Guide to Open a Company in Singapore
Singapore’s impressive workforce and promising market indicators make it an ideal location for many businesses to expand their reach. New Horizons Global Partners can help foreign businesses set up a local business entity in Singapore that is compliant with all bureaucratic regulations and labor laws.
Different Business Entities in Singapore
There are several types of business entities that can be established in Singapore. Our local experts can discuss the advantages and disadvantages of the following types of business structures:
Private Limited Company
A private limited company functions similarly to an LLC in other jurisdictions. This business entity is the most common selection for foreign businesses to set up a legal entity in Singapore. Shareholders’ liability is limited to the amount of their unpaid shares and they are not otherwise liable for the business or the debts of the company.
Requirements to set up a private limited company include:
- At least one shareholder
- One resident director
- A company secretary
- A registered address
No minimum share capital is necessary. These simple requirements make the private limited company an attractive option for foreign investors. This type of business entity can engage in any type of commercial or industrial activities. Additionally, there are no restrictions on foreign investments with private limited companies in Singapore. These companies also enjoy tax incentives. The Inland Revenue Authority allows exempt private limited companies to receive a tax exemption at 75% for the first 100,000 of corporate profits for the first three years after the company is set up.
Private limited companies in Singapore can have up to 50 shareholders. Many businesses use this business entity to establish a subsidiary.
A general partnership is an entity in which two parties form a business together. They are personally liable for the partnership.
A major disadvantage to this type of entity is that it exposes partners to personal liability for all damages and losses the business causes.
Limited Liability Partnership
A limited liability partnership is often used for businesses that provide professional services, such as legal services, tax assistance, accounting and consulting services. This type of business can issue contracts, sign legal documents in its own name and lease property. This type of structure limits the liability of the partners.
This type of business entity requires two partners. Minimum capital investment of USD $1 is necessary. Additionally, at least one manager who is a resident of Singapore must be appointed. Annual corporate income tax is not imposed. However, the income is taxed individually by the partners.
Free Zone Company
Singapore has nine free zones where foreign companies can be established. These free zones offer significant advantages, such as:
- Access to storage facilities
- No permit requirement for the transport of non-controlled goods
- No custom duties or GST on imported products
To operate this type of business, an operating permit must be obtained from the free zone authority.
This option is often used by trading companies who need to transport goods to Singapore for additional processing to then export as a finished good.
This option is not technically a separate legal entity. A branch office can only conduct business within the scope established by the parent company. This type of structure can be used to invoice local customers, sign sales contracts and receive income from clients and customers.
Branch offices do not have limited liability. Any of the branch’s incurred liabilities are attributed to the parent company. This characteristic may serve to deter many businesses from establishing this structure type. Additionally, there are no tax advantages of branch offices.
Branch offices can only be registered by foreign companies. They must be registered with the Accounting and Corporate Regulatory Authority. Establishing a branch office can be a cost-effective way to incorporate a business in Singapore.
Representative offices can only participate in certain types of business activities, which must not be revenue-generating. Acceptable activities include:
- Conducting market research
- Conducting research and development activities
- Promoting the business of the parent company
- Providing after-sales support
This option is ideal for companies that simply want to conduct market research to test how their product or service will be received in the Singapore market.
However, to be eligible for a representative office, a business must have annual sales of more than USD $250,000 and have been in existence for a minimum of three years.
Employees cannot participate in direct sales activity from a representative office. Because there is no revenue, annual filings are often simpler with this type of structure.
Singapore law only allows representative offices to remain in place for up to three years. After this time, they must be converted into a branch.
Special Purpose Vehicle
This investment tool is used to hold designated assets on behalf of its investors while insulating shareholders from liability. It can also be used to raise funds from the market.
Holding companies hold and manage long-term investments, including shares of the company, real estate and debt. There are tax advantages to this option. These companies receive their income primarily from dividends, interest payments, and rental fees.
Your Global Partner in All Aspects of Your Business
Our experts will help you identify the best legal entity for your business. We use first-hand knowledge and experience with various business structures and industries to give you important information about each option. Then, you can use this information to make an informed decision about which entity to establish for your business. Our expert team then handles the registration and licensing processes to establish a foreign legal entity on your behalf. We work closely with local governments and tax offices to be compliant with local regulations and customs.
We also provide long-term development support through the following services:
Comprehensive Payroll Services
We provide comprehensive payroll services that are efficient and compliant with local payroll regulations. We handle all social charges, mandatory deductions, third party payments and tax compliance. We also administer benefits and leave and holiday pay.
Exceptional Human Resources Administration
We are the leading HR service provider in Asia. We handle all administrative functions and conduct human resource services by using best practices.
Financial Services Tailored to Your Business Needs
Our team provides monthly bookkeeping, accounting and finance support activities. We provide detailed reports for your business and local authorities.
Compliance Management that Gives You Peace of Mind
We can also assist you with managing compliance matters, including preparing reports for your business and statutory returns. We can explain local requirements and ensure that your business remains compliant with them at all times.
Convenient PEO Services
Our local experts can place employees on the ground before your separate entity is set up. This can help you launch your business and get a team in place while you are waiting for your company’s incorporation. Your employees can conduct market research, promote your business and begin operational activities while you insulate your business from liability and we serve as the employer of record.