The Australian companies have frequently looked upon Singapore as an overseas location that they could consider expanding their businesses. Singapore is located in an ideal situation, welcoming a business environment with a very high economic growth which creates the possibility of reaching South East Asia through a single way. Nevertheless, starting a business abroad is not easy, especially for those who do not know how things are done in this new place and the prevailing rules and regulations. This article is an ultimate guide on what and how to do for Australian companies to open offices or companies in Singapore.
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Why Singapore?
However, before delving into the specifics of how to establish a business in Singapore, it is important to understand why an Australian corporation would be motivated to choose Singapore as its destination. Here are some key reasons:
Strategic location
Singapore is at the center of SouthEast Asia and serves as a gateway to the fast growing markets. The country’s location to its neighboring countries makes it an ideal destination for businesses venturing into other markets in the region. In addition, Singapore has good infrastructure and transport networks that ease business operations.
Business-friendly environment
The country’s efficient government, low taxes and strong legal system has placed it among the easiest places to do business globally. The government supports entrepreneurship and innovation by providing different incentives, grants that assist in the growth of businesses. Moreover, Singapore has a strong legal system that serves to protect businesses and their intellectual property rights.
Strong economic growth
The size of Singapore is small, but its economy is robust and varied with one of the highest GDP per capita in the world. The attractiveness of the country as an investment destination stems from its economic stability and growth prospects. Additionally, the strength of Singapore’s financial industry and its position as a premier international financial center facilitates companies’ access to finance and other related services.
Proximity to Australia
Singapore is easily accessible from Australia by a short flight; hence, business owners can fly to the country whenever need arises. With the closed proximity between Malaysia, Thailand, and Indonesia, together with stronger bilateral ties, it becomes easy to engage in business affiliation. Additionally, Australia is only 3 hours ahead of Singapore which aids in easy communication and effective coordination of activities for teams based from both countries.
Types of Business Entities in Singapore
However, before starting a business in Singapore, one needs to know the various options for consideration. The most common types of business structures in Singapore are:
1. Private Limited Company (Pte Ltd)
Private limited company(pte ltd) is the most common business structure in Singapore. The company has limited liability, which means that it is a separate legal entity from its owners whose liabilities are born by the assets of the corporation. For companies looking to raise capital, this structure is suitable as they can issue shares to investors. Moreover, a Pte Ltd faces corporate tax rates which are generally lower than personal tax rates.
2. Subsidiary Company
Subsidiary company refers to a private limited company linked either wholly or partly to another. This gives the parent company control over the subsidiary with as much limited liability extended to their assets. In Singapore, a subsidiary company is considered as a resident company and hence eligible for taxation benefits and incentives.
3. Sole Proprietorship
Sole proprietorship refers to the kind of business that an individual runs on his own. The contrast is that, unlike a Pte Ltd., the owner assumes all liabilities personally in case of any debts or losses to the company. It is an ideal structure for the operations of low risk oriented small businesses. Private limited also offers protection and credibility, which Sole Proprietorship does not.
4. Partnership
A partnership is a type of business organization where more than one person owns and runs the business. As with sole proprietorship, the partners bear personal liability for the business’s debts and losses. Partnerships are either general or limited, of which the latter provides liability protection to some partners.
5. Limited Liability Partnership (LLP)
LLP is a hybrid partnership and private limited company. It is a form of partnership that affords the partners with limited or no liability protection. A law of professional-service firms, such as a law firm or an accounting firm.
6. Branch Office
A branch office is a foreign company that has opened an extension in Singapore. It is not a legal entity and its liabilities and debts accrue to the parent company. For foreign companies exploring the Singapore market before incorporation of a separate entity, the branch office is appropriate.
Steps to Setting Up Company in Singapore
Having understood the three kinds of Singapore business entities, let us now move on to the process of starting up a business in Singapore.
1. Choose a Business Name
The selection of Name – The first step in establishing a business in Singapore. This is inclusive of, if it duplicates any name existing in Singapore or containing registered trademark. It should also be such that it portrays the type of business you do and one that is easy to remember and pronounce.
2. Check Name Availability
After you select a business name, go to Accounting and Corporate Regulatory Authority (ACRA) to verify whether it is available. In case the name is available and meets all the requirements, you can reserve it for your company. It should be noted that reserving the company name does not mean incorporation of a company.
3. Register Your Company
However, you will have to hire a professional firm or company registration service provider to register your company in Singapore. They will help you in preparing the necessary documents and submitting them to ACRA. Registration entails the presentation of a company constitution, director and shareholder details and registered office enquiry.
4. Appoint a Company Secretary
According to the regulations in Singapore, it is obligatory for each firm to appoint the company secretary within six months after incorporating the business. The company secretary verifies the legitimacy of the operations of the organization. Additionally, they undertake other clerical tasks like making electronic records on behalf of the company and filing of annual reports.
5. Apply For Necessary Licenses and Permits
It all depends on what kind of business you are running, but you might have to obtain a few licenses or permits. As an example, in the case of starting a new restaurant, you have to obtain a food establishment license from Singapore Food Agency (SFA). Make sure you look up all regulations related to licensing in your specific sector.
6. Open a Corporate Bank Account
In order to conduct your business, you will need to open a corporate bank account in Singapore. It is necessary for all shareholders and directors to show up physically when most banks in Singapore are ready to allow the creation of the account. You will additionally be ordered to furnish necessary documents such as business profile and board resolution.
7. Hire Employees
In the case of employing staff in Singapore you have to follow the applicable legal regulations. Among these is CPF registration and obligatory benefits such as medical insurance and leave facilities. Secondly, you should learn about the local labor market, recruitment processes as well.
8. Set Up Office Space
For example, you might require to establish an office space in Singapore depending on your business needs. This may involve hiring out a small office space or constructing a big company’s office. Choose an office based on factors for example where it is situated, the cost, and size of the space.
Considerations for Australian Companies
In regards to an Australian based company intending to set up a business in Singapore, there are few more issues that must be considered.
1. Taxation
Singapore operates on a territorial tax system basis meaning that only Singapore earned income attracts taxes. Such is advantageous to Australian companies in Singapore as they are only taxed on their local income. Nonetheless, professional guidance should be sought to ensure compliance with Australian and Singaporean tax laws. Also, you need to be conversant with the application of the Australia and Singapore Double Taxation Agreement.
2. Work Visas
In case you plan to move employees from Australia to Singapore, it will be necessary for them to have employment visas. Two common forms of these work visas in Singapore are the Employment Pass and Dependant’s Pass. However, the process may prove intricate and time-consuming; hence, seeking professional firm assistance would be beneficial.
3. Intellectual Property Protection
The intellectual property rights protection framework is robust in Singapore. Nevertheless, you should also record your IP in Singapore for better protection. These include trademarks, copyrights and patents. You should also know the steps in place to protect your IP if someone infringes on it.
4. Cultural Differences
Unlike Singapore, Australia’s cultural differences affect the way business organizations run their operations within the country. Recognizing these variances and tailoring the business practices to them can aid in a simple transition and effective operations of your business in Singapore.
Conclusion
For Australian companies, setting up a company in Singapore can be rewarding and profit generating. Singapore is an excellent investment destination for businesses wishing to tap into the Southeast Asian market due its business-friendly environment, strategic location and high economic growth. Australian companies in Singapore can, therefore, utilize this guide with sustainable solutions and advice from professionals to make a successful set up. For professional assistance in setting up a company in Singapore, reach out to FastLane Group. We can provide you with the expertise and support you need.