Updated: Mar 31, 2021
Thinking of pursuing your dreams of owning your very own business? Find out which business structure is best for you and how to start here.
Company or Sole Proprietorship?
What is a Company?
A company is a separate legal entity from its members and directors who own and manage it. Members of the company may own shares in the company, giving them certain rights in the company (eg. appointment of directors). The director(s) are responsible for the management of the company.
Companies in Singapore are mainly categorised into either public or private. Public companies generally have more than 50 members and are listed on the Singapore Exchange (SGX). Private companies are not listed and are limited to a maximum of 50 members.
What is a Sole Proprietorship?
A sole proprietorship is a business owned by one person. The owner of the business is also called a sole proprietor. He/She will have absolute say in the business, including its management and the day-to-day running of the business.
Comparison for Companies and Sole Proprietorships
After careful consideration and selection of your business structure, you are now ready to start your own business!
What do I need to start my company?
Every company is required to have at least one natural person who is ordinarily resident in Singapore (either a Singaporean Citizen, Permanent Resident, Employment pass) to be appointed as the director of the company.
To qualify to be a director, one has to satisfy the following requirements:
a natural person who has attained the age of 18 years and who is otherwise of full legal capacity
must be of sound mind, mentally and physically fit
not subject to disqualification such as
convicted of criminal offences relating to fraud or dishonesty
pursuant to court order
convicted for 3 years or more for an offence under the Companies Act within a period of 5 years
A shareholder can either be a natural person or a legal entity. Every company is required to have at least one shareholder.
Their personal identification details, contact information and residential address have to be submitted when applying online along with the type and number of shares they intend to acquire.
Ordinary shares: Carry voting rights and variable rates of dividends
Preference shares: Preferential rights over ordinary shares usually in respect of dividend distribution
A company has to appoint a company secretary within 6 months from the incorporation of the company.
The company secretary has to be:
a natural person; and
locally resident in Singapore.
Registering a company
Name and Address
Submit an application with the proposed company name to ACRA for approval.
The name approval/rejection will take from less than an hour to a few days or weeks, depending on whether the name contains words that need to be approved by other external organizations.
In order to ensure fast approval, ensure that the name:
Is not identical or too similar to any existing local company names
Does not infringe upon any trademarks
Is not obscene or vulgar
Is not already reserved
Thereafter, the approved company name will be reserved for up to 60 days from the date of application. One can extend the reservation before the expiry date.
For the registration of a Singapore company, the registered address of the company has to be a local Singapore address. This address can be either a commercial or a residential address.
The HDB Home Office Scheme allows individuals to register their residential address as their business address. However, in order to do so, you would require prior approval from HDB or URA (for private residential property).
The registered office has to be both operational and accessible to the public during office hours.
Prepare the Constitution
The constitution is a legal document that sets out the company's structure and aims as well as the rules and regulations by which the company's internal processes are governed. Upon the registration of the company, you would need to submit the company's constitution to ACRA.
Model constitutions have been made available by way of subsidiary legislation and companies are able to adopt these model constitution in whole or in part. The company can choose to adopt the model constitution in force at the time of the adoption or as may be in force from time to time (eg. as amended by the Minister from time to time).
Look for model constitutions here.
Registration on Bizfile+
Registration fee on Bizfile+ is $315. Once the fee and all the relevant documents have been settled, the company can be set up as quick as 15 minutes. If the registration is subject to approval, it might take anywhere from 14 days to 2 months for the company to be set up.
A shareholders' agreement is another important legal document that sets out specific regulations in addition to the ones in the company's constitution. Rules and regulations regarding the management of the company as well as the relations between the shareholders, directors and managers can be found in the shareholders' agreement.
Maintaining a company
The corporate tax rate in Singapore is 17%. In addition, Singapore registered companies also enjoy attractive tax exemptions and incentives. There are also no capital gains or dividend taxes on Singapore companies.
A company has to incur certain fees and comply with regulations in order to maintain the company after the registration, find out more here.
Registering a Sole Proprietorship
Name and Address
First and foremost, you have to choose a name for your business. Ensure that it does not contain any vulgarities and it is not similar or identical to other existing company names so as to not infringe on any copyright issues. The approved business name will be reserved for up to 60 days and can be extended before the expiry date.
Notify ACRA of the business address (a local Singapore address). Note that if you wish to use your residential address as your business address under the HDB Home Office Scheme, you would need to seek prior approval from either HDB or URA (for private residential property). An alternate business address can be reported to ACRA for the additional fee of $40.
Appointment of a local authorized representative
If you, the sole proprietor, do not reside in Singapore, you are required to appoint a local authorised representative. This representative has to be ordinarily resident in Singapore and be at least 18 years old with full legal capacity.
Registration on BizFile+
Registration is done online through the Bizfile+ website. You would have to pay either a fee of $115 (1 year) or $175 (3 years). The sole proprietorship will be set up within 15 minutes after the payment of the fee unless the application is sent for review.
Renewal of Business Registration
It is an offence to continue a business past its expiry date without renewing the business registration. You may incur a fine of up to $10,000 or imprisonment not exceeding 24 months or both if you are convicted of this offence.
Renewal of business registrations can be done on Bizfile+ or Inter-Bank Giro.