Incorporate Company In Singapore
What does it mean exactly to incorporate and register a private limited company in Singapore?
Setting up a local company and incorporating a Private Limited corporation in Singapore is one of the most popular entity type used in many businesses. They can be easily identified by its suffix (E.g. Pte. Ltd., Private Limited, Private Ltd etc), which is part of their business name. Being aware of the different entity types during the process to incorporate a company in Singapore is only the first step.
During the process to incorporate a company in Singapore, there are a few things to take note of. Before going through the process to start up Pte Ltd in Singapore (i.e. a private limited company), note that you are not permitted to sell shares and raise funds publically. Selling company shares on the public market is only permitted for public limited companies that are allowed to do so on the Singapore Stock Exchange (SGX). Despite this, there are many advantages such as limited liability to the owner who decides to register private limited company Singapore.
Therefore, the most common entity adopted by Singapore SMEs and entrepreneurs during the process to incorporate a company in Singapore is private limited companies. To find out more about the process to incorporate a company in Singapore, contact us for a free Singapore company registration consultation.
What is a Singapore private limited company?
Many company registration Singapore specialists have claimed that setting up a private limited company in Singapore is the most popular for new business owners. Unlike a public limited company, a private limited company does not trade shares on the stock exchange. This type of business entity is also limited to 50 shareholders.
To set up company in Singapore that is a private limited company is a scalable legal structure for your business. The company registration Singapore process of setting up a private limited company is quick and easy.
A Singapore private limited company is an independent legal entity. After registering a private limited company, the director’s and shareholders’ personal assets are separate from that of the business. The business can sue, and be sued in its own name. However, the company’s officers are not personally liable for the company’s debts.
By registering a private limited company in Singapore, your new Singapore private limited company can purchase and own property.
According to Singapore’s laws and regulations, a private limited company must have between 1 and 50 shareholders. Companies with fewer than 1 shareholder or greater than 50 shareholders during the process to incorporate a company in Singapore will not be allowed to be incorporated.
After completing the process of company incorporation in Singapore, the private limited company in Singapore is eligible for local tax exemptions. Private limited companies in Singapore are also permitted to receive government incentives regardless of the nationality of the directors or shareholders. This refers to foreign businessmen who can also benefit from local incentives.
What are some of the features of a private limited company?
There are different types of legal structures to use when you incorporate company in Singapore. However, a private limited company is the most preferred one, by both local and foreign individuals.
- A private limited company is not at risk of their personal assets. There is limited liability to its shareholders to their capital that is tied with the shares of the business.
- It has a separate identity from its owner and it is a legal entity.
- A private limited company is required to pay corporate income tax and responsible for all debts the business acquires.
- The company can own property.
- A private limited company is eligible for local tax incentives and exemptions.
What are the requirements to incorporate a private limited company in Singapore?
The minimum requirements that are stated by ACRA to incorporate company in Singapore as a private limited company are:
- Must obtain 1 director who is a resident of Singapore.
- There must be 1 local company secretary.
- At least 1 shareholder, who can be an individual or corporate entity.
- Paid up capital of at least S$1 SGD.
- An approved company name by ACRA.
- A physical office that has a local registered address.
- Similarly to owning a sole proprietorship, or partnership in Singapore, a private limited company has basic requirements needed to incorporate company in Singapore. The main difference is that there must be a local to provide secretarial services. The corporate secretary will keep track and maintain all administrative duties under the laws provided by The Companies Act.
What are the advantages of registering a private limited company in Singapore?
As there are many advantages to setting up a sole proprietorship or partnership, there are many for a private limited company based in Singapore.
- Dividends are tax-free. Tax is deducted from overall profits of the company at corporate tax rates.
- There is limited liability. Shareholders are not liable for debts and losses of the company.
- Ownership of the company can be transferred hassle-free. There can be additional shareholders acquired.
- As a private limited company is a separate legal entity, it does not cease to exist if one or more shareholders die.
With the company registration Singapore process, there are many more advantages that can be found when setting up a private limited company in Singapore. However, with its many benefits, also comes challenges during the registration process. There are many post-registration activities to follow through when setting up a private limited company. Several of these are: opening a corporate bank account, applying for a company stamp, convening AGM and annual returns, filing of tax in Singapore and more.
Status of a private limited company in Singapore
One of the top reasons is the status that a private limited company brings. Registering a private limited company in Singapore displays a higher public perception. This is especially to banks. Therefore, by going through the process to register a private limited company in Singapore, you are giving your new business a higher chance of investment from investors or a loan from the bank.
When setting up and registering a private limited company in Singapore, one of the primary concerns is limited liability. Limited liability is the condition of which shareholders are not personally liable for the business’s debts. Going through the (slightly more complicated and expensive) process to register a private limited company in Singapore will provide directors protection of personal assets.
This protection will help directors to be free of worry from the uncertainty of the business operations and economic downturns.
