Singapore has emerged as the new land of opportunities. The Government of Singapore made positive changes in the policies and processes that an entrepreneur needs to follow to start a business in the country. Being the second most business-friendly nation in the world, and the first in the G20 countries, Singapore has everything that a company will ever need to flourish and be a leader.
Why Start-ups Love Singapore?
There are several reasons why Singapore is a great country to start a new business. The top reasons include:
- As per the World Bank, Singapore is the top country for starting a new business. The time required to register and start operating a business in Singapore is just one day. Moreover, anyone can own a business in Singapore. It means that foreigners do not have to follow special rules to become a business owner in the country.
- Singapore has a highly stable political ecosystem, resulting in a highly robust and reliable framework that undergoes minimum fluctuations. It has also made the judicial and administrative system of the country highly trustworthy, giving all the confidence that a new business needs to stay in the country.
- Singapore situated in a very strategic position in the world. It is close to the two giant economies of the future – India, and China. The inbound and outbound traffic to and from the neighboring countries is enormous. It gives a chance to the startups in Singapore to explore the upcoming trade shows and business opportunities in and around the country.
- One of the biggest challenges faced by a startup is that of a cash crunch. Singapore has more than 100 commercial banks and 300 other financial service providers that enable the startups to secure funds quickly.
- A lot of developed and developing economies have a complicated tax structure. Singapore is an exception to this rule. The taxation policies are pretty much straightforward. Moreover, the tax authorities have a very progressive approach to taxation, allowing people to enhance their take-home income.
How to Start a Business in Singapore?
The Government of Singapore has laid down a robust but simple framework to start a business in Singapore. The Government also has set up agencies that help the startups in fulfilling the formalities, scouting for local talent, securing funds, ensuring quality, expanding to foreign lands, and any other kind of help that a new business requires.
Step 0: Do the Home Work
Starting a business requires an idea, a game plan, and much determination. Although Singapore is a business-friendly nation, unless the business idea and the execution plan is detailed and thoroughly grilled, there is nothing that the policies of the country can do. Therefore, the first area of focus should be outlining the business plan.
A successful business plan goes through several sessions of analysis and brainstorming before being materialized. Not only is the idea is analyzed, but the target market, location of the outlets, managerial duties, and the operational costs are analyzed and evaluated alongside. A good business plan lists the product, the company, competitors, customer demographics, and a marketing plan.
A lot of new business owners jump to the process of incorporating the business without thinking about the nature of ownership that the company should have. While most startups in Singapore are private limited organizations, but going down the same road might not be the best idea for your business. Singapore allows registration of the companies under different structural heads. The business owners need to understand the advantages and disadvantages of adopting a particular ownership structure over the other. It is also essential to understand the laws that govern the different business structures. ACRA demonstrates the different business structures that a business can adopt in Singapore here.
Step 1: Register the Business
Physically starting a business in Singapore is a sequential procedure that starts with registering a company. Startup owners can register their business, including the foreign branch offices online at Bizfile. Bizfile is an initiative by the Government which states all the formalities and pre-requisites of kick-starting a business in Singapore. The web portal also provides the necessary information and forms to be filled and complied with to register a company successfully. The portal allows the registration of the business as follows:
- Sole proprietor/ Partnership
- Local Company
- Foreign Company
- Limited Partnership
- Limited Liability Partnership
- Public Accounting Firm
For detailed step-by-step listing on every company type, refer to the help on Bizfile. It is important to note that every company type has its own set of liabilities and regulations to be followed. The business owners can refer to the Accounting and Corporate Regulatory Authority guide to understand the nature and structure of the company type that can register in Singapore.
Step 2: Get the Funds
Singapore provides several ways to find funds for a new venture. While bootstrapping is a popular option among young entrepreneurs, a business owner can also opt for bank loans and other such financial products to allocate funds for business at affordable rates. DBS is a popular choice among startup owners. DBS provides a quick account opening facility and a plethora of digital banking capabilities that enable startups to start recording revenue from day one. A business owner can open an SME bank account with DBS for as low as SGD1,000 and there is no need to maintain a minimum balance. Another accessible bank among the startup owners is Maybank. Maybank is originally a Malaysian bank, but it has been operating in Singapore since 1960. Maybank requires an SGD1,000 as an initial deposit without the need to maintain a minimum monthly balance. OCBC is yet another bank that startups can look at. The bank has exclusive products geared at startups that are highly commendable.
