Are you on the fence deciding whether to start out your first business in Singapore on a smaller or larger scale? This article will help you with just that!
A little introduction to Small Medium Enterprises (SME)…
SMEs are companies with at least 30% local shareholding ownership, with group annual sales turnover of less than $100 million or group employment size of not more than 200 workers (Skills Connect, 2013). Intimidating as it might seem, if you know the rules of the game you will play it out well rather than being played out.
Choosing your business structure
Singapore has always been an ideal country for business owners to start their business in attributed to the benefits that are associated with when incorporating in Singapore. These benefits include the following but are non-exhaustive to: Such as friendly tax system, zero restrictions for foreign ownership, and etc. Furthermore, Singapore houses several Financial sector powerhouses which alleviated Singapore’s status as Asia region’s largest financial hub.
There are 3 types of business structures that you can choose from in Singapore:
a.Limited liability Company
A Limited Liability Company (LLC) is a company limited by shares i.e. its liabilities are limited to the amount of share capital. LLC is a business entity registered under the Singapore Companies Act and a separate legal entity from its members.
In an LLC, the liabilities of the owners are limited to the assets in the company and their personal assets are protected from business liabilities. There are 3 kinds of LLC that are Private Limited Company, Public Limited Company, and Public Company Limited by Guarantee.
The Sole proprietorship is the simplest form of business yet bearing the greatest risk in Singapore. A Sole Proprietorship is not a company that is not bound to another business or company, identically this business is built and run by one person. The owner owns all the assets and must fulfill all obligations in the business.
In a Sole Proprietorship, there is no protection of personal assets from the occurrence of business risks. In the case where the business defaults or is unable to meet obligations, the creditors will have the right to seize the assets that are stated in the initial agreement.
Partnerships are a type of business structure where there are two or more people forming a joint business. There are three types of business structures of this type, namely General partnership, Limited partnership and Limited Liability Partnership (LLP).
Which One Should you Choose?
The ideal answer would be: it depends on your needs.
If you want to start a small business on your own, then the Sole Proprietorship business structure might be more suitable for you. This kind of business structure would give you the ease of registering to start your business. Just one thing you should remember, in the case of any business liabilities that happens, there will be a risk that you would lose your personal assets. So run your business right.
5 Advantages of the Sole Proprietorship Structure
There are 5 advantages when you choose to set up your business as a Sole Proprietorship.
- The ease of setting up. In fact, it is the easiest and least expensive business structure to set up in Singapore.
- Ownership control. As a business owner with the Sole Proprietorship structure, you are in complete control of your business affairs and decision making.
- There is no profit sharing as if you have chosen to start your business with the partnership or LLC structure. You can accrue all your business income on your own.
- When the situation gets tough, you can choose to terminate your sole proprietorship; which is easier compared to other business entities.
- You are free from the obligation of filing returns annually and only need to renew your membership once a year.
After establishing the grounds of the types of businesses in Singapore, let us delve into registration know-hows.
Documents Required & Registration Procedure
To register your business as a sole proprietorship business in Singapore, you have to prepare these documents as stated below :
- Proposed business name
- Description of principal activities
- Real Local business address for the proposed business, and not a PO BOX address
- Copy of owner’s Singapore ID
- Local residential address of the sole proprietor
- Declaration of compliance and Statement of Non-Disqualification
The registration procedure involves a) reserving the name, and b) registration of the business. The registration procedure is computerized and fast. The registration process can be completed within a day. Provided that all the documents have been lodged properly with due endorsements. However, if the name or the nature of business requires referral to another authority, it may take up to a few weeks. So make sure you had done double-checking before registering.
After submitting the sole proprietorship business registration application and assuming that everything is in order. The registrar will send you a confirmation email regarding the successful registration application with the business registration number. The email along with the registration e-certificate are valid and acceptable in Singapore, therefore you do not have to own the hard copy one.
After you have received the confirmation email, you can retrieve the business profile about your business in Singapore that contains important registration information. The original email regarding the establishment of the company along with the registered business profile are two important documents that you will need in Singapore when opening business bank accounts, business signages, business telephone network, etc.
Bank Account Opening
After registering your business under the sole proprietorship structure in Singapore, a bank account can be opened in any of the several international and local banks in Singapore. The account opening procedure varies across banks and most banks require the business owner to be present in person during account opening. Typically, you will require documents such as the Account application, copy of owner’s Singapore Identity Card, the latest print-out of the business profile for the sole proprietorship, minimum deposit (varies from bank to bank) and other documents as requested by the banks.
The owner is not the only person who attains benefits from building small and medium businesses. Other stakeholders like the government body and society also gain from this effort. This is because, with the number of small and medium businesses that grow in a country, more jobs are created and also increase domestic income. Therefore, it is not surprising that small and medium businesses are one of the driving forces of the economy in Singapore. Hopefully, you can also start your own small business in Singapore.