Registering your IT business in Singapore: what should I do?

Features of starting your own business from scratch in Singapore

There is practically no unemployment in this state, but there are no benefits either. Although business development here is uncontrolled (by the state), the personal life of every citizen of Singapore is under strict control. How to open your own business in Singapore from scratch is told by many foreign affairs experts and heads of existing companies that have conquered their niches in the global market.

Previously, when Lee Kuan Yew was at the head of state, he followed the principle of attracting investment from Western transnational corporations solely in order to develop Singapore's economy. Now this state is a successful platform for the development of both small and large businesses, which can be built not only by local residents, but also by foreigners.

It has long been no secret that Singapore is the best place to do business. This state is rightfully considered the most convenient and profitable for investment and development of various business projects. Let's figure out whether this is really so, and how true the legends that are made up about Singapore are.

A few words about Taxes

The tax system in this state is quite interesting, but at the same time very soft. The government makes no distinction between residents and non-residents and the tax rate is 17% on profits. But at the same time there are a large number of benefits. The most important of these is that a new organization is exempt from tax on the first $100,000 for the first three years. It looks like this:

• When you reach a profit of $100,000, you pay nothing.
• Upon reaching a profit of $200,000, you must pay 8.5% tax.
• Upon reaching a profit of $300,000, the tax rate is 5.7%.
• If the profit exceeds 300,000, then the full rate of 17% is paid.

This is done in order to allow start-up companies to develop and not burden them with unnecessary fees.

However, subsequently, if your organization does not achieve large profits, lenient tax rates of up to 4.3% may also be applied to you.

Business in Singapore from scratch

Let us remind you that in this country many people strive to occupy positions in the public service, even if we take into account the fact that in Singapore running your own business is extremely simple, interesting and profitable.

Interest in public service is caused solely by psychological reasons:

• less risk;
• less problems;
• minimal responsibility;
• normalized work schedule.

Speaking about Singapore, one should not compare this state with paradise - it is a mirror of Eastern society, which feels like a single nation (whose name is Singaporeans) and feels extremely protected and calm. These are optimal conditions for fully building your own business step by step. Here, business development occurs with almost a minimal percentage of risk. In addition, it is known that the Singapore dollar is the strongest and most reliable currency; it practically does not fluctuate even at times when the American dollar and the euro show ups and downs.

Business immigration to Singapore

As for the average income in Singapore, it is about 300-350 thousand Singapore dollars. It is also worth clarifying that the state monitors each of its residents, but this is unobtrusive surveillance, and an additional opportunity for citizens to feel more protected. These are the conditions that are most favorable for starting a private business.

The most popular areas for starting a business in Singapore are:

• services sector;
• IT companies;
• tourism.

Everything in Singapore is regulated - state capitalism operates here - even private business is state-owned. Those. – any businessman has a certain “safety cushion”, and Singapore occupies seventh place in the corruption ranking not because there is a developed bribery system here (it is not present here), but it’s all about the Asian dollar market. Capital flows into this market from neighboring countries, and it is almost impossible to identify exactly where the financial influences come from. But now this market has been practically eliminated and Singapore is completely free from corruption.

On video: Business in Singapore

What forms of business exist in the country?

Having determined what kind of business to open in Singapore, you need to choose a form for the company. There are several of them:

• Sole Proprietorship: an analogue of our individual entrepreneurship - the basic, simplest form, suitable for low-risk business, profits are taxed as the owner’s personal income, but he bears full responsibility for the company’s debts;
• Company: companies with varying degrees of liability - within certain limits (shares, guaranteed) or unlimited - separated in status from the founders;
• Partnership: partnerships, standard (Limited) and with limited liability (LLP, Limited Liability Partnership) - they have an independent legal status; they need at least two founding partners, whose obligations are limited to the assets of the company.

