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Singapore is one of the most developed countries in Asia and has been ranked as one of the best places to do business by Forbes Magazine for the last three years running. It’s also one of the safest places in the world, with crime rates at less than half that of New York City. In fact, it’s so safe that some people have moved here from other parts of the world just to start their own businesses.

So if you’re looking to get started in Singapore, we decided it’s time we put together our experience doing business in Singapore at Statrys and create a comprehensive guide on setting up shop there.

Part of opening up a business in Singapore is choosing a business bank account to go with it. Naturally, we can think of no better alternative to the headaches of traditional banking than Statrys. Open an account today and our experts will help set up your account to meet your needs as a growing SME in Singapore.

Develop a business model

Before starting any new business, it’s important to first determine what type of business you want to run.

Do you need a service-based business or are you seeking funding for a product? Do you want to sell online or offline? Are you targeting local customers or those abroad?

Once you know what kind of business you want to start, you’ll be able to develop a plan that aligns with your goals. This way, you’ll be able to focus on creating a successful business instead of trying to figure out how to make it work.

Choose a name

The next step is to choose a name for your company. You may already have an idea about what you want your company to be called, but it never hurts to take another look.

You should always consider potential trademark issues before naming your company. If you find yourself thinking “that sounds like someone else”, then you might want to change it.

If you don’t have a good domain name yet, now is the perfect time to purchase one. There are many different types of domains available, such as.com,.net,.org, etc. The more specific the better, so if you’re planning on selling products internationally, you might want to consider purchasing a .com domain.

Startups often struggle when they don’t have a clear brand identity. A strong brand helps you stand out amongst competitors and gives you a competitive advantage.

Create a business plan

After deciding on a name for your company, you’ll need to decide where you want to base your operations. Is it going to be home-based or would you prefer to open a physical office?

There are pros and cons to each option. Home-based businesses tend to be cheaper to operate while having a physical location means you can reach out to clients faster.

Deciding whether to base your business in Singapore or elsewhere will depend on several factors, including:

• Your target market
• How much money you need to invest
• Whether you’d rather rely on word of mouth marketing or advertising
• What resources you need (i.e., space)

Raise capital

Now that you’ve got your name and your location sorted, you’ll need to raise some capital to fund your startup.

Depending on your business model, you could opt to seek investors directly or you could try crowdfunding platforms like Kickstarter, Indiegogo or GoFundMe.

If you’re not sure which route to take, you can also ask us here at Statrys for assistance. We can provide advice on both options and help you decide which one suits your needs best.

When raising capital through crowdfunding, you’ll need to come up with a compelling pitch video to convince people to back your project.

In addition to pitching your idea, you’ll also need to include details about your team, financial projections, and other relevant information.

We’ll be happy to help you create a pitch video that’s tailored to your needs. Just drop us a line here.

Before officially launching your business, you’ll need to set up various legal documents. These include incorporation papers, operating agreements, employment contracts, and insurance policies.

Setting these up correctly will ensure that your business runs smoothly from day one.

Register your business

Once you’ve raised enough funds to start your business, you’ll also need a place to house all those important documents.

This is why registering your business is so important. It ensures that your business is legally recognized, protects your intellectual property, and allows you to easily access any necessary licenses.

To register your business, visit the Registry of Companies website. You’ll need to fill out a form and pay a fee. Once this process has been completed, you’ll receive a certificate of registration.

It’s also worth noting that there are certain requirements you must meet to keep your company registered. For example, you’ll need to file annual returns with the Registrar of Companies within 30 days after the end of every calendar year.

Open a business bank account

You’ll also need to open an official business bank account. This is essential if you plan on using credit cards to make purchases.

Most banks offer free online banking services, but you may have to pay a monthly subscription fee. If you do choose to use online banking, make sure you get a good deal as many banks charge exorbitant fees.

Bank accounts are also useful when making payments to suppliers, contractors, and employees. In fact, they’re often required by law.

Set up your office

After setting up your business bank account, it’s time to move into your office.

As mentioned earlier, you’ll need to find somewhere to house all your important documents.

The ideal space would be large enough to accommodate your staff, customers, and supplies. However, you don’t necessarily need to rent an entire building.

Some startups prefer to work from home, while others operate from coffee shops or coworking spaces. Whatever works for you!

Hire a team

If you want to scale up your business quickly, it’s advisable to hire some additional staff.

A virtual assistant can help you manage your workload and organize your daily tasks. They can also assist with marketing activities such as social media management and content creation.

An accountant can help you prepare tax returns and maintain records. A bookkeeper can track expenses and generate invoices.

Finally, a lawyer can advise you on how to protect your business assets and establish a solid foundation for growth.

These are just some examples of what you might require. The key thing to remember is that you should only hire someone who fits your specific needs.

Set up your digital presence

In addition to having a physical office, you’ll also need to set up a digital presence.

Here are some areas to start:

Create a website

Your website is probably the most important part of your online presence. It serves as your primary sales tool, allowing potential clients to learn more about your business.

