial operations by setting up a business account with Airwallex. This platform offers efficient cross-border payments and financial solutions tailored for entrepreneurs, helping you manage your finances seamlessly as you grow your business in the dynamic Singaporean market.

With the all-in-one Business Account, startups can streamline their expense management, easily pay multiple bills, and make payments to overseas suppliers without the hassle of traditional banking systems. You get market-leading exchange rates and low transaction fees, making cross-border payments more cost-effective. Ambitious startups can focus on growth and expansion, knowing that their financial operations are handled smoothly and efficiently.

But don’t just take our word for it. Companies using Airwallex experience enhanced efficiency and reduced costs. See how Saturday Club sells globally from Singapore with 99% savings in telegraphic transfer fees, or how Pure Group streamlined global expenses with the Airwallex multi-currency Borderless Card. 

Frequently asked questions

1. What are the common tax incentives available for new startups in Singapore?

New startups in Singapore can qualify for the Start-Up Tax Exemption (SUTE) scheme. Startups are exempted from tax for the first SGD 100,000 of normal chargeable income. They are also exempted up to 50% of corporate tax on the next SGD 200,000 chargeable income for the first three years of assessment.

2. What is the best business to start in Singapore? 

The answer to this question depends on market demand, your expertise, and access to capital. However, sectors such as fintech, e-commerce, healthtech, and sustainable energy are thriving and offer promising opportunities for new startups.

3. What is the minimum investment to start a business in Singapore?

You only need SGD 1 for the initial share capital, but additional funds will be required depending on the nature and scale of the business.

4. Can a foreigner own 100% of a business in Singapore?

Yes, a foreigner can own 100% of a business in Singapore, as there are no restrictions on foreign ownership for most business types.

5. How can Airwallex facilitate cross-border transactions for businesses operating in multiple countries?

Airwallex’s all-in-one Business Account lets you receive, hold, and send multiple currencies. Its Global Accounts feature lets you open local currency accounts instantly, which saves you the hassle of opening a traditional bank account in markets where you operate. 

6. What are the visa options for foreign entrepreneurs who want to move to Singapore to run their business?

If a foreigner’s startup is venture-backed or possesses innovative technologies like AI, they may qualify for an EntrePass. Alternatively, they may apply for an Employment Pass if they are a shareholder or director of a non-venture backed company.

Useful sources:

https://www.iras.gov.sg/taxes/corporate-income-tax/basics-of-corporate-income-tax/corporate-income-tax-rate-rebates-and-tax-exemption-schemes

https://www.ura.gov.sg/Corporate/Guidelines/Home-Business/Home-Office-Scheme

https://www.startupsg.gov.sg/public/2023-03/Singapore%20Venture%20Funding%20Landscape%202022%20Report.pdf

https://www.acra.gov.sg/how-to-guides/before-you-start/referral-authorities

https://www.gobusiness.gov.sg/licences/find-licence-by-sector/?src=run&grow_licences_fs

https://www.acra.gov.sg/docs/default-source/default-document-library/how-to-guides/before-you-start/comparisons-of-business-entities-13apr22.pdf

https://www.acra.gov.sg/how-to-guides/setting-up-a-local-company/determining-the-company-type

https://www.mom.gov.sg/passes-and-permits/entrepass