Starting a business is challenging. Even if you have numerous promising ideas, how practical are they? Before settling on a business concept, consider asking yourself:
Is my idea feasible and sustainable over time?
What are the unique selling points of my business?
Am I addressing a need or solving a problem?
Are there existing brands doing this, and if so, what sets me apart from them?
To further assess your idea’s viability, you might conduct focus groups or surveys to determine if there’s a substantial niche market for your brand.
#2 Draft a business plan
Once you’ve settled on a business idea, you can begin drafting a business plan to start your entrepreneurial journey. Your plan doesn’t need to be overly detailed, but it should cover the key points: an executive summary, company overview, target audience, marketing plan, financial plan, and operations plan.
#3 Calculate the financial costs for your business
Before starting a business, it is crucial to develop a financial plan to get your business up and running. Have you considered where you will obtain funds? Options include personal savings, borrowing from acquaintances, crowdsourcing, or finding an investor.
There are two types of costs to keep in mind: capital costs and fixed costs.
Capital costs are initial, one-time expenses required to start your business, such as setting up signage, purchasing physical materials, or covering website fees for e-commerce businesses.
Fixed costs are ongoing expenses that must be paid regardless of your business’s profitability, including employee salaries, office rentals, and utility bills.
It’s also essential to have an emergency fund for unforeseen expenses. If you need additional funding, Singapore offers numerous schemes to support new small ventures. Examples include the Business Angel Scheme, SPRING Start-up Enterprise Development Scheme, Technology Enterprise Commercialization Scheme, and Sector-Specific Accelerator Programme by SPRING Singapore.
#4 Register a business name
Before company registration in Singapore, you must register a company name with the Accounting and Corporate Regulatory Authority (ACRA). Company names must adhere to several guidelines: they cannot be identical to existing Singapore company names, contain profanities, or infringe on trademarks. The application fee is $15, and if all guidelines are met, name approval typically takes about an hour. Once approved, your company name can be reserved for up to 120 days. If you do not incorporate your business within this period, the name will be released.
#5 Choosing the right business entity
Singapore offers a variety of corporate entities for business owners, each suited to different types of business activities. Foreign companies looking to operate in Singapore can choose from four types of business entities: representative office, Limited Liability Company (LLC), branch office, and Limited Liability Partnership (LLP).
Before starting the Singapore business registration process, it’s crucial to fully understand your business model to select the corporate entity that best fits your needs. Consider factors such as potential liabilities, tax and compliance obligations, and the type of business activity you intend to pursue.
#6 Understand tax obligations
Singapore boasts one of the world’s simplest and most rational tax systems, so it’s crucial to understand your tax obligations to avoid future legal complications due to non-compliance. Here are some key points to consider when starting a business in Singapore:
Capital gains and business dividends are not taxed.
Corporate and personal taxes follow a tiered system:
New firms benefit from significant tax breaks in their first three years, with a tax rate of 0% for the first S$100,000 of income.
The maximum corporate tax rate is 17%.
Personal tax rates start at 0% and gradually increase to a maximum of 20% for incomes above S$320,000.
Corporate earnings distributed as dividends are not double-taxed, making dividends tax-free.
Value-added tax (VAT) is among the lowest in the world at 7%.
Profit repatriation is unrestricted. Capital profits from business sales and dividends paid to shareholders are not subject to taxes.
Foreign currency transfers in and out of Singapore are unrestricted.
Understanding these aspects will help you navigate the tax landscape effectively as you start your business in Singapore.
#7 Register your business
Starting a business in Singapore is simple and hassle-free due to the minimal requirements for setting up a new company. These requirements include a minimum paid-up capital of $1, a company secretary, a resident director, a shareholder, and a registered office address in Singapore.
To set up a sole proprietorship, you need to register your company with the Accounting and Corporate Regulatory Authority (ACRA). The requirements for registering a sole proprietorship in Singapore are as follows:
Individuals must be at least 18 years old.
They must be a Singapore citizen, Singapore Permanent Resident, or hold an EntrePass/Employment Pass.
Foreigners can also set up a sole proprietorship by appointing at least one nominee resident director and engaging a registered filing agent to submit the application.
