Starting Your Own Business in Singapore

Singapore 3rd May 2012 Michel Nol

What have you heard about it?

Very simple Only need 1 dollar capital Done within 24 hours Cost nothing

This is not totally true ..

2

Many questions Many options

Should I create a Private Limited Company (PTE LTD)?

What if I have currently EP or PEP? Do I get any tax advantage by creating a Company?
Can I become a Sole Proprietorship? How much do I put as initial Capital? How much tax I am going to pay? What are the steps I need to do? How much is this going to cost me? Can I be the Resident Director? What if I am a DP? A Tourist? Do I need to apply for an Entre-Pass? What is a Nominee Director? What is a Company registered address?
3

Answer 4 Basic Questions

1. How big is my project? How much funds do I need to invest? Business Plan Financial Plan Cash Flow Plan Required Funding Capital?/Loan?/Grants? 2. Who is involved? On my Own? Single or Multiple Shareholders? Corporate or Individual shareholders? Daily management? Directors? Employees? 3. What is my Current Work Permit Situation? Permanent Resident? Employment Pass? Tourist?

4. Which location? Separate Office? Home Office? Registered address?

Decide about
Which type of legal structure do you need to support your business?
Sole-Proprietorship Private Limited Company (Pte Ltd) Limited Liability Partnership (LLP) Representative office or Branch ..

My Business

Which type of Work Permit will you need to apply for?

None : if already Permanent Resident (PR) Entre-Pass Employee Pass (EP) ..

Minimum Legal Requirements for a

Sole Proprietorship
Maximum One owner who must be ordinarily resident in Singapore i.e. Singapore citizen or Permanent Resident or Employment Pass holder or Dependent Pass holder (*) Must register at the ACRA Must have a local registered address not PO Box (must be open to public at least 3 hours per day between 9 am and 5 pm)

(*) A non resident (Foreigner) can be a Sole proprietorship but needs to appoint a local manager who is Singapore citizen or Permanent Resident or Employment Pass holder

Advantages & Disadvantages of

Sole-Proprietorship
Advantages Quick and easy set up Easy to administrate do not need to audit their accounts or file annual returns with ACRA Easy to manage owner is the sole decision maker Exclusive use of profits owner receives all the business profits. Disadvantages Owner bears all costs and risks The owner is personally accountable for debts and losses. Borrowing powers for soleproprietors are more limited. The owner cannot raise funds by selling a stake in the business to investors The business may come to a standstill when the owner falls sick or dies.
7

Minimum Legal Requirements for a

Private Limited Company
Minimum one Director who must be ordinarily resident in Singapore i.e. Singapore citizen or Permanent Resident or Employment Pass holder Minimum Paid Up Capital is S$1 Must appoint one Company Secretary Must have a local registered address not PO Box (must be open to public at least 3 hours per day between 9 am and 5 pm)

Advantages & Disadvantages of

Private Limited Companies
Advantages Limited liability The personal assets of shareholders are protected. More attractive to investors Companies can fund their business by selling shares Better growth potential can "go public" and raise funds by offering shares and debentures to the public. More credibility due to higher regulation
Disadvantages More formalities and procedures to comply with. i.e. specific rules for appointment of directors, annual general meetings and shareholders resolutions. Filing of Company records and Annual return to ACRA Audit required for companies with more than 20 individual shareholders or with corporate shareholder, if revenue is more than S$5 million for the financial year.
9

Entrepreneur Pass (Entre-Pass)

Specific Work Permit for Foreign Entrepreneurs Business Plan must be submitted Company must be registered as a Private Limited Applicant to hold a least 30% of shares Company to have at least S$ 50,000 paid-up capital Company must not be registered for more than 6 months at the point of application Minimum required Annual Total Business Spending: S$ 100,000 (Q1) Minimum number of Singaporean Employees: 2 local employees (Q1)

10

Employment Pass (EP)

The Employment Pass is a work pass for foreign professionals working in managerial, executive or specialized jobs.

11

Several Scenarios depending on your situation

12

Scenario 1
You are On Your Own & You are a Permanent Resident (PR)

Option 1: Go for Sole-Proprietorship Option 2: Create a Private Limited Company (recommended)

13

Scenario 2
You are On Your Own & You have an Employment Pass
Option 1: Create a Private Limited Company (Single Shareholder) and transfer your Employment Pass to your own company e.g. employed as Managing Director. (recommended) Option 2 Create a Private Limited Company and Apply for an Entre-Pass
Note 1: Sole Proprietorship is an option in case you want to create your business besides your current job and keep your Employment Pass.

14

Scenario 3
You are On Your Own & You dont have any work permit yet (e.g. Tourist Visa or Long Term Visit pass) Option 1: and Create a Private Limited Company and apply for an Entre-Pass (recommended) Option 2: Create a Private Limited Company (Single Shareholder) and apply for an Employment Pass via your Own Company

15

Incorporation Steps of a PTE LTD

Step1: Choose a Company name and check with ACRA. If OK reserve the name. Step 2: Draft the Memorandum and Articles of Association (M&AA) Step 3: Apply for Company registration at ACRA
Name and address of Shareholders (number of shares and share price) Name and address of Company Directors Office Registered address Fill in Form 45

Step 4: Appoint a Company Secretary

1st Board Resolution Common Seal Company rubber stamp

16

After Incorporation
Open a bank account Print your company registration number on all letterheads, invoices, statements of accounts, official notices and publications Maintain your company Accounting Books and prepare your Financial Statements. Maintain Payroll Administration (CPF, SDL, Pay Slip, IR8A,) Hold an Annual General Meeting (AGM) GST registration and monthly submission (if > S$1 mio. Sales) Prepare and File Annual Tax Return
Note: Companies with less than 20 individual shareholders (Exempt Private Companies) do not need to appoint an auditor, audit their accounts or file them with ACRA if their revenue is less than S$5 million for the financial year.
17

Cost Indications
Incorporation ready to go package Company Secretary Accounting & Financial Reporting (ACRA) Work Permit Application Payroll Administration Tax return preparation & IRAS filling From SGD 1,000 one time From SGD 700 p.a. From SGD 400 p.m. depending on # of transactions and frequency of financial reporting From SGD 450 p. application From SGD 50 p.m./ EE From SGD 1,000 p.a.

18

Corporate Income Tax

17% tax rate No tax on dividend and capital gain Unabsorbed loss may be carried back for set-off against prior years income Reduced income tax rate for Start-up Companies during 3 first years (under specific conditions):
100% of the first S$ 100K 50% of next S$ 200K Productivity & Innovation Credit Scheme (PIC) Tax reduction/holidays for specific project/activities

Other tax incentives

19

Thank you!
Your Trustful Partner in Asia
B P Solutions Pte Ltd
101 Cecil Street #10-06, Tong Eng Building, Singapore 069533 Tel +65 6225 0833 Fax +65 6225 0985 Email: info@BPSolutions.com.sg Website: www.BPSolutions.com.sg

20