This is a complete guide on incorporating a limited liability company in Singapore
This is a complete guide on incorporating a limited liability company in Singapore.Singapore is a reveled business hub that many investors use as a conduit to achieve faster growth to multinational status. For years, Singapore has earned international reputation because of its stable political environment and support for business. The complex infrastructure, well-regulated business economy, and central location in Asia make Singapore a perfect entry point for any investor that wants to realize faster growth and success.
Why Singapore? The pros of registering your company in Singapore
- Ease of registration/ entry into Singapore: Singapore administration has made it very easy for new investors to enter and do business. This ease has made it win the top position on the World Bank list on ease of doing business. To incorporate a company, the main requirements are a local director and a local company secretary. If you have all the requirements and documentation, the company can be incorporated within 24 hours.
- Transparent and direct operational requirements: To attract more investors, Singapore has one of the most straightforward tax regimes. After incorporation, you are required to submit audited books to the Revenue Authority in 18 months. However, if the company has a turnover of less than S$5 million, it will be exempted from the annual audit. This is a great incentive for new companies to work harder and grow rapidly.
- Central location in the Far East: Many people refer to Singapore as the bridge between East and West. Its strategic location in Asia and vibrant economy has made it the best entry point for companies seeking to take advantage of the Asian rapid economic growth. With its Shangi airport known for its high efficiency, you can fly to and out of the country easily for business
- Subtle tax requirements for new companies: As a business, you will probably be looking for a country that does not have punitive tax regime. Singapore has some tax incentives that target ensuring that every business grows rapidly. For example, your business’s first S$100,000 corporate profit will be exempted from tax. Besides, all profits and deals that are completed outside Singapore are exempted from taxation. Therefore, if you have proper books and structure for the company, all external operations can qualify for 0% tax without being considered as tax avoidance. To keep your profits even higher, you can lower the taxable income by creating staff benefits programs like vehicle leasing and retirement benefits. These schemes will be captured in your books as expenses.
- Political stability: Risks associated with political administration and economic operations in the West are perhaps the biggest worries for investors. However, Singapore is a very stable jurisdiction and least bureaucratic state in the entire Asia. The pro-business approach is known for extra pragmatism, transparency, and rationality. When the system is further anchored by a sound and highly efficient legal system, every business can be sure of even playing field for faster growth. Well, your efforts will be surely rewarded and growth imminent at all levels.
Opening a limited liability company in Singapore
The minimum requirements for incorporating a business in Singapore include a minimum of one shareholder, a resident director, resident company secretary, physical address/ office, and a paid up share capital of at least S$1.
The documents required for registration according to Company’s Act include the following;
- The company’s name: A business name is a very vital brand-enhancing component. The Singapore administration requires that every investor conducts a name search on the companies list to ensure that it is unique and in line with the business target.
- A good business structure and shareholding pattern: The Singapore authorities want to understand the nature and system of operation for the new business. Will you be dealing with services such as telecoms, exporting devices, or operating in the hospitality niche?
Your structure of the company must issue at least one share subscription to the initial members. Then, you can establish whether the capitation will be increased through further issue of shares.
- The shareholder’s agreement: The Company’s Registry demands that the new company shareholders have a properly drawn shareholders’ agreement. This is very important for helping to solve disputes that may emerge in future. It also draws the rights and obligations of every shareholder. Because you are the main brain behind the business, make sure to control the interest of the company by protecting and holding the controlling rights.
- Details of shareholders and directors: To get the company registered, you will require at least one director who is a resident in Singapore. He should be a Singapore citizen/permanent resident, or an individual with an Entrepreneur Pass with a Singapore address.
The Companies Act allows one corporate member or individual shareholding. For a private limited company, a maximum of 50 shareholders is allowed.
- A company secretary, physical address, and an auditor: The Companies Act requires every company to have an operational office. This is the point of location where various government agencies can walk in to follow on your operations.
In addition to a physical address, a limited liability company is required to pick a resident secretary in 6 months after incorporation. This person must be knowledgeable of Singapore business law and becomes responsible for all regulatory requirements. Many companies consider outsourcing the company secretary to ensure they are compliant and on the right side of the law.
Every limited liability company is required to appoint an auditor within three months of incorporation. However, you can be exempted from this requirement if the shareholders are less than 20, have no corporate shareholders and an annual turnover of less than S$5 million.
- MAA (Memorandum of articles): This is a specific document that defines all the activities the company will be engaged in. It is different from the common Article of Association that defines the rules governing the company management.
Other important requirements include a company business profile, the first board resolution, company seal, and stamp.
Opening a Singapore bank account
Your company registration cannot be deemed complete without getting a bank account. This will help the business to transact business, make payment, get paid and clear bills. It is also a very crucial component of the auditing process.
Note that a company is considered a separate legal entity separate from directors and shareholders. Because it can transact on its own, you will need to open a company bank account with an agreement from the board of directors.
To open the right bank account, it is important to carry due diligence on all available banks. Review the banks’ operations based on the company’s objectives. For example, you might consider a bank with lower interest rates, easy access to credit, and commitment to support various activities.
To reduce the chances of getting the application for an account rejected, it is important to provide the company structure, proof of residence of directors and company secretary, and expected sources of cash. You could also indicate additional avenues that the company anticipates to raise more revenue for operations.
Acquire the relevant business licenses and permits
After the acquisition of an incorporation certificate, your business might still be required to get other licenses. For example, if the company is in hospitality, telecoms, or energy among other sensitive sectors, the respective departments will be required to issue their licenses. Note that additional requirements for set up, machines, safety, and operations might be demanded before a company can commence. As a business, it is crucial to carry comprehensive market analysis to establish the requirements and capitation.
Taking advantage of government supported programs
As a new company, it is important to check whether you qualify for various Singapore government support programs. These programs are aimed at helping businesses get a better footing. Some of these programs include Productivity and Innovation Credit that help to encourage innovation in production systems. If your activities qualify, a business can enjoy up to 400% in tax deduction. The main activities in this program include the buyout for IT equipment, Intellectual property registration, Design activities, and Research & Development.
Singapore allows new companies to convert a maximum of S$100,000 of the expenses into nontaxable cash payout starting from 2013 at a rate of 30%-60%. This means that it is possible to get up to 80% tax exemption on the expenses such as rent, volunteerism, philanthropy, manpower, and equipment acquisition.
Seeking expert help when registering and starting a company in Singapore
While the business environment in Singapore is targeted at assisting companies’ blossom faster, many people still find it hard to register and commence operations. To make your work easier and faster, it is advisable to seek expert assistance from the beginning. A good expert agency will assist you in the following ways;
- Getting a good local shareholder for the company
- Preparing most documentation that are required for company registration
- Registering the company at the registry
- Carrying comprehensive market analysis for a vibrant start
- Understanding the Singapore business environment and how to take advantage of various government incentives
- Anchoring business objectives especially at the initial stages of establishment in Singapore