Singapore ranks sixth in the Global Financial Centres Index 2022, making it third in Asia after Hong Kong and Shanghai, which are ranked third and fourth globally. The island-state’s reputation as a global financial hub has much to do with its robust banking network. Singapore’s banking industry is among the most advanced, thanks to sophisticated products and services, strict secrecy laws, and competitive prices. Its large network of foreign banks – numbering close to 120 compared to six local banks – makes it a regional or even global leader in banking services at times. Its US$2-trillion banking sector gets a further leg-up from tax-friendly policies and a stable political and economic environment.
Given its overall reputation, Singapore is a leading provider of corporate banking services. If you conduct business in Singapore, opening a business account is a top priority. You don’t have to be an established player to have one. The banking sector supports small and medium-sized enterprises (SMEs) as well.
While opening a Singapore business account is the way to go, there are different types of accounts in banks to choose from. Read on to know about the key features and pros and cons of each, and to decide which is the best business bank account in Singapore for you.
A business account is quite simply a bank account you use for your business as opposed to your personal finances. For a newly set up company, a business account might not be too different from a consumer account. However, as the business grows, you might need a more specialised account to take care of your changing financial requirements.
There are obvious benefits to having an account for business purposes. First of all, it separates your personal and business funds, ensuring that the former isn’t affected by your business decisions. Customers and clients perceive companies that use business bank accounts as more professional and credible than those that don’t. Furthermore, accounts for business in Singapore offer several special facilities such as multi-currency accounts, international fund transfers, trade finance, and lines of credit.
The most widely used business account, a current account allows companies to deposit and withdraw funds with few restrictions. Funds can be transferred in multiple ways – electronically and via cheque or card. Current account funds are always accessible to the account holder. As a result of its liquid nature, current accounts rarely earn interest.
Similar to a personal savings account, a business savings account is where you park extra earnings and spare cash you don’t plan to use in the immediate future. The interest earned will give you a higher return on your savings. This will ensure that your business has a financial cushion to fall back on in times of crisis. Funds set aside for taxes can also be parked in a savings account to earn interest, even if it is for a short period of time.
A money market account is similar to a savings account, although not quite as common. There are more restrictions on free fund transfers than in a savings account and a higher minimum deposit might be required. On the other hand, some money market accounts might offer a higher rate of interest than a savings account, though this is not the norm.
A certificate of deposit (CD) account offers an even higher interest rate than a money market account. Funds must remain in the account for a set period. A CD account is, thus, suitable for long-term financial planning. However, Singapore banks offer extremely flexible tenors on CD accounts, ranging from one month to five years. What’s more, the funds can be withdrawn in part or wholly on multiple occasions before the date of maturity, with a penalty of course.
You’ll need a merchant account if your business accepts electronic payments via debit and credit card. A merchant account acts as the middle man between your business account and your customer’s account. When the customer pays by card, the merchant account provider verifies the transaction with the card provider, checking if the card holds sufficient funds. On receiving the all-clear from the card provider, the funds are forwarded to your business account. To set up a merchant account, you will need to apply to a bank that provides this facility. Approval hinges on several factors such as your credit track record, how long you have been in business, and any history of bankruptcy. You will likely be charged a one-time set-up fee. Fees on individual transactions vary by provider, so it is wise to check with multiple players before settling on one.
More and more businesses in Singapore are now operating business accounts provided by non-traditional financial service providers. Aspire’s Business Account is one such example (more on this later). These non-traditional business accounts are fast gaining popularity due to their ease of use and globally competitive pricing. What’s more, they are often known to provide the best banking for small businesses.
Furthermore, in Singapore, businesses have the flexibility to open a Singapore dollar (SGD) business account or a foreign currency (US dollar, British pound sterling, Swiss franc, Japanese yen, etc) business account.
Preparing to open a business account in Singapore? Here’s some general information on the procedure:
Any individual or entity, whether Singaporean or foreign, can open a business bank account in Singapore. However, the applicant company or its directors and shareholders must not have any criminal proceedings or lawsuits against them. The directors and shareholders must also not have been declared insolvent (unable to pay a debt).
Opening a business account is easy if a company has all the required documents. These include:
All documents must be submitted in copies that are ‘certified true’ by a company director or secretary. Usually, banks demand to see the original documents at the time of opening the account. They might also ask for additional documents – such as a letter of recommendation from the bank’s overseas branch or another reputable bank, or documents from the relevant Singapore authority for specific businesses such as financial services and delivery services.
Account opening applications can be filed online. However, most banks require the authorised signatories and executive directors to be physically present in Singapore for the signing of documents. Some banks might allow the paperwork to be processed at an overseas branch or in front of a notary public. It is best to find out about such requirements beforehand.
Banks in Singapore don’t normally charge an account opening fee. However, there are initial deposit and monthly minimum balance requirements as well as transaction and monthly maintenance charges to consider. Banks allow a specific number of free transfers in a month, after which a transaction fee applies. Similarly, if the monthly balance falls below the required monthly average, there might be a penalty charge. Some banks offer initial waiver periods on banking charges, so make sure you are aware of these as well.
Opening a Singapore business account can take up to four weeks, given the country’s strict verification process. The time might be shorter for businesses owned by Singaporeans. If you need to open a business account in a hurry, you could opt for Aspire’s Business Account. Opening the account takes just five minutes and you’ll receive an account number and virtual card instantly upon approval.
For more on how to open a business account in Singapore, click here.
What is the best business bank account in Singapore for you? It depends on your needs and the size and nature of your business. For instance, a current account ought to be enough for a newly opened company with low transaction volumes. A multi-currency account is a smart choice for businesses with global ambitions. And, if your business is modestly sized, then one of Singapore’s many small business accounts might be what you need. Given that SMEs make up a large chunk of Singapore’s economy, here’s what to consider when opening a small business account:
For Aspire’s pick of the four best business bank accounts in Singapore in 2022, click here.
Whether you are a small business or an established player, there are numerous other factors that should be considered while choosing a Singapore business account:
If you need the best banking for small businesses, try Aspire’s Business Account. Built for start-ups and SMEs, it comes with all the trappings of a traditional business account and more. Here are some key features:
There’s another advantage to choosing Aspire. If you are yet to register your Singapore business, Aspire can do it for you at a favourable price, and you’ll get an Aspire all-in-one business account in the bargain.