How To Start A Trading Business In Singapore?
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If you have firmly decided that you want to register your company in Singapore, you should choose its organizational and legal form. The most common form of company for foreigners is an exempt private limited company (practically, a limited liability company that is only a joint-stock company). You can be the owner of your company and 100% shareholder, and the size of the authorized capital limits the liability of the founders.
- First of all, come up with a company name so that it is free and does not coincide with existing names of local companies, and does not violate the copyrights of existing trademarks.
- Second, identify the areas of business for the company.
- Third, study the laws of Singapore so as not to miss out on all the nuances of running a new business. Singapore provides subsidies to support small and medium-sized businesses, helps with staff training, increases salaries, and provides multiple tax breaks for companies registered in the market for the first three years.
- Regardless of the country in which you plan to work, it is vital to know the conditions of its market and the trends it represents. You should also know what the country is like in terms of economies around the world and assess the viability of the establishment. Why is this a critical step? When you know the market conditions and sectors that represent the greatest trend and demand, our chances of offering a product or service with higher performance capabilities are much higher. You offer a product according to the demand in that country.
It is not enough to analyze the product and domestic conditions and know how the country is doing from an economic point of view globally. Taking the time to study these essential aspects will save us a lot of headaches.
Economic conditions of Singapore
How to start a trading business in Singapore? For the second year in a row, Singapore is positioned as one of the best countries in which to do business, as it has not only a stable economy but also the best rules, which are very convenient for those who want to start a trading company in Singapore and do business with this country from anywhere in the world. One of the main characteristics and factors of this has to do with the investor protection that the country enjoys and reducing customs procedures, and offering a detailed study of tax payments, among other features.
It is also essential to note that Singapore has a highly developed market economy and the privilege of enjoying a business environment free from potential risks of corruption, since stable prices.
Another feature of Singapore from an economic point of view is that the country is prone to export goods such as medicines, consumer electronics, and a growing financial sector. At the same time, some of the essential products for the country as they are imported are chemical products, consumer goods, machinery, fuels and minerals, equipment, and food; this is where business opportunities open up for entrepreneurs, business people, and investors.
How to start a business in Singapore?
All Singapore companies must register with the Accounting and Business Regulatory Authority (ACRA) and comply with the Companies Act. There are four different types of business entities that can be established:
- Sole proprietorship;
- Limited liability company;
- Joint-stock company.
Singapore is a sole proprietor; this business is owned by a person or company incorporated in Singapore. This business structure is the simplest form in Singapore that meets the legal requirements for registering all commercial activities carried out permanently.
How to start a trading business in Singapore? The exclusive property is not a separate legal entity. It, therefore, does not differ from the owner, who is personally liable for all obligations arising in the course of commercial activities and must sue or bring a claim on his behalf.
A sole proprietorship, even if it is a tax resident, is not considered a business entity; therefore, profits are taxed at the owner’s income tax rates. In Singapore, personal income tax rates for resident taxpayers are progressive and up to a maximum of 22% for income above S $320,000. The maximum corporate tax rate is 17%.
Generally, starting a trading company in Singapore with sole proprietors registered with the Accountancy Regulatory Authority (ACRA) are self-employed. A person is considered self-employed when they earn income from trade, business, profession, or vocation. All self-employed persons must report income generated from their activities as business income, not wages, which is part of their total personal income.
How to register a trading company in Singapore?
The most beneficial for non-residents is the registration of ownership as a Singapore Company Limited by Shares since the liability of shareholders is limited in the Memorandum of the Company to the unpaid amount of shares that they own (if provided). If the shares are paid for, then the shareholders are no longer financially viable for the debts of the Company.
How to register a trading company in Singapore? Here are the requirements and conditions for starting a trading company in Singapore:
- The strict size of the authorized capital is not regulated; it is only indicated that it must be at least 1 dollar. However, it is recommended to set its size from 1000 dollars to have no problems when opening an account with the Bank.
- There is a special type of Company (EPC Exempt Private Company). This type of Companies is exempt from filing financial statements and tax returns. In addition, restrictions on loans to Directors and persons related to Directors are removed from these companies (by paragraphs 162 and 163 of the Companies Act), and the Company has the opportunity to exempt certain taxes for new start-up projects during the first three years of their activity. The requirements for this Company are simple; it must have more than 20 shareholders, and none of the shareholders must be a legal entity (either directly or through a trust).
- How to register a trading company in Singapore? Some areas will require additional licensing. Specialists will list all permitted activities.
- Registered shares are allowed, and the circulation of bearer shares is prohibited without declaring the par value.
- A company in Singapore must appoint one shareholder from among individuals or legal entities of any nationality and one executive director from among residents of the country. Also, the company must have a mandatory legal address.
- It is allowed to involve nominee shareholders and directors in the registration of a company in Singapore to protect the data on the real owners and investors of the company. This service may be required because the register of entrepreneurs in the country is open for viewing by third parties.
- There are no special requirements for the meeting of shareholders or the place of storage of constituent documents.
Benefits of Doing Business in Singapore
- Singapore offers very favorable conditions for starting a trading company. The country has a strong regulatory framework, a stable political and economic structure, a business-friendly government, and a well-established judicial system, which have created an ideal platform for investment and made it a major commercial financial center for Capital Management.
- Singapore is known for its broadly efficient and competitive government and its strong legal and regulatory regimes, making it one of the most transparent countries in Asia. The World Bank and other organizations consider Singapore to be the easiest place to do business globally. Moreover, it has highly educated and qualified staff who speak excellent English and several Asian languages.
- Singapore boasts one of the lowest corporate tax rates in the region (17%); besides many other tax plans and incentives, it is also one of the best countries in Asia to strike a deal. Corporate tax on dividends from foreign sources, profits of branches, and income from services from foreign sources in Singapore can be minimized or completely exempted from payment, subject to certain conditions.
However, the weakening of the Singapore economy is associated with external world events such as internal restructuring and policy changes as Singapore’s economy is highly dependent on trade, with the world’s highest trade-to-GDP ratio averaging 400%.
Recent external events such as Brexit, growing protectionist and populist stances in Europe and the US, and slowing growth in China, Singapore’s largest trading partner, could affect the country’s foreign trade performance.