Special corporate tax exemption and schmes
Private limited companies set up by local Singaporean entrepreneurs enjoy special corporate tax exemption and schemes. Do note, however, that these government schemes and rebates are only provided for local citizens and PRs that register a private limited company Singapore.
Unlike death or injuiry of the owner
In the unlikely case of death or serious injury of the owner, a private limited company provides the option of continuing business activities by a newly selected directed. The new director will be appointed by the company’s shareholders.
What are the disadvantages to register a private limited company in Singapore?
- A Singapore private limited company that has finished the process to incorporate company in Singapore has to follow strict rules and regulations stipulated in the Singapore Companies Act.
- Violation of rules and regulation when going through the process to incorporate a company in Singapore will result in penalties and severe consequences.
- All owners who choose to incorporate and register a private limited company in Singapore will have to oblige with additional administrative work according to the Companies Act. This includes filing of Annual General Meeting, Annual Returns and Financial Reporting.
- Due to obliging to the requirements under Singapore Companies Act, the newly incorporated private limited company would have to incur higher operation costs.
- During the process to register private limited company Singapore, the registration and setting-up cost with a Singapore company registration services such as WLP Group will be higher.
What are the preparations before the application to incorporate company in Singapore?
The Private Limited Company’s Business Name
Prior to finding a company incorporation services provider such as WLP Group, you should have an idea of a business name.
To register private limited company Singapore, the business name has to be approved by ACRA (Accounting and Corporate Regulatory Authority) before the Company can be registered. Business name requirements are:
- The company name must not be identical or similar to another existing business entity’s name.
- The company name must not be vulgar, obscene or offensive.
- The company name must not be banned by order of the Minister for Finance.
Should the name does not meet any of the requirements stated above, ACRA will reject the proposed business name in the application to incorporate company in Singapore.
Local Singaporean Director and Shareholder’s Details
For Singaporeans or Singapore PRs (Permanent Residents) registering as the director or shareholders, Singpass is required for the registration. The individual must not be an undischarged bankruptcy and also not previously disqualified as a Director by ACRA. For more information, contact an experienced company registration services consultant.
Foreigner Director and Shareholder’s Details
Regardless of their residency, all foreigners that are going through the application to incorporate company in Singapore are required to appoint at least one local director. The same applies for foreign entities.
It is important to note that the appointed director must be an resident in Singapore. This means that he or she has to be a Singapore citizen or a PR (permanent resident) of Singapore. Alternatively, the person must hold a Singapore Employment Pass, EntrePass or a Dependants’ Pass. Foreigners are required to produce also a proof of residency in their home country.
For more information about foreigners applying to incorporate a company in Singapore, contact an experienced incorporation consultant.
Shareholder’s Details (Corporate Entity)
Corporate entities looking to register private limited company Singapore as a shareholder must provide the business profile during the process to incorporate company in Singapore.
- Secretary. All companies in Singapore are required to appoint a secretary within 6 months of incorporation.
- A registered address in Singapore. All business entities, including Singapore private limited companies, are required to have a registered business address. It must be a physical address in Singapore and do note that a P.O. Box address is not allowed to be used as the registered business address during the process to incorporate a company in Singapore.
- Singapore Standard Industrial Classification (SSIC Code). The Singapore Standard Industrial Classification (SSIC) is the national standard taken by Singapore for the classification of economic activities undertaken by Singapore Registered Business Entities.
- In brief, the SSIC code describes the nature of your business activities. A Singapore Registered Entity that has just finished the process of register private limited company Singapore must have at least one SSIC code. The business can only have a maximum of 2 SSIC codes that best match the nature of their business. Furthermore, this must be mentioned in the application to incorporate a company in Singapore. This is a link to tools regarding the SSIC SSIC Code Search (ACRA).
- Paid-up business capital and number of issued shares. To register private limited company Singapore, the company is required to state the amount of paid-up capital. In addition, the new company must state the number of issued shares during the process to incorporate company in Singapore. This information will be reflected in the Business Profile.
What are the formalities are register private limited company in Singapore?
Have you finished the business registration process and registered a private limited company in Singapore? Congratulations! You have just taken the first (major) step in becoming a soon-to-be successful entrepreneur. But this is just your first step in your long journey. To build a successful business, you must have the right team, a good product or services, innovation, determination and more. Luck plays a factor in building a successful company too.
But before closing the book on registering a private limited company, you should check the work of your inc0rporation service provider. It is legally important that the company registration process was done without missing any steps.
Step 1: Log onto your ACRA company business profile
Upon incorporating a company, you should have received an email and physical letter from ACRA, the government agency in Singapore that overseas all business incorporated in Singapore. Once logged in, check that all the details are correct and 100% correct. There should be no misspellings in your company name, your name or the address registered with the new company.
