10 Things to Consider before Incorporating a New Company

Abuzz with excitement, we witness as the entrepreneurial world enters a remarkable era for starting businesses. Technology has revolutionized the game, leaving even the giants of industry scrambling to adapt. With the internet as our ally, digital marketing as our secret weapon, and e-commerce platforms and SaaS solutions as our trusted companions, the barriers to entry to entrepreneurship have crumbled like never before. Now, breaking through the boundaries of geography and time zones, the possibilities are boundless as we gain access to partners and customers all over the world.

Embarking on a business venture has never been more exciting! Thanks to the abundance of freelancers and the gig economy, you can reduce hefty, fixed costs associated with full-time hire and redirect the expense towards exploration!

When it comes to finding the perfect launchpad for your entrepreneurial dreams, Singapore steals the spotlight. With its politically stable environment, enticingly low tax rates, government support for businesses, and a vast pool of talented individuals at your fingertips, this dynamic city-state is a haven for ambitious entrepreneurs.

So, with many factors pooling together to form an ideal climate, why wait? Read on to find out more about the considerations involved as you seize the opportunity to make your mark in the business paradise that is Singapore!

Here are 10 things to take note of when you decide to proceed with setting up a company in Singapore.

1. Choose an appropriate company name

With so many good options out there, selecting a company name is often a daunting task! After all, you would want nothing but the best for your company. It’s natural to believe that your company name should align perfectly with your brand image and offerings. However, here’s a little secret: your company name doesn’t have to be identical to your business name! Take us, for instance. We operate as Grof, but our official business entity is registered as Gro Big Big Pte. Ltd.

As the guardian of fair play, ACRA also has some ground rules to ensure your company name stays within the bounds of decency. Obscene or religious names, as well as those identical to existing or reserved names, won’t make the cut. But fear not! If you have your heart set on a particular name, we are here to help. Just give us a shout, and we will investigate its availability and even reserve it for you! It is also worth checking if your dream domain name is up for grabs, should you be thinking about having an online presence.

So, when it comes to naming your company, feel free to explore creative possibilities and consider alternative options that best capture your vision and goals. Remember, it is all about finding the perfect name that resonates with your audience and setting the stage for your entrepreneurial journey.

2. Determine the company type

Private Limited Structures are the Most Common

In Singapore, there is a whole range of entity structures for conducting business available. Undeniably, the most popular and highly recommended choice is the straightforward Private Limited company (Pte Ltd). In accordance with business law, the term “Limited” indicates that you can enjoy limited liability protection. It means that in the event of bankruptcy, your personal assets are generally safeguarded from being seized to settle company debts, unless you have issued a personal guarantee to creditors. This structure ensures that the company’s profit and loss are separate from your personal account and will be taxed separately.

So, what are the benefits of this? By separating personal and company interests, this structure opens doors for potential future investments and the sale of company ownership or shares.

With a “Private” company, you can have up to 50 shareholders and benefit from reduced reporting and compliance obligations compared to a public company.

Why is opting for a private limited company strongly advised over options like sole proprietorship or limited liability partnership (LLP)? Well, it’s mainly due to the tax savings exclusive to private limited companies.

Therefore, by setting up a private limited company, it’s a smart choice that not only protects your personal assets but also maximizes your tax savings.

3. Business activities

Now that you have determined your company type, just hold on a minute. Does the term Singapore Standard Industrial Code (SSIC) sound familiar to you? SSIC is a business activity code with the function of tracking economic activity. This code, assigned by the government, plays a vital role in helping ACRA determine if your business requires any special licenses to operate.

Where Can I Find My SSIC Code?

Step 1. Visit our free SSIC Code Checker Tool 

Step 2. Enter your company’s business activities in the search box.

Step 3. Find the result that matches your business best.

Step 4. Should you find that the description is too generic, you may elaborate more on your business activity type during the incorporation process.

4. Resident Director

The importance that befalls the title of “Director” is generally well understood by many. As the guardian of a company’s affairs, a Director assumes the responsibility of overseeing and managing its operations. To adhere to the stipulations outlined in The Companies Act, it is imperative to appoint at least one director who holds Singaporean residency. Whether you are a Singapore Citizen, Singapore Permanent Resident, EntrePass holder or Employment Pass holder, a local residential address is all you need to be classified as a resident!

5. Work Visas

Are you a foreigner (classified as a non-Singapore Citizen and non-Singapore Permanent Resident) who wants to work in Singapore? In order to take a step towards your dreams, you will firstly need to apply for an EntrePass or Employment Pass. 

