6 Decisions That Could Impact the Success of Your Startup in Singapore
Few countries can claim to be as business-friendly as Singapore, especially when it comes to tech startups. With the city-state having almost nonexistent corruption, high political stability, and world-leading innovation ecosystem, startups could hardly find a better country to base their operations.
That said, there are still plenty of things startup founders need to consider when setting up a business in Singapore. Here are just 6 of the decisions you’ll need to make that will directly impact your startup’s success in the country.
1. Your Business Structure
When locating your enterprise in Singapore, one of the first things to consider is the company structure you want to adopt. The Singapore Economic Development Board (EDB) offers guidelines for foreign investors opening a company in Singapore.
Startups generally have the following options for their corporate structure:
- Sole proprietorship
- Limited partnership
- Limited liability partnership
- Public or private company
- Variable capital company
Each of these business types carries its own funding structures, requirements, and liabilities. You may want to explore the website of the Singapore Accounting and Corporate Regulatory Authority (ACRA) to learn more about the nature of these different business structures, including the licensing requirements of each.
2. Extent of Presence in Singapore
If you do not want your startup to be headquartered in Singapore, you do have other options, including setting up a local office. While this may keep your startup from enjoying a full range of benefits from locating in Singapore, it can be a good way to test the local market.
Another option is to set up a representative office. This will allow your startup to have a presence in Singapore, with the drawback of being unable to solicit business or raise funds.
If you are already established elsewhere, there is an option to transfer your foreign-based startup’s registration to Singapore in an increasingly popular process called “inward re-domiciliation”. This effectively turns your foreign startup into a Singapore-based entity. There are some caveats, but notably, inward re-domiciliation does not affect the obligations, liabilities, or property rights of foreign startups.
3. Visa and Residency Options for Staff
If you are planning to locate non-Singaporean employees in the country, you will want to consider the visa and residency options available to them.
Singapore offers special visas and passes to foreign investors, entrepreneurs, and technical experts that are intended to encourage their entry into the country. Exceptional tech experts and entrepreneurs with a proven track record may apply for the EntrePass, a special pass specifically intended to attract the world’s best minds in tech by offering them simplified access as well as support and funding.
Entrepreneurs and qualified tech experts also have the option to apply for Singapore Permanent Residence (PR) under the Global Investor Programme, popularly known as the Tech.Pass visa programme. Other experienced professionals may apply for a Personalised Employment Pass (PEP).
For other staff members, there are generally two basic options. Skilled foreign workers may qualify for the Employment Pass. Semi-skilled foreign workers such as domestic helpers may obtain a Work Permit.
4. Which Government Incentives to Use
The Singaporean government is widely considered to be remarkably hands-off when it comes to businesses. But that is not exactly true. The Economic Development Board and other Singaporean government organizations offer a wide range of incentives for businesses. Most of these incentives are aimed at businesses engaged in industries deemed strategic for the country’s long-term growth.
Thankfully, virtually all startups qualify for some kind of government incentive. For example, qualified tech startups may be able to benefit from the [email protected] programme as well as the Tech.Pass visa programme. Most startups may also benefit from grants and incentives related to carbon emissions reduction, the use of domestic financial services, and the application of emerging technologies.
There may be some trade-offs when opting in for some incentives, so it’s important to discuss matters with a qualified legal expert before committing to any specific government grant or scheme.
5. Legal and Tax Compliance
The country has a rather reasonable corporate income tax rate, which is fixed at 17% for all Singapore-based companies, including tax residents, non-tax residents, and components of foreign businesses that are based in Singapore.
It’s worth noting that startups are eligible for various tax exemptions, including ones that may be based primarily in other countries. For this reason, it’s important to hire qualified legal corporate tax and law experts when you build your startup in Singapore. While the professional fees may add up, you may be losing out so much more if you do not apply for the different tax exemptions available to startups.
6. Your Singapore Team
The business culture in Singapore, while exceedingly vibrant and accommodating, is still fundamentally rooted in Asian values. Westerners often assume, because Singapore is a successful and wealthy English-speaking capitalist society, that all locals share common Western values such as individualism. This is definitely not the case.
Sticking with such assumptions often set up foreign startup founders for failure, as they may find it difficult to make headway in Singapore if they maintain a west-facing attitude. Growing a startup or any other venture in Singapore successfully often means doing away with all your assumptions about the country.
If you’re going to be doing business within Singapore, it’s important to hire people who can navigate the ins and outs of the country’s culture. This means that you will want to consider hiring locals or expats who have experience handling business matters in Singapore. This is especially important for sales teams and administrators, as they will be facing locals regularly.
By being deliberate with your business structure, hiring decisions, incentive choices, and legal compliance, you will not only maximise your startup’s odds of success in Singapore. And by succeeding in Singapore, you’ll also give your startup a fair shot at achieving a truly global presence as well.
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