When creating your site, consider hiring a web designer who specializes in websites around your industry. These professionals know how to optimize your site for search engines like Google and Bing as well, at least to get your indexed.

They’ll also ensure that your site loads fast and uses a responsive design.

Don’t forget to open a Google My Business page, especially if you’re a local business or retail.

Email marketing

Another important aspect of your online presence is email marketing. This includes sending emails to your current and prospective customers. Start with people in your network, just to get it jazzed in their heads that your business is now out in the wild and soon you’ll be collecting more new people for your lists

Email campaigns can be used to promote special offers, announce new products, and even send reminders to existing customers.

With the right tools, you can automate your email marketing strategy so that it runs automatically.

Get on social media

Create company pages on the big 3 social media networks Facebook, LinkedIn, and Twitter, as well as any other local or niche networks you might find clients on.

File corporate income tax

You may have heard of the term “corporate taxes”. These are taxes imposed by governments on businesses. For instance, in Singapore, corporations pay SGD $1,000 per employee every year.

Corporations must file these taxes quarterly and they cannot deduct them from their taxable income.

This means that you will not be able to claim deductions for things like advertising costs, travel expenses, or salaries paid to employees.

However, there are exceptions to this rule. If you run a small business and earn less than S$250,000 (US$180,000) annually, then you won’t have to pay any corporate taxes.

As long as your annual revenue doesn’t exceed S$250,000, you’ll be exempt from paying corporate taxes.

If you do make over this amount, however, you’ll still have to pay up.

Available grants for SMEs

SMEs are small and medium-sized enterprises. They include companies that employ fewer than 10 people but generate more than S$500,000 ($360,000) in annual gross revenues.

Small businesses often struggle to access funding because banks tend to favor bigger firms. However, there are several government agencies that offer grants to help startups grow.

The following are some of the most common ones:

• Government Venture Capital Agency (GVCA) – GVCA provides financial support to early-stage ventures. It’s funded by the Government of Singapore Investment Corporation (GIC).
• Singapore Economic Development Board (EDB) – EDB helps entrepreneurs build successful businesses.
• National Research Foundation (NRF) – NRF funds research projects that aim to improve the lives of Singaporeans.

Startup incubators

An incubator is an organization that helps startups succeed. You can use one of these organizations to gain expertise and connections.

Some examples of incubators include:

• National Productivity Board – The NPB was established in 2012 to provide advice and guidance to the private sector.
• Nanyang Technological University – NTU’s Entrepreneurship Centre works with students and faculty members to develop ideas into viable startup companies.
• Yishun Institute of Technology – YI Tech helps students launch their entrepreneurial ideas through workshops and mentoring programs.

Outside of official incubation, there are many more private incubators as well.

Did you know that you don’t have to register in Singapore to do business in Singapore?

Depending on your situation, you might consider registering your business in Hong Kong as an offshore registration.

Register your business in Hong Kong with Air Corporate for as little as US$90.

Or reach out to us and one of our experts will walk you through the process and help you decide if Singapore or Hong Kong is best for your new business venture.

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The Hong Kong Companies Registration Office (HKCRO) has introduced the concept of holding companies for people who have their business registered with the HKCRO but are not based in Hong Kong.

A company can be set up as a subsidiary, associate, or branch of another company, and these are known as ‘holding companies’.

The main difference between a holding company and an ordinary company is that it does not own any shares in its subsidiaries and therefore cannot control them.

It also does not issue any dividends or pays any tax on profits made by its subsidiaries.

Instead, it receives all the profits from its subsidiaries and pays income tax on them.

In order to form a holding company, you must first register your company with the HKCRO. You then need to apply for a license to operate as a holding company.

This will allow you to conduct activities such as issuing shares in your subsidiaries, making investments in other companies, and opening bank accounts.

However, if you want to sell shares in your holding companies, you will need to obtain approval from the HKCRO before doing so.

Common reasons holding companies are set up in Hong Kong

There are several reasons why you might wish to set up a holding company:

To protect yourself against insolvency

Many countries require individuals to hold at least one share in each company they run.

In some cases, this requirement applies even if the individual owns only a small amount of stock.

For example, in Canada, it is illegal for anyone without a minimum level of ownership to take part in the management of a corporation.

As a result, if someone becomes bankrupt, creditors can seize his assets.

By forming a holding company, you can ensure that your personal assets are protected.

To limit liability

Most jurisdictions impose strict rules on how directors of companies can be held liable for any financial losses caused by their actions.

These rules often make it difficult to sue directors for negligence. Setting up a separate legal entity allows directors to act independently of the company and limits their liability.

To manage multiple businesses

There are many advantages to having more than one business. You can use them separately or together. For example, you may choose to run your retail business during the day while running a different type of business in your home office at night.

Or you may decide to open a second shop near your existing store. This way you can increase your sales and develop new markets.

To trade internationally

Having a holding company gives you the opportunity to trade internationally.

If you plan to trade internationally, you should consider whether you need to register your company under the laws of the country where you are planning to trade.

