Of all the choices you make while setting up a company in Singapore one of the most important factors is the type of business structure, you choose for your business. Your decision affects the amount of taxes you pay, the image and perception of your business and the advantages and disadvantages that come along with the legal structure. One of such business structures in Singapore is a Private Limited Company. A private company is limited by shares and is separate from its shareholders. It is recognized as the taxable entity in its own right. As a result, shareholders of a Singapore private limited company are not liable for its debts and losses beyond their amount of share capital.
This article provides you with an overview of how to set a private limited company in Singapore and the different regulatory and tax regimes reflecting the entity and ultimately the business.
Private Limited Company in Singapore
In Singapore, a private limited company is the most advanced, flexible, and scalable type of business an entrepreneur can incorporate. Even though Singapore has the different type of business entities to choose from when it comes to incorporating a business most entrepreneurs prefer the option of a private limited company due to the flexibility that it offers. Before going in-depth, do note the key requirements of starting a private limited company in Singapore.
Key Requirements to Register a Private Limited Company in Singapore
- 1 resident director is required
- 1 company secretary is required
- At least 1 shareholder who can be an individual or a corporate entity is mandatory
- A physical office address is a necessity
- Companies are required to have an initial paid-up capital of at least SG$1
After this, the next step is the Singapore company registration of your private limited company.
5 Steps Singapore Incorporation Process
The business registration of any company in Singapore is done through the Accounting and Corporate Regulatory Authorities (ACRA). And do note that all the private limited companies must end with the suffix “Private Limited”, “Pte Ltd”, or “Ltd”. Getting started with the incorporation process, an entrepreneur has to go through the following steps to register their company in Singapore.
1.Select a Company Name
Before a company can be incorporated, a name must be assigned to it. The name must not match with the company name of an existing business. The name must be then submitted to ACRA for them to review and approve/disapprove. In most cases, the approval process takes 1-2 hours unless the proposed name contains restricted words.
2.Draft a Memorandum and Articles of Association
The next step to business setup in Singapore is drafting a MoA. The document specifies the activities in which the company may engage in. The Articles of Association specifies the rules governing the internal management of the company. Singapore Company Registrar provides a standard MAA document that is suitable for most instances.
3.Filing for Incorporation and Approval from ACRA
The next step is filing the incorporation request and obtaining an approval from ACRA. This can be completed early assuming all the incorporation documents are ready and have been duly signed by all the persons involved.
4.Appoint an Auditor
All the companies that have been incorporated in Singapore must appoint an auditor in the span of 3 months of incorporation, unless the company is exempted from auditing requirements. To be exempted, the number of individual shareholders in the company must be less than 20 with no corporate shareholders, and its annual turnover must be less than S$5 million.
Once the registration is completed you can go forward with completing all the typical post-incorporation tasks like:
- Open a corporate bank account
- Obtain the necessary business licenses as may be applicable to your company’s business activities
- Establish an office. If appropriate, you may want to explore the idea of having a home office in the early stages
- Set up a website
- Order business cards and stationery as required
- Set up a bookkeeping system for your company’s financial affairs or engage the services of a professional accounting firm
- Recruit staff as necessary
- Singapore Goods and Service Tax (GST) Registration must be completed. Goods exported from Singapore and international services provided from Singapore are exempt from GST. The current rate is 7%.
You must pay a registration fee of SG$300 to ACRA at the time of incorporation. Once you complete all the aforementioned procedure and receive an approval from the authorities, your company is legally recognized.
Documents Required to Set Up a Private Limited Company in Singapore
- Company name
- Brief description of business activities
- Copy of identity card for Singaporeans and passport, overseas residential address proof for foreign nationals
- Shareholders’ particulars
- Directors’ particulars
- Registered address for the company
- Company Secretary particulars
- Memorandum and Articles of Association (MAA) of the company
Although a company incorporation process in Singapore is straight-forward, it is highly recommended to take help of a consultant who is well aware of all the laws to ensure that the firm is incorporated and maintained as per the regulations of Singapore Companies Act.
Advantages of a Private Limited Company in Singapore
The advantages of setting up a Private Limited company in Singapore include:
- Shareholders are not personally liable for debts and losses of company
- Profits are taxed at corporate tax rates
- Dividends are tax free in the hands of shareholders
- Newly incorporated companies are entitled to tax incentives and exemptions
- The company, as a separate legal entity, does not cease to exist if one or more of its shareholders die
- Ownership of a company can be transferred and additional shareholders can be appointed.
After understanding all the advantages that come with business incorporation in the Singapore, you can go ahead with your decision of starting a company here. We at Business Setup Worldwide are a platform to start your business in Singapore. We provide all the services related to company incorporation and are well-versed with the legal framework of Singapore. If you are looking forward to setting up your private limited company in Singapore contact us today – we’d be happy to help.