Overseas holidays are still off the cards, and bosses think employees have “nothing better to do” than to be on call 24/7, leading to people working even longer hours than before. So we don’t blame you for thinking of starting a business and kissing the corporate life goodbye forever.
The good news is that Singapore is one of the easiest countries in the world to start a business, administratively speaking at least. However, executing a business idea that actually works is another story.
Here’s a walkthrough of the process that business owners have to go through.
1. Make sure you’re ready
Many people dream of starting a business as a way to escape a hated job. But before you jump in the deep end, you must know that running a business is hard, and comes with its own set of challenges. You must have a deeper motivation that simply wanting to quit your job, otherwise the hardship is going to be a bitter pill to swallow.
So how do you know if you’re ready? Examine your intentions.
If your primary reasons for starting a business are because you hate your job, want to make more money or think running a business will be easier than working, then you might not be ready unless you’re just planning to work freelance in an field you’re already familiar with.
On the other hand, if you are motivated by the desire to see a particular business idea through to fruition or are passionate about entrepreneurship, then you might have the intrinsic motivation needed to thrive.
Before you take the plunge, you will also have to ensure you have a good strategy and amass the experience, capital and guidance needed to succeed.
2. Raise capital
So, you’ve got a good business idea and mapped out your fail-proof strategy. Now you need to raise some cash in order to turn your dreams into reality.
First of all, you need to estimate how much capital you need. This can vary wildly depending on the size, scale and character of your business.
Some small, bootstrapped businesses might need only tiny amounts of capital to get started. For instance, a sole proprietor setting up a small business to promote his or her services as a private tutor, music teacher, web developer or illustrator might well be able to rely on personal savings to get started.
On the other hand, some businesses such as brick-and-mortar retail stores or F&B establishments can be very capital-intensive and require a 6-figure sum.
If you don’t have enough savings, here are a few ways you can raise capital:
- Fundraising – Crowdfunding platforms like Kickstarter, Indiegogo, FundedHere and Fundnel can help you raise funds from the public.
- Government schemes – The ACE Startups grant offers funding to first-time entrepreneurs. There are also several Startup SG Founder grants available for fledgling businesses.
- Venture capital and angel investors – You can contact venture capitalist firms and angel investors to see if they would be interested in investing in your business. However, you should research them before accepting an offer to ensure that you understand their terms and conditions and check that their values align with yours.
- Family and friends – You can invite those close to you to invest in your business. However, ensure that they understand the risks involved, and that both parties understand how the investors’ return on investment will be paid out.
- Loans – This is pretty straightforward, but the downside is that it puts you in debt. Make sure you compare interest rates across the different banks and financial institutions.
- Peer-to-peer lending – Platforms like MoolahSense and FundingSocieties offer an easier way to get funding than traditional business loans.
3. Register your business
Incorporating a business is quick and easy thanks to ACRA’s Bizfile website.
First, you need to reserve a company name for $15. Your company name should be approved provided it’s not already taken and doesn’t contain vulgarities. After that, you can then incorporate your business entity.
You’ll have to decide what type of business entity you want to incorporate, the most likely ones being:
- Company ($300) – This type of structure lets you create a business that is separate from the owners. So, any debts and liabilities incurred by the business are separate from the owners’.
- Sole proprietor ($100) – If you’re a one-man-show, this type of business entity is the most fuss-free option. However, it also means you are liable for any debts and liabilities your business incurs. Great if your business doesn’t require much capital, such as if you’re a home-based private tutor.
- Partnership ($100) – This type of structure is for two or more people setting up a business together, and who also agree to be personally liable for the debts and liabilities incurred by the business. If your business is fairly simple and small-scale without much overheads, a partnership might be more convenient than a company.
Need more information? Check out our in-depth guide to registering your business.
4. Open a business bank account
Unless you’re a sole proprietor and are okay with receiving payments in your personal account, you’ll need to open a business bank account.
When evaluating your options, you’ll want to compare the monthly maintenance fee, as well as any minimum initial deposit or minimum balance/fall below fees.
Most banks in Singapore have business bank accounts, but some of the more notable ones include OCBC Business Growth Account, which has no minimum deposit or fall below fees, and Maybank FlexiBiz Account, which has no monthly maintenance fee.
5. Set up your office
When you incorporate your business, you’ll need to include an office address at which to receive mail (including lots of junk mail).
This doesn’t mean you need to rent a separate office space, though. For businesses that don’t actually need an office, you can “rent” an address from a virtual office.
Alternatively, if you qualify and apply for the Home Office Permit, you can use your own home as your business’s office. You must not hire more than two non-resident employees.
For a larger scale business, you’ll probably need legit office space. Other than renting or buying office space, you can also consider renting a space in a coworking space that offers business addresses.
6. Hire a team
Starting a business means not just being your own boss, but being other people’s boss as well.
Your first step to not being a horrible boss and to avoid breaking the law is to understand your employees’ rights. Employees who are not managers/executives earning $2,600 or less and workmen earning $4,500 or less are protected by the Employment Act.
They must receive at least 7 days of annual leave in their first 12 months of services and at least 14 days in subsequent years, as well as at least 14 days of sick leave entitlement.
There are also rules as to how much you can slavedrive these employees. They can’t work more than 6 hours without a break, more than 8 hours in a day or more than 44 hours in a week.
Last but not least, you’ll have to register all your Singapore citizen and PR employees with the CPF Board and pay CPF contributions. This is fairly easy — instructions can be found on the CPF website.
7. File corporate income tax
Unlike income tax, the deadline for corporate tax e-filing is in December instead of April. You’ll be paying a flat rate of 17% as a Singapore tax-resident company.
If you have an annual revenue of not more than $5 million and have no chargeable income for the year, you don’t even have to file a tax return. This would apply to fledgling businesses that have yet to break even.
For everyone else, the government always makes it as easy and convenient as possible to pay them money, bless ‘em. So, filing your taxes just requires you to log into IRAS’s myTax Portal and submit the online Form C or Form C-S, depending on your annual revenue.
Useful resources for business owners
Good luck! But you don’t have to do it all on your own. Here are some places you can find more info and resources from the government:
- GoBusiness Singapore – Your one stop shop for all the licences, permits, government grants and e-services you might need.
- EDB’s 2021 Guide to Setting Up Your Business in Singapore – Downloadable PDF guide targeted at foreigners looking to set up a business in Singapore.
- IRAS’s New Company Start-Up Kit – Guides you through your first corporate tax return.
- StartupSG – Government website with programmes and grants targeted at startup founders, incubators and investors.
You should also rub shoulders with fellow entrepreneurs in the same field for mutual support, advice and tips.
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