Step 1: Determining business entity type
One of the first steps involves determining your corporate structure. Which business entity supports your objectives best? When deciding on a corporate structure, consider who the shareholders of your company are, the size of each share, who the directors are, and the initial share capital of the company. It also helps to weigh the advantages and disadvantages of each business type keeping in mind your ultimate goals to be able to arrive at the best decision. Your risk appetite is also a significant factor and affects the business entity type that you choose.
In Singapore, there are four different business entity types you can choose from:
- Sole-Proprietorship or Partnership: A business entity that is fully owned and controlled by a single individual (Sole Proprietorship). There are no partners in this type of business structure, and the business entity and the individual are not legally distinct. A business entity owned by at least two individuals who intend on running business operations together and sharing liabilities (Partnership)
- Limited Partnership (LP): A partnership consisting of two or more partners, with one limited partner and at least one general partner. General partners are liable for all actions of the limited partner.
- Limited Liability Partnership (LLP): A partnership consisting of two or more partners, with co-partners being protected from any acts of commission or omission by other partners. Partners of an LLP cannot be held liable for acts of wilful misconduct or negligence of other partners. These can be incorporated as Private Company Limited by Shares, Public Company Limited by Shares, Public Company Limited by Guarantee.
- Company: A business entity registered under the Companies Act, Chapter 50.
Foreign companies that intend on establishing a company in Singapore can do so under the following entities:
- Subsidiary company: Also known as a limited liability company, this is the most common business structure for foreign businesses.
- Representative office: A branch office does not have a legal status and is established temporarily. Such an entity cannot engage in trade.
- Branch office: A branch office is established as an extension of its parent company, and any liabilities are borne by the parent company.
There are 4 types of companies:
- Private company limited by shares
- Exempt private company
- Public company limited by shares
- Public company limited by guarantee
Step 2: Decide on a company name
Choosing an appropriate company name can be difficult. Adding to this conundrum is having to ensure that your company name has not already been taken up by another business. To check if your shortlisted names are available for you to register, search them up on the Accounting and Corporate Regulatory Authority (ACRA) website. Take care to ensure you have spelt the name correctly. Registering your name would cost S$15.
During this process, you would also have to indicate the nature of your business using the Standard Industrial Classification (SSIC) codes. For example, if you’re starting an advertising business, the corresponding SSIC code is 73100. Upon receiving the approval of your application, complete your company incorporation in Singapore within 120 days, or you will need to restart the process of application.
Step 3: Prepare the required documents
Once your company name has been approved, prepare the following legal documents:
- Consent from company directors
- Consent from company secretaries
- Declaration of the company’s controllers
For Singapore residents, submit these documents on Bizfile+ to complete your application. To log into the Bizfile+ portal, use your Singpass. You will be asked for your transaction number, which was provided during the application of your company name.