The country also has a separate institution of business trusts. The most convenient forms for companies are considered to be those in which personal liability is limited to a contribution to the company - these are LLP and, in particular, Private Limited Company. The latter is the most common - including the Exempt variety, which is very convenient for startups; it occupies the main market share, similar to domestic LLCs. The liability of the owners (there can be up to 50 people) is limited to the limits of their shares, the company itself is an independent legal entity and, if the structure is properly organized, you can significantly save on taxes. Exempt Private Limited Company is a type with no more than 20 participants, and there should be no legal entities among them. Such firms are exempt from the heavy tax burden if their turnover does not exceed five million Singapore dollars; they do not have to submit audited financial statements, only a statement of solvency with a positive annual balance sheet. Regardless of the form, the procedures for registering companies are similar.

What does it take to open your own business in Singapore?

First of all, you should get . It is a ticket to a world of great opportunities, the level of which in Singapore is almost limitless. This visa can be expected within eight months, however, when it is in hand, all doors are open to a potential entrepreneur in Singapore.

An appropriate visa is needed in order to head a company yourself. If a potential businessman values ​​his time and immediately wants to open his own company in the territory of the above-mentioned state, you can follow a more simplified scheme and put a person with citizenship in Singapore at the head of the company. In this case, the scheme for starting a business is extremely simple - in the morning you submit an application to create a new company, in the evening you can already do full-time work, since your application will be approved within a few hours.

Registration of invoices

The last thing you need to do for full-fledged work (including obtaining loans) is to open an account. This can be done in one of the country’s banks or foreign branches located on its territory, and there are extremely many of them. It is opened to local business entities within a few days (up to three weeks for companies registered outside of Singapore). It is better to choose a corporate form, since there are certain restrictions for private accounts - for example, confirmation of legitimate presence in the state, address, and so on. The company needs to pass a resolution of the board of directors and deposit a certain amount into the bank, focusing on the minimum balance that the company can realistically maintain (in order to avoid paying about $50 monthly for maintenance). Banks have different conditions - it is better to study them in advance, because each institution independently decides whether to cooperate with the company or not. The basic rules include:

• personal presence of the client - at least one representative, including a nominee director;
• availability of basic company documents - extracts from the register, recommendations;
• deposit of the initial amount - from 1,000 to 50,000 dollars, depending on the circumstances.

In order not to make a mistake when choosing the type of business and at the stage of its creation, it is worth enlisting the support of professional consultants. provides qualified assistance - with it you can correctly register your successful company.

The main differences between opening a small and large business in Singapore

If you decide to open a small business in Singapore, you don’t even need to look for a local resident to put him at the head of the company and register the company in his name. A resident of any country can become a small business owner. Here the scheme is also simple - the application is submitted at the beginning of the day - at the end of the day you are already the founder of a new company in Singapore. The corresponding scheme applies to all areas of business, with the exception of IT technologies. Here everything is a little more complicated. All large companies in Singapore are opened exclusively with the approval of the state - the percentage of state participation in such enterprises is very high.

Accordingly, local residents do not have the opportunity to create an exclusively private business if we are talking about a large enterprise - in this case, the activities of such a company will be categorically controlled by government services. The private large business in Singapore is only one percent. To date, such companies, in whose activities the state does not interfere, are exclusively engaged in the development of high technologies (innovative developments). In this context, we note that the most important thing for the development of large business in this state is the provision of a clear and reasoned business plan, described to the smallest detail.

In addition, entrepreneurs begin to make a profit from opening large companies much later than those who decide to be content with opening a small business in Singapore.

On video: Registering a business in Singapore

About the move itself

It wasn't scary. But there was uncertainty - I did not understand what Singapore was. Back then I thought it was part of Malaysia. I moved in 2012: at that time there were much more quotas for foreign employees than now.

The fact is that out of five million Singaporeans, three are natives and two are expats. There are also about 300 thousand Filipino domestic workers and half a million workers from Pakistan and Bangladesh. All this creates competition in the labor market, burdens public transport, and increases the cost of housing.

Now the government is tightening the screws and wants to show that “Singapore is for Singaporeans”, so there are fewer and fewer quotas for foreigners. Many left due to coronavirus. The government is creating conditions to ensure that the most qualified personnel remain. If you don’t wait, your work permit is simply not renewed - this happens to people who have worked here for a year or 10 years.

