Are you considering starting a private company in Singapore and wondering where to start? Singapore ranked as one of the easiest places to do business by the World Bank, has a simplified process for setting up companies.
This article will guide you through all the key steps from choosing a unique business name, understanding legal requirements, registering with ACRA, and even post-registration processes.
Continue reading to unlock the secrets of establishing your own Private Limited Company in Singapore!
Contents
Overview of Setting up a Private Company in Singapore
Setting up a private company could be the perfect option if you’ve ever considered starting your own business in Singapore. This blog post will provide an overview of what it means to establish a private limited company in Singapore. Did you know that Singapore is known for its robust business-friendly environment? Well, it’s true! Setting up a private limited company allows you to enjoy numerous advantages and benefits that other business structures may not offer. So, keep reading if you want to learn how to start your journey as a successful entrepreneur in Singapore!
What is a Singapore Private Limited Company (Pte Ltd)?
A Singapore Private Limited Company (Pte Ltd) is a type of business. It has shares. These shares belong to the owners, called shareholders. ACRA controls how these types of companies work in Singapore.
This agency makes sure that every company follows the Companies Act rules.
Types of Private Limited Companies in Singapore
There are different types of private limited companies in Singapore. One type is a company with shares that are not publicly traded, meaning they are not listed on the stock exchange.
Another type is a company with less than 50 shareholders, where a small group of individuals or families usually holds ownership and management control. There are also dormant companies that do not conduct business activities but remain registered for future use.
Additionally, some exempt private companies have certain criteria that allow them to be exempt from some financial reporting requirements. Each type of private limited company has its characteristics and benefits depending on the business owner’s needs.
Features of a Singapore Private Limited Company
A Singapore Private Limited Company, or Pte Ltd, has some key features. Firstly, it is a separate legal entity from its owners. The company can enter into contracts and own assets in its name.
Secondly, a Pte Ltd can have up to 50 shareholders, offering flexibility for ownership. Thirdly, the liability of the shareholders is limited to their investment in the company – their assets are protected.
Lastly, Pte Ltd has perpetual succession, meaning that the company will continue to exist even if there are changes in ownership or management. These features make a Singapore Private Limited Company an attractive option for entrepreneurs and investors.
Advantages and Disadvantages of a Private Limited Company
A private limited company in Singapore has its advantages and disadvantages. One advantage is that it offers limited liability, which means the owners are not personally responsible for the company’s debts.
Another advantage is that it provides a separate legal entity, allowing the company to enter into contracts and own assets.
However, there are also some drawbacks to consider. One disadvantage is the higher regulatory compliance requirements compared to other business structures. Private limited companies must file annual financial statements with ACRA and hold annual general meetings.
Additionally, setting up a private limited company may involve more complex administrative procedures and higher costs than other business structures.
Despite these challenges, many entrepreneurs opt for a private limited company as it offers more credibility and prestige, making it easier to attract investors and secure funding.
It also provides better protection of personal assets compared to sole proprietorship or partnership structures.
Key Requirements for Private Limited Company Registration
The key requirements for private limited company registration in Singapore include choosing an approved company name, meeting the minimum initial paid-up capital requirement, having a specific number of shareholders, appointing a local director and company secretary, and more.
Read on to learn how to set up a private limited company in Singapore.
Approved company name
When registering a private limited company in Singapore, one of the key requirements is choosing an approved company name. The name should be unique and not already taken by another registered company.
It’s important to note that ACRA has guidelines and restrictions for company names. For example, the name should not be obscene or offensive, infringe on trademark rights, or imply government association.
Additionally, it cannot be similar to existing companies or reserved names. Therefore, individuals must carefully select an appropriate and available name for their private limited company registration in Singapore.
Minimum initial paid-up capital
The minimum initial paid-up capital required to start a private limited company in Singapore is just S$1. You only need a little money to get your business up and running.
It’s important to note that the paid-up capital is the initial investment made by shareholders when they purchase shares in the company. So, with just S$1, you can start your own private limited company and begin your entrepreneurial journey in Singapore without breaking the bank.
Number of shareholders
A private limited company in Singapore can have a minimum of one shareholder and a maximum of 50 shareholders. These shareholders can be individuals or entities, and they can either be local or foreign.
The number of shareholders is an important factor to consider when setting up a private limited company as it determines the ownership structure and decision-making process within the company.
It’s worth noting that there are specific regulations regarding the transfer of shares and adding new shareholders in Singapore.
Local director and company secretary
To set up a private limited company in Singapore, you must have at least one local director and a company secretary. The local director must be a Singapore citizen, permanent resident, or someone with an Employment Pass or EntrePass.
They will be responsible for managing the company’s day-to-day operations and ensuring compliance with relevant laws and regulations. The company secretary is also required and can be an individual or a corporate entity.
They handle administrative tasks such as maintaining statutory records, filing necessary documents with government authorities, and ensuring the company complies with its legal obligations.
