How To Start A Business In Singapore As A Foreigner

Singapore is well known for being one of the most business-friendly countries globally, it is relatively easy for eligible foreigners to set up a business here. This guide aims to guide you on how to start a business in Singapore as a foreigner.

Different business structures for foreigners

A foreigner can choose what business structure he wishes to adopt. There are a variety of business structures such as the sole proprietorship, partnership and company that Singapore recognises.

Each structure has its own advantages and disadvantages, and certain requirements may apply, especially if the foreigner cannot be physically present in Singapore for the setting up of the business. The summary is as below.

Sole proprietorship

A sole proprietorship is owned and operated by one person, a so-called one-man show. It is the cheapest and simplest of all business structures to incorporate and run.

Sole proprietors can take all profits from their business and have very minimal compliances or reporting requirements to Singapore authorities such as Accounting and Corporate Regulatory Authority (ACRA). The negative part about this structure is that the business owners will be personally liable for all debts incurred and any legal action taken against the business.

Sole proprietorship registration can be done online through the BizFile+ portal using SingPass. As a foreigner, it is advisable to engage the services of a registered filing agent such as us.

In general, it is not necessary to be physically present in Singapore to order to register a sole proprietorship as a foreigner.

However, if he or she does not live in Singapore, the sole proprietor must appoint one authorised representative, who is a resident in Singapore (potential representatives include Singapore citizens (SC), Permanent Residents (PR) and EntrePass holders).

The purpose of this authorised representative is to receive notices on behalf of the company and be responsible for all Singapore operations to the relevant authorities

Please refer to our other guides on authorised representatives as well as forming a sole proprietorship.

Partnership

A partnership is owned by at least two, and a maximum of twenty (20) partners. Just like a sole proprietorship, partnerships are very simple and cheap to incorporate, with little compliance or reporting requirements.

Similar to the above, partners are personally liable for all the debts incurred by the partnership (inclusive of those incurred by your partners) and any legal action taken against it. As such, a very high degree of trust between the partners and a need for a cohesive partnership agreement is very important.

Partnerships registration is similar to the process of sole proprietorship registration. This will include engaging a filing agent and appointing an authorised representative if you are not living in Singapore. Like a sole proprietorship, you can register a partnership without the need for any of the partners to be present physically in Singapore.

Do refer to our guide on forming a partnership for details.

Company

Incorporating a company is a little more time-consuming but offers plenty of advantages compared to sole proprietorship and partnership.

A company is deemed as a separate legal entity from its owners, this means that the owners will not be liable personally for any debts or legal action that is taken against the company.

Having said that, companies are subjected to more stringent compliance requirements (for examples like filing of annual returns and holding of annual general meetings) and it takes longer to wind up (it can take 5 months for a company to be struck off from the register) a company.

There are two main scenarios where foreigners seek the incorporation of companies:

  1. Foreigners who wish to set up a company in Singapore personally; and
  2. Foreign entities who wish to expand into Singapore.

To set up a local company in Singapore as a foreigner

Foreigners can incorporate a company on the BizFile+ portal with their SingPass account.

It is a requirement for all companies to have at least one director who is a resident here in Singapore. The foreigner must appoint a nominee director if he or she does not live in Singapore and has no intention to.

However, if he or she wishes to manage the business himself or herself in Singapore, he or she can use the newly incorporated company and apply for an Employment Pass (EP) from the Ministry of Manpower (MOM). To achieve a higher success rate for EP applications, your company should aim for a paid-up capital of a minimum of SGD $50,000 and of course fulfil other important requirements.

Please refer to our guide on Singapore company registration for more information.

Foreign companies setting up in Singapore 

If a foreign entity (rather than an individual) wishes to get incorporated in Singapore, there are 4 options available – a subsidiary, branch office, a representative office or re-domiciliation.

Each option has its advantages and disadvantages, as well as other things to consider such as tax exemptions or liabilities and extent of company liability. You or your company will have to take these into considerations and decide which is the best option.

Refer to our guide on how you can incorporate your foreign company in Singapore for more details.

Can foreigners who hold certain passes in Singapore, allowed to start a business in Singapore?

Singapore allows foreigners to start businesses in Singapore in general. But foreigners who are already living in Singapore with a certain pass may be prohibited from starting businesses under the terms of that pass (refer to the table below).

In general, most passes (e.g. EP or Work Permits [WP]) do not allow their holders to be managing businesses in Singapore. This simply means that these pass-holders are not allowed to set up sole proprietorships or partnerships.

However, they can still incorporate and own shares in companies, but they cannot be the director of the company. The pass-holder cannot apply to work for a company that they holding shares in.

The situation for holders of a Dependant’s Pass (DP) or a Long-Term Visit Pass (LTVP) is slightly different.

If a DP holder wants to set up a business in Singapore, they may:

  • First register a sole proprietorship, partnership or company. For a company, they need to own a minimum of 30% of the shares in the company;
  • Apply for a relevant work pass

If an LTVP holder wants to start a business in Singapore, they may:

  • Register a company first, list someone who is a resident in Singapore (such as an SC or PR) as a director of the company. The pass-holder must not be either a shareholder or director of the company at the time of incorporation; and then
  • Using the Singapore company to apply for a Letter of Consent (LOC) from MOM on their behalf, which will allow them to work for that company. (This LOC is different from the one DP holders need to operate a business in Singapore.)

