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Why do business in Singapore? Expanding your business to Singapore has many financial benefits. Singapore is famous internationally for its incredibly business-friendly environment, including low taxes, a centralized location with access to huge Asian markets, and the ability to retain 100 percent ownership of the new branch.
If you want to expand your business in Singapore, you will need to take the appropriate formal steps to make your business legal. If you are considering a subsidiary-based entity, registering a foreign company in Singapore can be a complicated, expensive and time-consuming process. You will need a good understanding of the details before you start.
Options for Developing a Business in Singapore
When your business is ready to expand in Singapore, you have two main options: You can set up a subsidiary or work with an organization such as an Employer of Record (EOR). If you’re working with an EOR, the process will likely be much faster, simpler, and more cost-effective. However, some companies choose to create a subsidiary because they are more familiar with this traditional option.
To get started with a conventional subsidiary-based option, your business will need to collect information on topics such as taxes and labor laws. You should also research the terms of employment and understand how your company should handle essential aspects of employment, including:
- Contract structure and requirements
- Normal wages
- Paid leave and public holidays
- Notification requirements
- Termination Restrictions
Before undertaking these tasks, however, you will need to formally incorporate and register your business. These steps are necessary for your company to do business legally in Singapore.
One of the first steps towards setting up a business in Singapore is deciding how it will be incorporated. Generally, you should incorporate as soon as you have decided to do business in Singapore. Here are some of the benefits of early incorporation:
Name Protection: You will be able to register the name as an official mark and protect it from unauthorized use.
Ability to sign legal agreements: Formal incorporation enables your business to enter into binding legal transactions.
Intellectual Property: Your business must be incorporated before you can claim intellectual property rights in Singapore. Formal incorporation greatly facilitates the resolution of disputes regarding ownership of intellectual assets.
Equity Ownership: Early incorporation also allows your business to claim more of the equity before the value begins to accumulate. In contrast, late incorporation will reduce the amount of equity owners can receive.
Easier Fundraising: Banks and other lenders will find your business much more attractive as a customer once it is officially incorporated. Investors, too, will generally only invest in incorporated businesses.
What are the requirements for setting up a business in Singapore?
Setting up a commercial subsidiary in Singapore can be a complex and labor-intensive undertaking. These are some of the steps your business will need to complete.
Registering a company in Singapore starts with formalizing your business name and address. Reserving the business name usually has three main components:
Choosing a Name: When selecting your business name, you will need to meet a few requirements. The name must be unique, it must not be obscene or offensive, and it must not be a name expressly prohibited by the Minister of Finance. Once you have met these criteria, you can register the name legally.
Name Registration: Your company must then register the chosen name through the Accounting and Business Regulatory Authority (ACRA), through the electronic filing and information retrieval system known as BizFile+ . After your registration, the name will remain reserved for 120 days. If you do not register and onboard the branch within this time, the registration expires and the name becomes available for other entities to use. Some names require additional approval by the relevant authorities. A name indicating an educational institution must, for example, be approved by the Ministry of Education.
Specification of business activities: Your company must declare the exact business activities that will take place under the registered name. You should identify both the primary and secondary business activities that your branch will pursue, and you should state the Singapore Standard Industrial Classification (SSIC) that best represents each activity.
When you establish your new business location in Singapore, you will need to select a physical location and demonstrate your legal right to do business at that address. You must provide a physical address , rather than a PO Box, to ACRA with your registration.
3. Formalize your incorporation
When establishing your new business presence in Singapore, you need to choose the structure your business will use to incorporate. Singapore has several types of incorporation for international companies:
- Sole proprietorship: Your business will likely avoid the sole proprietorship model, unless your business is a single proprietor who does not wish to establish a separate entity. A sole proprietorship is easy to register, manage, and operate, but has limited utility for larger businesses.