Appointing auditors
To comply with the legal requirements in Singapore, a private limited company needs to appoint auditors. Auditors are financial experts who review the company’s accounts and ensure they are accurate and aligned with accounting standards.
They help identify any inconsistencies or errors in the financial statements and provide an independent assessment of the company’s financial health.
Appointing auditors is important because it helps maintain transparency and accountability within the company. The auditors’ role is to assure to shareholders and stakeholders that the company’s financial reports are reliable, thereby building trust in the business.
The Accounting and Corporate Regulatory Authority (ACRA) requires all companies incorporated in Singapore, regardless of their size, to appoint an auditor within three months from the date of incorporation.
Businesses must select qualified auditors who possess relevant experience and expertise in auditing.
Share capital and registered address
A private limited company in Singapore must have a minimum share capital of S$1. This is the amount of money that shareholders invest in the company. The registered address is where the company operates and receives important documents.
It can be a commercial space or a residential address with permission from relevant authorities. These requirements ensure transparency and accountability in business operations.
Governance structure
The governance structure of a private limited company in Singapore is important for ensuring the smooth running and compliance of the business. The company must have at least one director who is ordinarily resident in Singapore, and they are responsible for managing the company’s operations.
Additionally, every private limited company must appoint a qualified company secretary within six months of its incorporation. The secretary plays a crucial role in maintaining statutory records, preparing annual returns, and ensuring compliance with legal obligations.
A well-defined governance structure allows a private limited company to operate efficiently and meet its regulatory requirements without any issues or penalties.
Steps to Register a Private Limited Company in Singapore
To register a private limited company in Singapore, you must choose a unique business name, fulfill pre-incorporation requirements, complete post-incorporation processes, obtain necessary licenses and permits, and register for Goods and Services Tax (GST).
Choosing a unique business name
Choosing a unique business name is important when setting up a private limited company in Singapore. The Accounting and Corporate Regulatory Authority (ACRA) requires that the company name be distinct and not already registered by another company.
Choosing a name that reflects the nature of your business and is memorable to customers is advisable. Additionally, it is important to consider any potential trademarks or copyrights associated with the chosen name to avoid legal issues in the future.
Remember, ACRA has guidelines on what can and cannot be included in a company name, so reviewing these before finalizing your choice is crucial.
Pre-incorporation requirements
Certain pre-incorporation requirements must be met before registering a private limited company in Singapore. Firstly, you need to choose a unique business name and make sure it is available for registration.
Next, you must have a minimum initial paid-up capital of S$1. You must also determine the number of shareholders and appoint a local director and company secretary. Additionally, auditors must be appointed, and the share capital and registered address should be decided upon.
Lastly, you need to establish the governance structure for your company. By fulfilling these pre-incorporation requirements, you will be ready to begin the registration process.
Post-incorporation processes
After successfully incorporating your private limited company in Singapore, there are several post-incorporation processes that you need to complete. One of these processes is obtaining the licenses and permits required for your business activities.
Depending on the nature of your business, you may need to obtain additional licenses or permits from relevant government agencies. It is important to research and understand the requirements for your particular industry.
Another important post-incorporation process is registering for Goods and Services Tax (GST), if applicable. GST registration is mandatory if your company’s taxable turnover exceeds S$1 million in 12 months.
You must apply with the Inland Revenue Authority of Singapore (IRAS) and provide all the necessary supporting documents.
Additionally, it is crucial to ensure that you comply with ongoing obligations such as filing annual returns and financial statements with ACRA, holding annual general meetings, maintaining proper accounting records, and renewing relevant licenses and permits when they expire.
Failure to fulfill these obligations may result in penalties or even the deregistration of your company.
Obtaining necessary licenses and permits
You may need to obtain certain licenses and permits to operate a private limited company in Singapore. The specific requirements can vary depending on the nature of your business activities.
The Accounting and Corporate Regulatory Authority (ACRA) or other relevant government agencies oversee the licensing process. Researching and understanding the licenses and permits that apply to your industry before starting your business is important.
By fulfilling these requirements, you can ensure that your private limited company operates legally and complies with regulations.
Registering for GST
After successfully registering your private limited company in Singapore, consider whether you must register for Goods and Services Tax (GST). GST is a consumption tax levied on the supply of goods and services in Singapore.
If your company’s annual taxable turnover exceeds or is expected to exceed S$1 million, you must register for GST. However, even if your annual taxable turnover does not meet this threshold, you can still voluntarily register for GST.
It is important to note that once registered for GST, your company must charge and collect GST on its sales invoices and file regular returns with the Inland Revenue Authority of Singapore (IRAS).
Conclusion
In conclusion, setting up a private company in Singapore requires careful consideration of the legal requirements and processes involved. By understanding the advantages, disadvantages, and key steps to registration, individuals can make informed decisions about starting their own business in Singapore.
With the right preparation and guidance from ACRA, establishing a private limited company can be a rewarding venture in this dynamic business environment.