EntrePass holders enjoy the most flexibility when incorporating a Singapore business.

The EntrePass scheme is designed specifically for eligible foreign entrepreneurs, who want to start and operate a new business. EntrePass holders are given a huge range of benefits – they can set up any business with any legal structure (sole proprietorship, partnership or company). They also have the right to bring their spouse and children to Singapore by applying for DPs for them.

Eventually, EntrePass holders can also be eligible for applying to be a PR in Singapore. It will be a good idea for any foreigner who plans to set up a business in Singapore, to consider applying for an EntrePass from MOM if they satisfy the requirements.

You can refer to our guide on the EntrePass application for more details.

The table below is a summary that shows the different types of passes and the types of legal structures they can register for their business:

Type of Pass Sole Proprietorship Partnership Company 
  • Work Permit
  • S Pass
  • EP
  • Personalised Employment Pass
  • Training Work Permit
  • Training Employment Pass
  • Work Holiday Pass
  • Visit Pass
Not allowed Not allowed Pass-holders are allowed to set up and own shares in a company but disallowed to be a director or employee of the company
  • LTVP
Not allowed Not allowed Pass-holders are allowed to set up and be a shareholder in the company. But, pass-holders who wish to work in the company (as either a director or employee) will have to incorporate a company first, and they are neither a director nor a shareholder of this company. And get the company to apply for a LOC from MOM.
  • DP
Allowed, but pass-holder must apply for a LOC Allowed, but pass-holder must apply for a LOC Allowed, but pass-holder has to own 30% of the shares in the company minimum, and also apply for a LOC.
  • EntrePass
Allowed Allowed Allowed

Are foreigners allowed to operate a business from home in Singapore?

The Singapore government allows foreigners who want to operate a small business from their Singapore homes (for example a home bakery) can do so under the Home-Based Small Scale Business Scheme, subject to the conditions of their passes.

This means that only EntrePass holders, DP holders or LTVP pass-holders with a LOC from MOM, can operate businesses from their homes.

Additionally, you must take note that the businesses have to respect the property’s residential nature and therefore observe certain guidelines. Such as:

  1. The home business must not employ any persons outside of the household.
  2. The home business cannot display any paid or physical advertisements (business signboards etc.).
  3. The home business cannot introduce increased traffic and human traffic to the place.
  4. The home business cannot introduce noise, smoke, smell, effluent or dust nuisances/danger to the neighbouring residents.
  5. Unloading or loading of goods by vans or trucks must not be allowed.
  6. Activities of the home business have to be compliant with the relevant authorities rules and regulations (i.e. food and hygiene laws, fire safety requirements).

You should also take note that addresses of HDB flats (public housing), unlike private properties, cannot be registered as a business address (Home Office Scheme allows some exceptions of businesses in certain industries).

Since the businesses registration (sole proprietorship, partnership and company) requires a valid business address, foreigners who want to set up a small business from their HDB flats, have to make the necessary arrangements and register a different business address instead. This can be done by employing the services of a corporate secretarial firm offering virtual business addresses in Singapore.

What’s next after incorporation?

Registering a business is just the first step in setting up a business. After that, the actual operation and management of a business can begin.

Take note that the following steps are not possible if you are in Singapore on a pass and the pass disallows you to be a director or employee of a company.

Applying for a corporate bank account

Normally, one of the most important things to be done after incorporation is the setting up of a corporate (business) bank account for the company. This is very critical as you need to separate your personal and business expenses for accounting purposes and accountability to stakeholders (this allows for business liability to be limited to the company’s assets only for the case of companies).

The incorporation of the company must happen first before the bank gives an appointment for the bank account opening.

Most banks require the company’s directors to be present physically, though in certain cases some banks might allow verification to be done online via the phone or video conferencing. This is purely on a case-by-case basis.

If the bank requires the company directors to be physically present, it is advisable not to book the flight tickets to Singapore first until confirmation for the appointment with the bank is given.

Please refer to our article on the opening of corporate bank accounts in Singapore for more details.

Employing employees

Sometimes, the business may need to hire employees to execute various company functions.

The workforce in Singapore is highly skilled to meet most international firms’ demands, there are many popular local job websites for employers to use. You can also bring in employees from overseas through an application for the respective work pass from MOM.

For more details (as well as the relevant compliance requirements), refer to our article on the employment of employees in Singapore.

Renting an office

If your business is a non-home-based business, chances are you will need to rent offices or business premises for your operations. In Singapore, the office rental rates vary depending on the location, with offices in the central business district (CBD) being the highest rates.

It is advisable to source for office space via a local real estate agent, who can provide better expertise and advice on rental decisions with a fee.

This article is about the various matters that you as a foreigner, have to take into account when setting up a business in Singapore.

Actually, the process for incorporating a business is mostly similar for locals and foreigners, with some additional steps for foreigners like the appointment of a local authorised representative or applying for an EntrePass, EP or LOC (as relevant) if they would like to manage the business in Singapore personally.

It is advisable to engage the services of a corporate secretarial firm to help you with the company incorporation and application processes before and after the company has been successfully registered in Singapore.

Do not hesitate to get in touch with us should you have any questions.

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