A startup or an SME that are operational for a few years can also look at several grants and schemes that are offered by the Government. All these programs by the government aid the SME sector is specific ways. In fact, the plans are so detailed and extensive, that they can take care of all the major expenses that SMEs face in their lifetime. Some notable campaigns include the ACE Startup Grant who got awarded to first-time entrepreneurs in the tech space. Sector Specific Accelerator (SSA) Program, which is a Government initiative focused on niche areas. CDG or Capability Development Grant to help startups build their capabilities in ten different regions and ComCare Enterprise Fund for business owners actively giving back to the society. Enterprise SG lists all the details of the grants and schemes that advocate the growth of the SME sector in Singapore.
Step 3: Find a Premise
Singapore is known for its fantastic infrastructure, and finding a premise for a business is not a difficult task. However, for a customer-facing business, the location of the outlet can be the difference between success and failure. Thus, finding the right premise can be a strategic need for individual companies. Whether the business needs a premise in the middle of the city, or a factory, Singapore provides an extensive list of specialised parks and industrial zones that fulfil all the premise needs of the businesses.
Singapore provides quite a few options for business owners to select a premise having its advantages and disadvantages. Here is a quick list of the nature of space available to companies in the country:
Business Centers/Co-working Spaces
Co-working spaces are fully-furnished office space in Singapore that can be rented by companies on a monthly or an annual basis. These areas are usually located in posh areas of the country, and provide prestigious business addresses. The cost of renting a co-working space is comparatively low, and perfect for startups with small team sizes. These spaces are particularly lucrative among new startups since the cost of moving in is negligible, and facilities like housekeeping, IT infrastructure, lighting, and food are readily available.
For startups with larger teams, traditional offices are a great option. A conventional office is essentially a big space that is available to the company to fill and enrich its corporate identity. The businesses have to furnish the space themselves and put up all the facilities like security, utilities, lighting and ventilation, housekeeping, etc. on their own. The most significant advantage of leasing a conventional office is the flexibility available in terms of creating an office layout and providing facilities to the employees.
Virtual offices are an exciting way to give a corporate identity to your business without actually investing in an office space. This setup involves paying a very reasonable fee for a business address, dedicated telephone number, fax number, handing mails and couriers, and use of meeting rooms and conference halls. Virtual offices are generally rented by businesses that need to show their business presence in Singapore but do not need to be present in Singapore physically at all times.
As the business grows, the startups can move to larger offices and even lease full buildings to carry out the operations. This guide on leasing office spaces in Singapore presents an interesting comparison of different options available to startups.
Step 4: Recruiting Manpower
Being a startup hub, Singapore attracts a lot of local and foreign talent towards the startup scene. Countless people from the neighbouring countries have come and settled in Singapore in the last few years. The community thus developed has been living in harmony, making Singapore an exciting mixture of culture and business.
Sourcing talent in Singapore is relatively easy. Several online portals help businesses in finding the right people for the company. The businesses actively list their opening on job boards like Beamstart, Jobstreet, Indeed, and Monster. After the opportunity gets listed on these websites, interested candidates can express their interest by applying to the openings. The companies can then contact the interested candidates through phone or email, as per their preferences. LinkedIn is another online outlet for companies to scout for talent.
Most companies in Singapore like their HR to take a multi-stakeholder role. HR is no more treated as a passive operation. HR functions gear towards not only finding the right people, also help the employees in re-aligning their goals to that of the organization for mutual benefit.
Companies in Singapore are free to hire and invite people from foreign countries into the country to fill open positions. However, to engage foreign workers in Singapore, the companies have to ensure that the workers hold a valid pass (or visa).
A foreign worker can apply under different categories depending upon the qualification and the nature of the job that he or she is supposed to take up in Singapore. Broadly, the passes divided into the following categories:
- Skilled Workers
- Family Members
- Exemptions and Other Passes
More information on the passes can be found here.
