Last Updated on September 12, 2022 by HassanShabeer
Business Incorporation Singapore is an essential step in the process of setting up your own business, whether it’s one that involves physical goods or services or one that operates entirely online. Business Incorporation Singapore isn’t difficult as long as you understand what’s required of you and your business and how you can go about fulfilling those requirements. This guide will tell you everything you need to know about Business Incorporation Singapore, including what’s involved, how to set up the right legal framework, and the best course of action once you’ve done so.
Is it right for you?
A business incorporation in Singapore is a great idea for anyone who wants the best of both worlds when it comes to their home base. In general, most people believe that incorporating a business in the country where they live allows them access better financial benefits. This can come in the form of lowered taxes and higher incentives from the government. The risk with doing this, however, is that if your home country’s economy starts doing poorly, you’ll likely be much worse off than someone who has their business incorporated elsewhere. Nevertheless, there are more pros than cons associated with starting a business incorporation in Singapore because it offers a lower start-up cost, personal tax deductions for investments made locally and reduced taxation for foreign nationals working overseas within one year after becoming a resident in Singapore.
Advantages and Disadvantages
The primary advantage of incorporating is the liability protection it provides for the business owner, who pays personal taxes on any income. Additionally, corporations must file their own tax returns and can deduct most expenditures and losses from the corporate income. Shareholders are generally not liable for a corporation’s obligations, and dividends from profits can be paid out without causing taxable income. There are also limitations on shareholder liability for unrelated parties that may also be advantageous. The disadvantages of incorporation include filing expense as well as additional legal expenses incurred in order to maintain corporate existence.
What Information do I need?
For those considering incorporating a business in Singapore, there are many factors you should take into consideration. Here’s what you need to know about company incorporation in Singapore and what the process entails. The first thing to consider is if your business is a Company Limited by Shares (CLS) or a Private Limited Company (PLC). This will depend on whether or not investors have bought shares in your company- a CLS is for share buyers only. A PLC does not require investors and does not have share prices, so it may be more attractive for small companies that cannot afford the expense of shares. Other things that will affect which type of company you choose include location, ownership type, and investments from outsiders. Once you’ve determined what kind of company to register as, next comes choosing your board members. As a director or shareholder, this is an important decision since they can make decisions without needing unanimous agreement from all shareholders. You’ll also want to determine how much equity each person has, which can range anywhere from 100% for the director with all shares (not typical), 25%, 5%, 1%, etc. Once these decisions are made, registration can commence!
Are you looking for a private limited company or public limited company?
Public limited companies offer certain protections that private limited companies do not. The individual’s liability is limited, and a public company may take on external debt. These are usually stocks traded on the stock market, with fewer restrictions for holding shares. In addition, most publicly held companies can issue corporate bonds as securities. Furthermore, shareholders vote for the directors of the company who then appoint executives such as the chief executive officer (CEO). Publicly-held companies are required to publish financial statements each year disclosing comprehensive information about their revenues and profitability.
Are you planning on selling products or services?
If you plan on selling products or services, this is typically the case. However, it may also be wise to incorporate your business just in case you decide you want to start selling something later on down the line. This is also a good idea if you’re part of a partnership with other people and need legal protection. An S-Corp has some tax benefits as well because it doesn’t pass through its income or losses to individual shareholders like the C-Corp does. In addition, S-Corps have more flexibility in how they distribute profits to shareholders and don’t have to deal with the double taxation that C-Corps do. For example, if an investor owns 20% of a company’s stock then he or she would only pay taxes on 20% of the dividends they receive from their shares (the first time). The investor pays taxes at his or her own rate and there’s no additional corporate rate when the dividend is received.