How Can Foreigners Start a Business in Singapore

How Can Foreigners Start a Business in Singapore?

Singapore is one of the most business-friendly countries in the world, making it relatively easy for eligible foreigners to establish a business. This guide provides an overview of the key steps and considerations for foreigners looking to start a business in Singapore.

Choosing a Business Structure

Foreigners must first decide on the legal structure of their business. Singapore law recognizes several business structures, including sole proprietorships, partnerships, and companies. Each has its own advantages, drawbacks, and specific requirements, especially if the foreigner does not intend to be physically present in Singapore. Below is a summary of these options:

Sole Proprietorship

A sole proprietorship is the simplest and most cost-effective business structure. It is owned and operated by a single individual who retains all profits but is also personally liable for any debts and legal actions against the business.

• Registration is done online via the BizFile+ portal using SingPass.
• Foreigners without a SingPass must engage a registered filing agent (e.g., a corporate services firm) to complete the registration.
• If the owner does not reside in Singapore, they must appoint an authorized representative who is a Singapore citizen, Permanent Resident, or EntrePass holder.
• Physical presence in Singapore is not required to register a sole proprietorship.

Partnership

A partnership involves at least two but no more than 20 partners. It offers simplicity and lower compliance costs, similar to a sole proprietorship. However, partners share liability, including debts incurred by other partners.

• Registration follows the same process as a sole proprietorship.
• An authorized representative must be appointed if no partner resides in Singapore.
• A partnership can be registered without any of the partners being physically present.

Company

Incorporating a company provides the benefit of limited liability, meaning shareholders are not personally responsible for the company’s debts. However, companies must meet additional compliance requirements, such as filing annual returns and holding annual general meetings.

There are two primary scenarios for foreigners incorporating a company in Singapore:

1. Foreigners setting up a local company:

1. • Incorporation is done via BizFile+ using a SingPass account.
   • The company must have at least one director who is ordinarily resident in Singapore.
   • Foreigners intending to manage the business in Singapore must apply for an Employment Pass (EP) through the Ministry of Manpower (MOM).

2. Foreign companies expanding to Singapore:

1. • Foreign companies can enter the Singapore market through a branch office, subsidiary, representative office, or redomiciliation.
   • Each option has different legal and tax implications.

Restrictions Based on Foreigners’ Passes

Foreigners in Singapore under certain passes may face restrictions on running a business.

• Employment Pass, S Pass, and Work Permit holders:

• • Cannot register a sole proprietorship or partnership.
  • EP holders may own shares in a company and take up secondary directorship roles.
  • S Pass and Work Permit holders cannot be company directors or shareholders.

• Dependant’s Pass (DP) holders:

• • Can register a sole proprietorship, partnership, or company (must own at least 30% of shares in a company).
  • Must apply for a Letter of Consent (LOC) from MOM to run the business.

• Long-Term Visit Pass (LTVP) holders:

• • Can register a company but must list a Singapore citizen or PR as the director.
  • The company must apply for an LOC from MOM on their behalf to allow them to work for the company.

• EntrePass holders:

• • Have the most flexibility in setting up and running a business.
  • Can establish any legal business structure and bring family members to Singapore.
  • May eventually qualify for Permanent Residency (PR).

Running a Business from Home

Foreigners may operate small businesses from home under either the Home Office Scheme or Home-Based Business Scheme, subject to their pass restrictions. Some key regulations include:

• No employment of non-household members.
• No display of signboards or advertising on the premises.
• No excessive noise, smell, or increased human/vehicle traffic.
• Compliance with relevant laws (e.g., food safety, fire regulations).

Post-Registration Steps

Once the business is registered, additional steps must be completed:

1. Opening a Corporate Bank Account

• A corporate bank account helps separate personal and business finances.
• Most banks require company directors to be physically present for verification, though some allow remote verification on a case-by-case basis.
• It is advisable to confirm the appointment with the bank before making travel arrangements.

2. Hiring Employees

• Singapore has a skilled workforce and various job portals for recruitment.
• Foreign employees require work passes, such as the Employment Pass or S Pass.

3. Renting Office Space

• Rental rates vary based on location, with central business district properties being more expensive.
• Office spaces can be found via property listings or local real estate agents.

Conclusion

Setting up a business in Singapore is a straightforward process for foreigners, with additional requirements such as appointing a local representative or obtaining an appropriate pass if managing the business locally.

Engaging a corporate services firm like WLP Accounting can streamline the registration and compliance process, ensuring a smooth business setup and operation in Singapore. Contact us today to learn more about the full range of corporate services we offer if you are a foreigner looking to start a business in Singapore.