Also, take note of the registration date, principal business activities (as stated) and particulars of shareholders and partners of the new private limited company. You would not want a mistake in the ownership of the company (i..e. the number of shares that each shareholder owns). Finding a mistake years down a road will be a rude shocks which could cost thousands of dollars and hours to fix!
Step 2: Check your business GST requirements
Depending on the activities of your new private limited company, your private limited company registration process may not be finished. In Singapore, all businesses that have an expected turnover of more than SGD $1 million are required to register for GST.
GST stands for Goods and Service Tax. This is the tax that people pay in restaurants and shops. GST registration and filing must be registered with ACRA and the IRS. Making any mistakes or “overlooking” the GST registration process could result in severe penalties. Foreigners unfamiliar with the Singapore law should note that the Singapore government takes crimes very seriously.
Step 3: Check and make a copy of your certificate of incorporation
This is probably the most important step of the post incorporation process. The certificate of incorporation is a confirmation from ACRA and the Singapore government, approving your new private limited company’s incorporation. This means that you now own a company that is recognised by the government. Aside from an automated email, you will receive your newly incorporate company’s register number.
After the process to incorporate a company in Singapore, you might even want to keep a hard copy of the certification of incorporation. You can make a request (through ACRA’s online platform). After paying a small administrative fee, a physical copy of your company’s certification of incorporation will be sent over!
The image on the left is an example of the certificate of incorporation that will be issued by ACRA.
Why is it important to incorporate company in Singapore?
1.To become a legal business
To incorporate company in Singapore means to legalize a business. If the business is not incorporated, this means that it does not have the right to start operations. One of the best options is to register private limited company in Singapore. Starting operations without a business incorporation permit can cause problems with the Singaporean government. This can result in penalties and sanctions for the company. A legal case can also be filed against the business owner and shareholders. Thus, it is important to register private limited company in Singapore first before beginning business operations.
2. To avail great Singapore business benefits
Apart from being legalized, to incorporate company in Singapore means the business will be entitled to a lot of great benefits. For example when you register private limited company in Singapore, one of the benefits are 100% ownership of the business. This is also the case even for foreigners. Another benefit for foreigners is that they can repatriate 100% of their sales back to their home country.
Furthermore, great tax incentives are reserved for an incorporate company in Singapore. One of them is that there are no tax charges on dividends distributed to shareholders. A newly incorporate company in Singapore will be given a tax break on its first three years of establishments. As for foreign business, Singapore has a double taxation agreement with over 50 countries. Moreover, Singapore gives a unilateral tax credit to foreign entrepreneurs from countries that are not part of the said agreement. Thus, registering your private limited company in SIngapore will get you qualified for these business benefits.
3. To legally hire great Singaporean workers
An incorporate company in Singapore has the opportunity to hire world-class workers. Singapore has schools that harness productive and skilled workers. Most Singaporeans are fluent in English. Thus, they can communicate well with many clients especially foreigners. They are also taught to bring the best of their abilities in their jobs so both the worker and the company can progress.
Furthermore, Singaporeans prefer to work with companies that are registered. A registered business in Singapore means that the business is following the Singaporean law. Workers will feel more secured working for an incorporated business rather than a business that isn’t registered. They know that they will get the right compensation and benefits in exchange for their services.
4. To take advantage of Singapore’s location and robust economy
Singapore is a first-world country that is geographically located in the center of Asia. A single plane ride from Singapore can reach other prominent Asian countries in less than an hour. Its strategic location is the reason why Singapore is called the “Business Gateway to Asia”. Thus, registering a company in Singapore means that you have a great chance to expand your business in the neighboring countries.
Furthermore, Singapore has a robust economy that has been growing fast in the past decades. That is because more and more infrastructures are being built in Singapore. Transportation systems are improved almost everyday. In addition, Singapore has a corrupt-free government. Laws are also enforced religiously in the country to ensure the security of everyone including businesses. That is why business owners can safely start a business in Singapore.
Contact WLP Group to Incorporate a Company in Singapore
To recap, we have gone through the advantages and disadvantages of registering your business as a private limited company in Singapore. We have also provided several key insights into the requirements and documents needed in the application to incorporate a company in Singapore.
Incorporating a new private limited company in Singapore will be full of opportunities. With the right assistance and hard work, this form of business entity can bring many successes. As with any other company registration Singapore process, there are necessary requirements to follow when deciding to incorporate company in Singapore. With the experience of qualifiable company registration Singapore experts, your business will be right on track.
For more information, contact an incorporation consultant such as WLP who is experienced in incorporating companies in Singapore. We have many professional consultants who will be able to provide the best support in Company Registration in Singapore. Setting up a local company is a big step to take in your entrepreneurship journey, and we can help you kick start your company today!
At WLP Group, we can help you with all your business needs and enquiries on setting up a private limited company in Singapore. Feel free to contact us at +65 6493 2970 for more information!