• The bar is set high for EntrePass eligibility, as it is designed for exceptional individuals – visionary serial entrepreneurs, brilliant innovators, and seasoned investors. Find out the specific criteria and requirements by visiting our EntrePass Eligibility page.
• You can unlock new opportunities by applying for an Employment Pass through your newly incorporated company. Employment Passes are tailored towards managerial, executive, or specialized roles. To qualify, a minimum fixed salary of S$5,000 is required, with further increments based on your level of expertise. Additionally, possessing esteemed qualifications such as a reputable university degree, professional certifications, or specialized skills will bolster your application.

If you already hold onto an Employment Pass, Dependant’s Pass or other types of visas, it is possible for you to be a shareholder of a new company. However, you must obtain a Letter of Consent from the Ministry of Manpower to qualify as director. You can approach Grof for more assistance in this area!

6. Company Secretary requirement

Companies in Singapore are required to appoint a Company Secretary. A Company Secretary must be qualified under the Companies Act, assumes a pivotal role in assisting directors with maintaining meticulous records and ensuring compliance with regulatory obligations. This is essential as the consequences of neglecting these responsibilities can be severe, with regulators ready to act against non-compliant companies. Finally, it is crucial to note that the position of Company Secretary must never remain vacant for more than six months.

At Grof, we offer a comprehensive range of secretarial services bundled with our incorporation solutions. Our one-stop solution not only saves you time and effort on compliance matters but is also priced attractively! By offloading services onto us, you can focus on propelling your venture forward instead!

7. Financial Year End

During the registration of your company, do not forget to inform ACRA of the Company’s Financial Year End (FYE). While the FYE is typically 12 months long, the accounting period varies per company – it can range from 12 months to over 52 weeks. Therefore, as a businessman you must make the decision based off your company’s preferences.

If you have no preference, we recommend choosing the last day of the previous month (eg. If we are in the middle of May, we recommend 30 April). This strategic decision maximizes tax breaks, specifically tailored for start-up companies.

By aligning your FYE accordingly, you can position your business for optimal financial benefits!

8. Shareholding

Shareholders are the courageous owners of shares within a company, wielding the power to vote on company’s decisions and share the bountiful profits that await.

Shareholders are not mere participants nor bystanders. When choosing your shareholders, you must remember that these individuals hold a pivotal role within the company’s fabric. Shares, the precious tokens of ownership, bestow rights, privileges, and responsibilities upon them. Uncover more about shares by reading up on different classes of shares and stages of capital shares!

9. Registered Address & Constitution

In the world of business, a registered office address holds significant importance. It serves as the designated location where all official correspondence is directed and where the company’s vital records and registers are securely stored.

When incorporating your business, it is mandatory to provide a registered office address. Although the company is not required to carry out business activities there, the address must be accessible to the public during regular office hours.

Given the increasing trend of “working from home”, more companies are also opting to carry out business activities from remote locations. As a result, this arises the question—Can I register my home address instead? The answer is yes, it is possible! Of course, certain criteria must be met, and this comes at the cost of your privacy. But worry not! With Grof’s Launch and Offshore Incorporation packages, you can avail yourself of a registered address without the need to rent a separate office space. This convenient solution is readily available to both locals and foreigners!

A Company Constitution is also essential, referring to a legal document that outlines the fundamental characteristics of your company, including operational procedures, governance regulations, and the rights and responsibilities of directors, shareholders, and the company secretary. You may the choice of drafting your own Constitution or adopting the Model Constitution. 

 ‍10. Business bank account

Congratulations on incorporating your business! Now, it’s time to dive into the exciting world of corporate banking and kickstart your operations with a bang! But wait, with so many banks out there, how do you choose the perfect bank to partner with?

When selecting a bank, there are several points to think through. Firstly, you must consider the minimum balance requirements, bank account maintenance charges, and bank transfer fees that align with your unique business needs. Additionally, you should ensure the ease of operating the bank account – be it the proximity of the nearest bank branch or your familiarity with the internet banking portal.

We all must agree, time and money are crucial factors. Therefore, the process of opening a business bank account shouldn’t consume excessive time and attention that could be better spent on running your business. For solopreneurs or small business owners, we recommend opting for a business account rather than a traditional bank account. Business accounts offer shorter processing times and have no minimum balance requirements or monthly commitments, making it easier for you to get started without unnecessary hurdles.

→ Create a free business account 

Wrapping Up 

In conclusion, incorporating a new company is a significant step in your entrepreneurial journey. To ensure a smooth process and long-term success, carefully consider factors such as business structure, names and financial planning. Building a strong team and establishing good governance practices will contribute to your company’s sustainability.

Remember, when you find yourself in doubt, it’s always wise to seek professional advice. This not only helps you avoid costly mistakes but also saves you valuable time and trouble. Consulting with experts who have the knowledge and experience can provide invaluable guidance and ensure that you make informed decisions for your business. We’re always ready to help!