Experts Insights on Company Registration in Singapore

Welcome to the second of our three-part series on ‘Starting Your First Business’. In this post, we show you the business structures you should consider and what are your options when it comes to incorporation.

6 Things to Consider Before Registering a Company in Singapore

One of the things most first-time entrepreneurs find challenging is registering their new business. And while there are many guides out there, there just isn’t a lot of advice from people who have been there and done that.

That’s why we went out and spoke to our panel of successful business owners and business experts, who kindly shared their insights into business registration.

1. Choosing Your Business Structure

Choosing the right structure will help put your business on a sound footing, while choosing the wrong one might result in challenges to your business growth.

There are several forms of business structures you can choose from, and the most popular is the private limited company — which accounts for 70% of all forms of business registered or incorporated with ACRA in 2019. Sole Proprietorships are the second most popular, followed further behind by Partnerships.

2. In Separate Company

So why is incorporating a company such a popular choice for businesses in Singapore?

One big factor is that the company is a legal entity separate and distinct from its shareholders and directors. What this means is that the shareholders and directors are not personally liable for the debts and obligations of the company.

Mr. Francis Chan, Deputy Head (Disputes) of the Rajah & Tann Legal Basix Practice Group, shared the following view “While sole proprietorships and partnerships have less compliance formalities than private limited companies and cost less to set up, you or your business partners can be sued personally and be made personally liable for the mistakes made by the business.”

Mr. Lawrence Chai, Founder of 3E Accounting, also advised, “As a Sole Proprietor or Partner, the profits of your business are your personal income, of which the highest tax bracket currently is 22%. In comparison, companies are taxed at up to 17% only. Thus, incorporating as a company may save you some tax dollars in the long run.”

3. Preparing For Growth

The company is a good choice of business structure for reasons of ownership and growth too. For one, a company can own assets in its own name and it can raise funds by admitting investors to the company as shareholders, who may change their stakes in the business by purchasing or selling their shares in the company.

4. Avoiding Pitfalls

The case for incorporating as a Private Limited Company grows further when you consider there is no easy way to convert a Sole Proprietorship or Partnership into a Company.

Mr. Jonathan Yang—Co-Founder of Muchachos and The Daily Cut restaurants—shared the experience of converting his first business from a Partnership into a Company. “You can shut down the partnership and set up a private limited company, but you’ll lose all those years of records. This matters if you want to apply for a loan. The loan criteria might require you to be in operation for 6 months to 2 years and suddenly you don’t have that.”

Lawrence of 3E Accounting echoed these sentiments, pointing out the significant challenges in transferring assets and liabilities—including trademarks, licenses, staff, and bank loans—from a previous business entity to a new Company.

All in all, it’s clear that while it takes a bit more time and resources to set up and run a company, it offers many benefits for those looking to take their business places.

5. DIY Or Outsource

Each of the business owners we spoke to recommended engaging a corporate secretary for incorporating a Company.

Jonathan of The Daily Cut warned about saving a penny and losing a dollar. He pointed out the many areas that you can be non-compliant with regulations, and “if you do the math, the incorporation service provided by corporate secretarial firms is almost free.”

Dr. Terence Tan, Founder of The Pain Relief Clinic, opined that a Corporate Secretary can be your partner throughout your business journey too.

According to Dr. Tan, “Over the years, as we grow, we will have questions along the way in terms of business structuring, tax, and of course accounting, that I will need some advice on. This is where a good corporate secretary makes a difference.”

6. Opening A Bank Account

80% of businesses establish a banking account immediately after registering their business.

Among other things, you need a business banking account to deposit your paid-up capital (PUC), and pay for business licenses and permits. 

Mr. Vincent Teoh, founder of Zoo-phonics Asia enrichment centres and the Safari House chain of pre-schools, is a Certified Practicing Accountant (CPA). He shares an important piece of advice.

“To ensure your business is sustainable, you must keep your business money and personal money separate, otherwise it is hard to differentiate between the two. Especially if you have partners, there is a serious need to have separate accounts to avoid conflict on money matters.”

You’ll be happy to know that OCBC's Business Growth Account is highly suitable for first-time entrepreneurs.

Your account can be opened instantly online with MyInfo (log in with your SingPass), saving you time and hassle. There is only a low initial deposit and minimum balance requirement, which means you don’t have to tie up precious business capital.   

Got All You Need to Register Your Business in Singapore?

We hope the first-hand knowledge and insights from our panel of business owners and leading experts have shed some light on the right structure for your business. Let us know if they have made a difference in helping you make the right decisions.

Here at OCBC, we’re always on the lookout for quality advice and information to help you grow in your business. Let us be your partner in every step of your entrepreneurship journey. Read on for practical advice for your startup.