Setting up your own business can be very attractive for trailing spouses or people who want to escape life in a large corporation. Singapore is ranked second globally by the World Bank for ease of doing business, after New Zealand, and it is indeed easy to set up a business here. You’ll need to plan carefully, though, to make sure you design and structure your business well.
Planning to make the Business a Success
The first steps in setting up a business are to figure out what you want to do and to develop a business plan. Individuals run small businesses ranging from consulting firms or training companies to bakeries or high-tech manufacturing firms, so there are plenty of options.
Once you decide on the type of business, you’ll need to decide on the details of the product or service you will offer and who your customers will be. It can be helpful to look at competitors in your niche to identify what they do and how to differentiate your offerings.
Marketing, promotion and sales are, of course, essential for success. Social media and traditional media can both work well. The best way to bring customers in is usually by using your network and contacts, though, so you’ll want to make sure you have plenty of connections and maintain them through networking or professional organizations. A website can add credibility as well as marketing reach, and you can engage a professional to set one up or do it yourself using platforms such as Wix or GoDaddy.
While finances may seem mundane, they are critical. Developing a financial plan can be helpful. You will most likely need to set up a bank account, and using software such as Xero or Quickbooks can make handling the bookkeeping easy.
If you need support, you can find services ranging from design and website development to marketing and administrative support from professionals worldwide at sites such as Upwork or Fiverr. Your network can also be a source of collaborators, partners or staff, or you can find staff at sites such as jobscentral.com.sg or LinkedIn.
Types of Businesses
Once you figure out what to do, you should register your business with ACRA. Two structures are most common for individuals.
The easiest is a sole proprietorship, which you own and control yourself. As ACRA describes it, the person and the business are the same legal entity and the owner has unlimited liability. The advantage is that it’s easy to set up and you can run it entirely on your own. One consideration for Americans is that revenue may be considered as personal income for tax purposes and you may need to pay social security and Medicare taxes.
The other is a “private limited” company with directors and shareholders. A company shields directors from liability and may be perceived as more established. Regulatory requirements include having a corporate secretary and making tax as well as company filings, however, and hiring support services can cost several thousand dollars annually. While company profits are taxed for Americans, only revenue paid as salary or fees may be personally taxable and the company may not have to pay social security or Medicare taxes for Americans.
Permissions and Permits
While it is easy for Singapore citizens and permanent residents to set up a business, other residents need additional permission. It is essential to look for the latest details on the Ministry of Manpower (MoM) website.
Rules for a Letter of Consent, which enables Dependant Pass (DP) holders to operate a business, changed in May 2021. To be eligible now, MoM says you need to be a sole proprietor, partner or company director in an ACRA-registered business. You will also need to hire at least one Singaporean or permanent resident who meets MoM salary requirements and receives CPF contributions for at least 3 months.
Another option is to apply for an Employment Pass (EP) or an S Pass, if you meet the salary criteria. Criteria for obtaining a Pass have been tightened considerably in recent years. You can use the MoM Self Assessment Tool to see whether you might qualify.
MoM also says that you can apply for an Entrepreneur Pass (EntrePass), before incorporating a company with ACRA or within six months after incorporating it.
It is indeed straightforward to set up a business in Singapore, and thousands of people have succeeded in achieving their purpose and living a fulfilling life by becoming an entrepreneur. While careful planning is needed, the potential is tremendous.
This information should not be considered as tax or legal advice. You should consult Singapore and US government sources as well as professional advisors for full information.