In most countries, including Hong Kong, there are restrictions on trading outside the country where the company was originally registered.

When setting up a holding company, you should bear in mind that certain aspects of your business operations may change because of the structure of the holding company.

For example, the holding company must account for all of the income and expenses of its subsidiaries.

This means that the holding company needs to keep records of these transactions.

If you have already started operating your business, you may find it convenient to continue using your current corporate structures.

The following sections discuss the main options available when setting up a holding company.

Ensuring your holding company is compliant

One advantage of setting up a holding company is that it helps you comply with local regulations.

It also provides additional protection against bankruptcy.

In Hong Kong, there are two ways to set up a holding company:

1) Registering as an incorporated company, and 2) Forming a limited partnership.

Registering as an Incorporated Company

You can form a Hong Kong incorporated company through the Companies Registry.

This will give you full control over the company’s affairs.

However, you will lose some flexibility and face additional costs.

The benefits of incorporating include:

• Full control over the company’s finances and activities.
• Protection from creditor claims. When you incorporate, you become personally responsible for any debts incurred by the company.
• A ready-made credit history. As a registered company, you will appear on the list of approved creditors. This makes it easier to obtain loans.
• Better access to government services. Many government departments require that companies are incorporated before they provide public assistance.
• Easier access to capital. Investors will be willing to invest in a well-known brand.

However, incorporating is not always necessary.

There are other ways to protect yourself against personal liability.

For instance, if you want to operate your own business but do not want to take on the responsibility of being a director, you could set up a company as a sole trader instead.

Why set up a holding company in Hong Kong?

There are several reasons why people set up their own businesses in Hong Kong.

The Tax Regime

Hong Kong has one of the lowest tax rates in Asia. You only pay 15% corporation tax on profits made from your business.

This low rate attracts international investors who would otherwise prefer investing in Singapore or Malaysia.

Entrance into the China market

Starting a new business in Hong Kong allows you to enter the Chinese market without having to start at square one. You can use the advantages of the existing infrastructure and experience gained while operating locally.

Setting up a company in Hong Kong is relatively easy.

The process involves filling out forms and paying fees. After this, you can start trading.

Corporate structure benefits

A holding company gives you more freedom than a normal company.

In addition, a holding company offers greater protection against corporate insolvency.

For example, a company cannot go bankrupt unless all of its directors agree to liquidate.

If you set up a holding company, then you can appoint an administrator to manage the company’s assets.

This person will be able to deal with the company’s liabilities.

Incorporation cost and requirements

The registration fee varies depending on how large your company is. It ranges between HK$700 and HK$20,000.

Another requirement is registering the company’s name. This must be done within 30 days after formation.

If you decide to register your company under a different name, you will need to apply for a change of name certificate.

The time taken to complete the entire process depends on the number of shareholders. Normally, it takes about 1 month.

However, this may vary according to the complexity of the application.

Double taxation arrangement between China and Hong Kong

To attract foreign investment, Hong Kong introduced special arrangements to encourage multinationals to establish operations there.

One such scheme is known as the Double Taxation Agreement (DTA).

Under this agreement, the two jurisdictions have agreed to treat each other’s income equally.

They also share information regarding taxes paid by residents of both countries.

Stay compliant with local Hong Kong taxes and laws

You should be aware that any form of business activity in Hong Kong requires you to comply with the relevant legislation and regulations.

For example, you must obtain a license before carrying out certain activities.

These include selling alcohol, gambling, money laundering, prostitution, drug trafficking, and fraud.

You must also comply with the Anti-Money Laundering Ordinance.

This means that you must ensure that transactions involving cash are properly recorded.

You must also keep proper records of all transactions.

These records must be kept for a minimum period of 3 years.

Annual Return Filing Dates to Take Note of for New Business Owners

Hong Kong has 2 filing dates: April 15th and June 30th.

April 15th – Annual return date for companies incorporated prior to July 1st, 2006.

June 30th – Annual return date if you incorporate after July 1st, 2006

General characteristics of holding companies in Hong Kong

Holding Companies in Hong Kong offer many advantages. For instance, they allow you to avoid double taxation.

Furthermore, they provide greater protection from corporate bankruptcy.

In addition, they give you additional flexibility when it comes to dealing with the government.

However, there are some downsides to using them. You should be aware of these before setting up one.

Limited liability protection

One drawback of using a holding company is that it limits your personal liability.

In fact, you do not even need to pay any tax on profits made by the company.

This does not mean that your personal assets are safe.

You still have to pay taxes on dividends received from the company.

Tax savings

As mentioned earlier, a holding company enables you to save on taxes.

In particular, you can claim deductions against your earnings without having to declare the source of income.

Dividends and interest earned by the company are exempt from tax.

This exemption applies to dividends and interest paid during the first 5 years of incorporation.

It is important to note that dividends must be declared at least once every year.

Any dividends that are accumulated over more than 12 months are taxed at 20%.

Conclusion

A holding company is useful for several reasons. However, it has limitations.

Therefore, make sure that you fully understand the pros and cons before deciding whether or not to set one up.

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