Another critical thing to note is that the companies in Singapore expect to maintain a specific ratio between foreign workers and local workers. The Dependency Ratio Ceiling (DRC) or, in simpler terms, the maximum permitted ratio of foreign workers that can be hired by a company depends on the sector of operation of the business. For example, for the service sector, the DRC stands at 38% as of January 1, 2020. It means that for every 50 local workers hired, the company can hire 19 foreign workers. This ratio will further reduce to 35% in January 2021. The foreign worker quota calculator by the Ministry of Manpower gives the exact number of foreign workers that a business can hire against the local hiring.
Step 5: Knowing the Authorities
Singapore has several official authorities that take care of different needs of the business owners. This structure has been formulated to ensure the smooth running of the economy and also providing high efficiency of the various governing processes of the country.
A business owner in Singapore should be aware of all the authorities active in the country. Any decision or amendment in the law done by these authorities can impact the way a business does its operations. Here is a list of relevant bodies of Singapore:
- Enterprise Singapore: This authority leads the country’s economy. It formulates all the policies and creates the ecosystem required for business development in Singapore.
- Economic Development Board: Popularly known as EDB, this authority is responsible for overlooking the well-being of the Singaporean economy on the whole. The administration facilitates comprehensive support to investors and maintains a healthy pro-business environment in Singapore.
- Accounting and Corporate Regulator Authority: Or ARCA, this authority is responsible for taking care of new business registrations, enforcing regulations on the companies, ensuring compliance, and providing information on the latest business structure.
- SMEPortal: It is a pit-stop for all the essential information that startups need to run their operations, maintain viability in the market, and grow the market share.
Step 6: Follow the Guidelines
The next thing that business owners need to address is the regulations and other laws of the land. One reason as to why Singapore is an attractive startup hub is due to the presence of a robust legal framework and strict enforcement of the regulations. The following set of rules governs every niche of business in Singapore:
- An eligible company should appoint auditors within three months of its incorporation. However, companies privately owned, employ under 50 people, and with assets and annual revenue under $10 million do not need to be audited as per the laws.
- On successful incorporation, the company is given a Unique Entity Number (UEN) by ARCA. This company is mandated to disclose this number on all official communication with the official authorities.
- Any change in the company details like transfer of shares, increase and decrease in capital, resignations, and nominations of new officers (like directors, company secretary) have to be informed to ARCA on priority.
- Companies are mandated to submit paperwork as required by IRAS on an annual basis. The paperwork usually includes estimated chargeable income, accounting records, financial reports, and tax returns.
- Certain startups might need to apply for additional permits and licenses, depending on their operations. For example, retail stores, hotels, spas, employment agencies, real estate agencies, private educational institutes, pharmacy, construction companies, travel agencies, and financial advisory companies require special permission and licenses.
- All companies need to have an office address that can be contacted by the public for a minimum of three hours per day on weekdays. In case the company does not operate from 9 AM to 5 PM, it is expected to inform ARCA about the time when it is operational and available to the public.
- Companies, including startups, are mandated to hold AGM (Annual General Meeting) every year or 15 months from the date of its last AGM (whichever is earlier). The first AGM for a newly registered company should happen within the first 18 months. After the AGM, the company mandated to inform its annual return to the ARCA.
- If a company supplies taxable goods and/or services, it is mandated to register under the GST tax laws. The laws involve e-filing the tax, payment of the fee, reporting the tax implications, and taking part in the GST audits.
Growing a Business in Singapore
Although Singapore is a place where the businesses are known to flourish and grow, the country presents its own set of challenges. Some of these challenges are very generic and present among several niches. However, particular niches can have specific problems, and they need special care.
Read More: https://smequest.com/why-singapores-startup-ecosystem-is-a-true-enabler/
The Government of Singapore has devised training programs, campaigns, grants, and schemes to enable businesses to tackle these problems. For example, companies that are struggling with the adoption of technology can make use of Enhanced iSPRINT program. Market Readiness Assistance Grant can help businesses in exploring the overseas markets. Innovation & Capability Voucher get used to strengthen the business capabilities in areas of HR, innovation, and financial management. Productivity-Max (P-Max) Program use to recruit professionals, managers, and other executives to enhance the productivity of the company.
Similarly, various other programs can help businesses to grow and improve their quality and productivity in multiple areas of operations.