From Idea to Incorporation: Forming a Singapore Private Limited Company

Consistently ranked no. 1 as the world’s leading business environment by the Economist Intelligence Unit, Singapore is one of the most attractive places for capitalising businesses. entrepreneurs often corporatise their business by converting it into a private limited company. The incorporation of a Singapore company not only offers tax benefits but also provides credibility and opportunities for growth in this global hub.

So, for those planning to set up their own company in Singapore, this guide details its features, procedure for incorporation and its post incorporation requirements to help you prepare for the same. 

The Private Limited Company structure is the most preferred business structure among entrepreneurs due to its flexibility and benefits. So, let’s see what all features make it a highly efficient and scalable structure for local and international businesses.

Features of a Singapore Private Limited Company

1. Separate Legal Entity

Such a Company is a separate legal entity distinct from its owners, shareholders and directors. It can own property, enter into contracts, sue and be sued in its own name.

2. Limited Liability

The shareholders’ liability is limited to the amount they invested in the company. Hence, they are able to protect their assets in case of business losses.

3. Ownership Structure

The Minimum requirement of having only 1 shareholder and a maximum of up to 50, makes it suitable for small and medium-sized businesses. Restriction on the free trade of shares in public ensures that the control remains with the owners.

4. Tax Benefits

The government imposes a low corporate tax rate capped at 17% and allows eligible companies to claim tax exemptions including the Startup Tax Exemption Scheme.

5. Perpetual Succession

 Any change in the ownership or management of the Company does not affect the existence of the Company and it continues to exist until otherwise closed or struck off in accordance with the Singapore Companies Act, 1967.

6. Flexibility in Raising Capital

Can easily raise funds by issuing shares or debt instruments subject to the provisions of the Act.

While these features give us an insight into the form of a private limited company in Singapore, there are certain minimum requirements for a local Company incorporation as per the Act.

Step-by-Step Guide to Singapore Company Formation

The government agency Accounting and Corporate Regulatory Authority (ACRA), primarily responsible for Singapore business registration, has devised a clear process of incorporating a local company. Let’s see the step by step process:

1. Refine Your Business Idea

Before taking the formal steps toward incorporation, ensure that your business idea is clear and viable and outline an extensive business plan. You might need it while applying for industry specific licenses.   

If you are a Foreign entrepreneur, you will need to submit the Singapore business plan while applying for Entre pass. 

Our complete guide on Directorship options for a foreign owned Singapore Company, will answer all your doubts if you are planning to start your business in Singapore.

2. Appoint a Registered Filing Agent or Corporate Service Provider

ACRA mandates Foreign entrepreneurs to appoint a Registered Filing Agent to submit their application to it through its Bizfile+ portal. One can simply log on to the Bizfile+ portal or BizFile Singapore to check the registration status of a filing agent by entering its name or UEN no.

This mandate does not apply to local residents who can file directly or engage a corporate services provider to ensure a smooth registration process.

3. Apply for the new business entity name

Registration of the new business entity name will be the first official step of the Singapore Company formation process. However, even before registration one must ensure that the desired name is not identical with a name already registered with ACRA; for which one can simply visit ACRA’s official website to know whether the name is available for registration or not. 

Read our ultimate guide to finding a perfect Company name in Singapore to avoid chances for rejection.

Ensure that you choose the most relevant Singapore Standard Industrial Classification (SSIC) code corresponding to your intended business activity so that your firm is correctly classified in the most appropriate industry.

ACRA charges a fee of $ 15 registering the name and reserves it for 120 days giving you time to complete the company registration process.  

4. Choose a financial year

Choosing a financial year determines the due dates of various statutory compliances, taxes and e-filings. The Act allows for an accounting period of 12 months or 52 weeks and requires a Private Company to hold its Annual General Meeting within 6 months of the Financial Year end and file the annual returns within 7 months of the Financial Year end.

5. Appoint Key Personnel

 Appoint the following personnel:

• Directors: At least one director who must be a Singapore citizen, permanent resident, or an Employment Pass holder.
• Company Secretary: A qualified secretary within six months of incorporation of Singapore Company.
• Auditor: Unless exempted, companies must appoint an auditor within three months of incorporation.

