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Setting up an E-commerce company in Singapore

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Due to the increasing cost of infrastructure and maintenance, several business owners in Singapore are turning to the online world. Today, E-commerce is one of the fastest growing segments in the global markets and it is very promising and rewarding. The benefits of the digital world require a little bit of planning, and investment of time & money.

Here are the steps involved to successfully start your online business:

Step 1: Research and Planning.

The research will give you an idea about your target market, whether your business plan caters to the market needs at the current moment, and what is the market demand for your product/ service?

 

Your research should typically answer questions such as:

  • What product/service will you be selling?
  • Who are the buyers?
  • Where and how you’re going to obtain your products? (producing /curating?)
  • What are you doing to fund your business and what is your plan B Who are your competitors?
After having the answers to the above questions it’s time to draw your business plan. This will be your roadmap which will help bring your ideas and thoughts together. A business plan is crucial in determining what to prioritize and how to effectively reach new customers.

Step 2: Funding & Financial Assistance.

The government of Singapore ensures the country’s economy stays stabilized, that opens a lot of ways to fund your business. For instance:

  • The old school-Business Loans: Perhaps, the most straightforward way to get more money to fund your business. But this convenience comes with a huge risk and cost of losing not only your business but also your capital if things do not work as per the plan.
  • Investors: Contrary to the traditional loan, this does not require the repayment of the principal amount in its monetary value. As an exchange for the investment in your business, the investors claim a part/ share of your business.
  • Government Funding: Singaporean government has been very proactive when it comes to new businesses and always on the lookout for new investment. Several initiatives allow start-ups and specific industry businesses to have access to the funds. Grants, business incubator schemers, and tax incentives are few such initiatives.

Step 3: Choosing the right Business Structure for Singapore Business.

An individual entrepreneur (local and foreigner), can register a business in Singapore using one of the following business structures:
  • Private Limited Company (Pte Ltd)
  • Sole Proprietorship
  • Limited Liability Partnership (LLP)

However, your best bet is to incorporate a private limited company to exploit one of your online business ideas in Singapore. A Pte Ltd limits your liability to the amount you have invested in its shares.

 

A corporate can use one of the following business entities to register its business:

  • Subsidiary Company
  • Branch Office

Step 4: Incorporate your business.

Here are some key facts on opening a company and doing business in Singapore and what you need to Incorporate your business:
  • Company name: We recommend having a shortlist of three in case your first choice isn’t available.
  • 1 or more directors: Directors must be individuals, aged 18 and above, who have not been disqualified to hold a directorship in Singapore or elsewhere.
  • 1 or more resident directors: You need at least one locally resident director. This is someone who is a Singapore citizen, Permanent Resident, or someone who is on a visa such as an Employment Pass, Dependant's Pass or EntrePass.
  • Between 1 - 50 shareholders: A director can be a shareholder, and a shareholder can either be an individual or a legal entity like a trust or another company.
  • Paid-up capital: The minimum paid-up/share capital for a company to register in Singapore is S$1. Any time after the company has been incorporated, the share capital can be increased.
  • A registered address in Singapore: The address that is provided for the company must be located in Singapore. In addition, it must be a physical address (residential or commercial). A P.O. Box will not be accepted.
  • Company secretary: Within 6 months of incorporation, every company must appoint a company secretary. A company secretary has to be a citizen, permanent resident or an employment pass holder.
  • Auditor: Within 3 months of incorporation, every company must appoint an auditor, unless the company has been exempted from audit (which is the case for most start-up companies).

Few other helpful things to keep in mind when registering a company:

  • No local/foreign shareholding requirements: You may have 100% local shareholding or 100% foreign. You can transfer existing shares or issue new ones at any time after the company has completed the incorporation process.
  • Taxes: As a company registered in Singapore, you will receive some very appealing tax incentives and exemptions. This is one of the primary reasons that entrepreneurs from around the world prefer to form their company in Singapore.

Required documents at incorporation:

To incorporate your company in Singapore, you need to file with ACRA (the Accounting and Corporate Regulatory Authority), who manages company registration in Singapore. You will need to provide:
  • Name of company
  • Brief description of activities
  • Details of shareholders
  • Details of directors and KYC information
  • Registered (Singapore) address
  • Share capital details
  • The company’s constitution

For complete step-by-step guide on setting up a company, find our article “Key facts:How to register a company in Singapore”

Step 5: Infrastructure requirement.

To incorporate your company in Singapore, you need to file with ACRA (the Accounting and Corporate Regulatory Authority), who manages company registration in Singapore. You will need to provide:
  • A domain name: This is the name of your brand. Make sure you pick a domain name that represents your identity and is easy to remember.
  • Hosting provider for your website: A hosting site will ensure that you have good security, bandwidth and that your site will be up and running all the time.
  • Web design and development: Your website is the face of your business. Make sure the design is user-friendly and provides adequate information to the user about your product.
  • Marketing and advertising: A strong marketing plan to ensure that more people find out about your business. Use social media and other paid online marketing channels to advertise your business.

Step 6: Bookkeeping and Accounting.

It is important to keep track of the financial transactions of the business and the cash flow. Bookkeeping and accounting as it is a statutory and you should have a system to track your business transactions.

Step 7: Tax compliance.

Any company that wishes to do business in Singapore has to be compliant with the Inland Revenue Authority of Singapore (IRAS). And whether your Singapore company is active or dormant, all tax filings are compulsory. We have discussed a great deal on IRAS compliance in our article “IRAS company requirements in Singapore”.

Next steps

Incorporating in Singapore is a strong choice when deciding where to base yourself.  Stable economy, strong workforces, and business-friendly tax policies let you get up and running sooner- so you can spend less time tangled in admin and more time growing your business.

 

At Sleek we help people everyday to set up their businesses in Singapore.  Talk to us for practical advice if you have any questions about incorporation.

We help entrepreneurs streamline their company incorporation, governance, and accounting using clever technology.

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