Before moving, I gave away most of my things. I remember even giving my down jacket to a security guard at the airport who was cold. Upon arrival, I temporarily rented a room for a month for 500 SGD, and then moved into an apartment that I shared with a colleague for 2,500 thousand SGD (one Singapore dollar is equal to approximately 54 rubles, exchange rate at the time of publication. - Note). Our house had a fitness room and a swimming pool.

This is what condo housing looks like in Singapore. Vitaly's first house

Three main advantages of Singapore for entrepreneurs:

1. A small tax for companies For example, for six months I was charged 0.5% income tax - something like $100. And then they were returned! It’s just that in 2020, due to a tax surplus, the government returned the surplus to citizens.
2. Low risks of doing business Over the five years of operation, our company has completed about 100 projects.
   Most of the time we worked without advance payment - a letter or WhatsApp message was enough. During all this time, we were not paid only one micro-invoice for 2000 SGD, because the client went bankrupt. For comparison: our colleagues supplied server equipment to India for 100 thousand SGD, and when 30 days later they came to check the office, the company disappeared. In another situation, when they arrived to pick up servers from a client, they were met by armed men and were not allowed to go inside. Therefore, we rarely work outside of Singapore and Malaysia without prepayment. The rest of Asia needs trusted partners, otherwise there is a risk that your equipment will be stolen.
3. Professional labor market Singaporeans are hardworking and educated professionals. They speak two or three languages ​​fluently and are well versed in the intricacies of local business. If you have just started work, then you definitely need to hire a couple of locals - this will help build relationships with the community.

Profitable business in Singapore

The niche for opening children's music schools on the territory of this state is empty. In this aspect there is no competition, no leaders, no investment investments. However, if we consider that Singapore is a very musical city-state, then you can easily become the first in the field of opening children's educational musical institutions, which will become not only profitable, but also a fruitful type of business. If a private entrepreneur from another country employs 2-3 Singaporeans, he is automatically exempt from having to pay taxes.

Business relevance

Singapore is considered a small state in Southeast Asia. It is also an economically developed and successful country. It is on a special list of states with incredibly high rates of economic development.

This place is considered the leading financial center of Southeast Asia. It has an advantageous geographical location, as it is washed by oceans such as the Pacific and Indian. This country is the largest port for maritime transport and trade. Startups and innovation also play a leading role.

This country is characterized by a leading position among Asian regions in such areas as biotechnology, electronics, oil refining, energy, digitalization of business, communication technologies, etc. The government strives not only to create ideal conditions for business, but also to ensure a high standard of living for people .

Therefore, the population can receive education in the best higher educational institutions in Asia, quality medical care, and enjoy numerous recreational and entertainment venues.

Another key advantage is the fact that the delivery of education and the service process are carried out using English. It is the working language of the republic, although official recognition has been given to Chinese, Malay and Tamil.

Why Singapore is considered the best country for paying taxes and doing international business:

Positive and negative sides

Foreign entrepreneurs have identified a whole list of positive aspects of doing business in Singapore. Credit must be given here:

• absence of corruption;
• low taxation;
• developed infrastructure;
• financial support for medium and small businesses provided by the state;
• flexible immigration policy;
• applicable privacy laws;
• highly qualified workers;
• lack of bureaucracy;
• low crime.

The main negative factor is the presence of fairly high monetary fines. It is not for nothing that, according to many, Singapore is the country with the highest fines. Such non-serious violations for our population as throwing a piece of paper on the street and smoking in a public place can lead to a huge fine. The lowest fine price is approximately 9,000 rubles.

How to invest in Singapore?

Before investing in the Singapore economy, you must go through the following stages (steps):

• Set personal financial goals.
• Open a brokerage account.
• Choose the investment style that best suits your investment goals and financial needs.
• Decide on the type of company to choose and find ways to search for investment ideas.

The country has government support for startups and investors. One such program is the Global Investor Program (GIP). Investors can invest S$2.5 million in a new venture or business expansion, or invest the amount in the GIP1 fund to support Singapore companies. You must meet the criteria for this program:

• successful business experience of at least 3 years.
• The company's turnover must be at least $50 million in the year preceding the application and at least $50 million on average over 3 years.

As for small or medium-sized businesses, popular areas for investment are: service, tourism, trade, information technology. Also favorable objects for investment: shares and securities, real estate, banks.