In general, anybody looking to carry out any activity for profit on an ongoing basis must register a business with the Accounting and Corporate Regulatory Authority (ACRA), unless you have reason to be exempted.
If you’re a foreigner , you will need to engage the services of a registered filing agent such as a law firm, accounting firm or corporate secretarial firm to submit your application on your behalf. You will also need to appoint a director who resides in Singapore to set up a business entity here (note that this person need not be a Singapore Citizen or a Permanent Resident and may be someone who exercises an employment with a work pass in Singapore).
Exemptions from registration of business
Exemptions from registering for a business can happen when:
- You conduct your business using your full name as reflected in your NRIC.
- You choose to conduct the business with one or more partners using their full names as reflected in their NRICs.
However, if you choose to add descriptive words before or after your name (e.g. Cakes by Fiona Ho), you must register the business. Example is as illustrated below:
In this context, part-time or contract workers such as freelancers or tuition teachers who are providing services under their full names could be exempted from having to register their businesses. That said, they may be missing out on some of the benefits that businesses get when they register with ACRA.
What are the benefits of registering with ACRA?
There are several advantages to registering a business with ACRA. They include greater transparency and discoverability of your business, and access to governmental support such as those offered by Enterprise Singapore. In some cases, it also allows you to better manage your business risks.
Now that we are clear of the terms, let’s get started on this step-by-step walkthrough to register your business in Singapore:
Step 1: Choose a Business Structure
The type of business structure you choose depends on your business needs. To help you decide which is most suitable for your venture, let’s look at some of the most common types available in Singapore and what they are best suited for.
This is the simplest business entity as it comprises just one owner. A key advantage is that the owner will have absolute control of the business, and low compliance burden and costs.
On the flip side, because the business and the business owner are considered a single legal entity in a sole proprietorship, this means that the owner is personally liable for any business debts or legal consequences that result from business operations.
Limited Liability Partnerships (LLP)
You need a minimum of two partners, and there is no limit on the maximum number of partners in a LLP. Like its namesake, LLPs shield owners from being personally liable for business debts or losses of the LLP. Or legal actions against the LLP, since it is treated as a separate entity.
You can also buy and own property under a LLP’s name. and shares in a LLP can and be transferred or sold to other individuals.
Private Limited Companies
Private Limited companies are larger and more robust than LLPs, and can have between one and 50 business owners. But requirements for these companies are also more stringent, and are subject to more corporate governance regulations.
For instance, you will need to appoint a qualified company secretary, at least one Singapore resident as company director, and to file annual returns and minutes of Annual General Meetings. Private Limited companies will also need to retain documents of financial transactions for at least the past five years.
In exchange for all the extra administrative work, you stand to enjoy benefits like greater ease when it comes to issuing shares, transferring ownerships and fundraising. Tighter regulatory requirements also inherently create greater trust levels for these companies in the eyes of investors, vendors, clients and consumers.
Refer to this table on ACRA’s website for more details of types of business structure in Singapore. Once that’s settled, it’s time to move on to the next step.
Step 2: Register Your Business Name
Once you’ve come up with a suitable name, it is advisable to first conduct a search on BizFile+ – ACRA’s online filing and information retrieval system – to see if it’s available.
Steer clear of names that are similar to an existing business, undesirable names that are vulgar, obscene or offensive, and lastly, names that are prohibited by order of the Minister of Finance (such as those containing the word “Temasek”).
During the name application, you will also need to specify the primary and secondary activities of your business by choosing the most relevant Singapore Standard Industrial Classification (SSIC) code corresponding to your business activity.
For instance, if you’re selling cakes and pastries, the code to select under your Primary Activity would be 10712 for “Manufacture of bread, cakes and confectionary”. Meanwhile, your Primary User-Described Activity would be “sale of cakes”. There is also an optional Secondary User-Described Activity field, which you will need to fill up if you intend to sell other products and services outside of your Primary User-Described Activity (such as selling baking utensils in this scenario). Click here for a full list of SSIC codes.
The name application costs $15. Approval is usually immediate, but may take between 14 days and two months, if the application needs to be referred to relevant authorities for review. For example, if the name contains words like “legal” or “law”, it will be referred to the Legal Services Regulatory Authority.
Once it’s been approved, the name will be reserved for 120 days. If you don’t register your business or incorporate the company within this period, the name will be made available to other members of the public thereafter.
Step 3: Register Your Company Address
The next step would be to register a business address, which you will need in order to register your business here. Below are the different requirements for addresses that you will need to register based on your entity type.
Business Address (For sole-proprietorships)
If you’re a sole proprietor, you may use your residential address as your business address under the Home Office Scheme, which applies to both HDB and private properties. However, you will need to seek prior approval from HDB or URA respectively.
Registered Office Address (For companies and LLPs)
For LLPs and companies, this is where all communications and notices may be addressed. This is also where the business’s register and records are kept. Do note that a registered office must be operational and accessible to the public during office hours. However, it does not have to be where the company or LLP conducts its activities (e.g. Registered office address is at Tanjong Pagar, but the factory is in Tuas).
All business owners and company officers must provide their residential address to ACRA at the point of registration. These addresses will be made publicly available when the public purchases information about the business entity. If you prefer not to disclose your residential address publicly, you can check out the following option:
If privacy is priority, you may want to consider registering an additional Alternate Address. This address will be displayed in your Business Profile for public information, instead of your residential address. However, the address has to be where you can be contacted, and also within the same jurisdiction as the residential address. You will need to fork out $40 for this, and will still be required to submit your residential address for record purposes.
There is also the option to rent a virtual office space, which typically provides an address and communication services for a fee, without providing a dedicated office space. Costs can range from a few hundred to a few thousand dollars per annum. The flexibility and cost-efficiency of renting a virtual office space has made this option especially popular with businesses that are just starting out.
Step 4: Register Your Business
You’re almost done now. To seal the deal, go back to the BizFile+ website to register your business.
For sole proprietorships and LLPS, fees for a one-year registration is $115, while fees for a three-year registration is $175. This includes the registration of a business name.
For companies, the standard incorporation fee is $315, including the registration of a business name.
Applications are typically processed within 15 minutes, but may take between 14 days and 60 days if the application needs to be referred to another agency for approval or review. For example, if you want to set up a private school, the application will be referred to the Ministry of Education.
Once you’re done registering your business, you will receive a business profile containing details of your business, as well as a Unique Entity Number (UEN), which is something of an ID for your business. The UEN must be used when transacting with government agencies.
You can commence your business once it is registered with ACRA, on condition that you do not require further licenses/approvals from other government agencies to carry out your business activities.
Open A New Business Banking AccountLooking for a bank account for all your business transactions? The OCBC Business Banking provides a wide range of business accounts for you to choose from so that you can find the most suitable account for your business needs.
Join The DollarsAndSense Business Community
For more content that helps entrepreneurs, freelancers, and self-employed individuals and learn to build better businesses, join the DollarsAndSense Business Community on Facebook.