6. Issue Share Capital

The minimum paid-up capital required to incorporate a Private Limited Company is SGD 1 which can be increased later to support operations or expansion. Companies with share capital of S$500,000 or more automatically become members of the Singapore Business Federation (SBF).

7. Registered Address

A Company must always maintain a valid registered office, which shall be open for public accessibility for at least 3 hours during business hours on all business days. It can be different from the place of operation of business.

You can also use your residential address as the office address of the Company by applying under the Home Office Scheme before submitting your application to incorporate your Company. Virtual offices are widely accepted and used in Singapore as long as they comply with the requirements of the Act. 

8. Prepare Incorporation Documents

Prepare the following documents required to be filed with ACRA for incorporation of Singapore Company:

1. Memorandum (MOA) and Articles of Association (AOA), generally known as the constitution documents of the Company; where MOA outlines company’s name, objectives, and liability, and the Articles detail the company’s internal rules and regulations;
2. Shareholders Agreement (SHA) that defines rights and obligations of shareholders;
3. Identification documents for all directors, shareholders, and the company secretary;
4. Consent forms signed by directors and the company secretary.
5. Any other document required under the Act.

9. Conduct the First Board Meeting

Hold the first Board Meeting of the Company adhering to the Act, to document the decisions taken in respect of opening of bank accounts, registered office, appointment of key personnel, issuing shares, giving authorisations, etc.

10. File with ACRA

After completing the above steps, file the incorporation application along with the required documents via ACRA’s BizFile+ portal. This digital process generally takes less than a day if all documents are in order.

Post-Incorporation Requirements

After successfully filing the incorporation application, you must meet certain statutory obligations to stay compliant:

1. Create a Company stamp and seal

Arrange to get the Company’s stamp and seal having its name and registration no. on it, which you will require for various secretarial and legal documents and for giving authorizations.

2. Open a Corporate Bank Account

Complete the formalities for opening the corporate bank account of your company which basically includes furnishing details like incorporation documents, a board resolution, and identification details of directors and authorized signatories.

3. Apply for Business Licenses (if required)

Apply for industry-specific licenses or permits, if required. For example, food and beverage businesses require licenses from the Singapore Food Agency (SFA).

4. Register for GST (if applicable)

If your annual revenue exceeds SGD 1 million, you must register for Goods and Services Tax (GST).

5. Annual and Tax Filing

Take care of the due dates for filing the annual returns, including financial statements and tax filings, to ACRA and the Inland Revenue Authority of Singapore (IRAS). It is always beneficial to set up an internal accounting system or engage a professional accountant to manage these obligations.

6. Employ Staff and Fulfill CPF Obligations

You must contribute to the Central Provident Fund (CPF) and ensure compliance with local employment laws.

Challenges and How Professional Services Can Help

Incorporating a company in Singapore is straight forward with supportive government regulations. However, regulatory compliance, tax obligations, and getting business licenses can be challenging for newcomers. Here’s where engaging professional services can make a difference:

• Corporate Secretarial Services: Ensure timely compliance with statutory requirements.
• Tax Advisory Services: Optimize tax efficiency adhering to GST and corporate tax regulations.
• HR and Payroll Solutions: Simplify employee management and ensure compliance of employment and other labour laws.
• EOR and PEO Services: Facilitate effortless hiring and workforce management without needing a local legal entity.

Conclusion

A strong and committed government, favourable business environment, strategic positioning, and dynamic economy make Singapore an ideal location for setting up a new business. Businesses that take an outward approach and align themselves with market trends, especially in technology and sustainability, will benefit themselves and the economy. However, Singapore’s vast economy offers varied potential areas for new businesses to enter. 

So now, if you wish to incorporate a company in any of the business sectors you wish to work in, let 3E Accounting help you register your business! Whether you need company formation in Singapore or registration as a partnership firm, sole proprietorship, / LLP, accounting taxation, or compliance, we offer varied business-related services.