How Foreigners Open Business: A Step-by-Step Process

In the sense that investors and business people are attracted from every nook and cranny, Singapore may be considered one of the friendliest countries towards businesses. Having a strategic location and advanced infrastructure with transparent legal systems, this city-state fosters lucrative opportunities. The following article will help you in understanding how foreigners open business in Singapore, going through the minimum requirement to be fulfilled by foreigners, options available in case of EPass holders, and how Indian nationals can proceed with it.

Requirements for Foreigners to Open a Business in Singapore

Various Requirements for Foreigners to Open a Business in Singapore

Among the several requirements for opening a business in Singapore by a foreigner, some important ones are:

1. Company Structure: Singapore law, on the other hand, allows several business structures that can be set up, including a Private Limited Company, Sole Proprietorship, and Limited Liability Partnership. The most common option for foreigners is the Private Limited Company because it offers flexibility and legal benefits, being treated as a separate legal entity from its owners, protecting owners’ liability beyond their capital investment.
2. Minimum Capital Requirement: At the time of commencement of a company in Singapore, it requires the amount of paid-up capital, which shall not be less than SGD 1. On the other hand, companies usually adopt a much higher amount that is based on the nature of the business.
3. Resident Director: Every company must have at least one director who is a Singaporean citizen, a Permanent Resident, or an individual holding an Employment Pass (EPass), EntrePass, or Dependant’s Pass. If foreigners do not hold one of these passes, they will need to appoint a local director to fulfill this requirement.
4. Registered Office Address: Businesses must have a physical registered office in Singapore. This address cannot be a PO Box, as it must be operational during business hours.
5. Company Secretary: Singaporean law mandates that companies appoint a company secretary within six months of incorporation. The secretary must be a resident of Singapore.
6. Filing and Compliance: All businesses must file annual returns with the Accounting and Corporate Regulatory Authority (ACRA) and comply with tax regulations as stipulated by the Inland Revenue Authority of Singapore (IRAS).

Can E-Pass Holders Start a Business in Singapore?

E-Pass holder can start business in Singapore

E-Pass holders can set up a business in Singapore but under certain conditions. The Employment Pass is given to foreign professionals, managers, and executives who work in Singapore. In the case of an E-Pass, a holder can open a business when he satisfies the following:

1. Appointment as Company Director: E-Pass holders can set up a company and be appointed as a director. However, an application for the Ministry of Manpower – MOM’s in-principle approval has to be made if they intend to be actively involved in running the business. If the individual stays employed with his current employer and intends to join the new company, MOM’s in-principle approval will be required if this proposed employment/ activity may create a conflict of interest with his main employment.
2. EntrePass Option: If an E Pass holder decides to commit all his time to the business fully, he can opt for an EntrePass. An EntrePass applies to foreign entrepreneurs who want to set up innovative businesses in Singapore. This allows him to be the founder and the company’s director, which has broader scope than that of EPass.
3. Compliance and Duties: An E Pass holder who starts a business has identical responsibilities with any other company director in respect of filing annual returns, paying taxes, and fulfilling employment obligations.

How to Start a Business in Singapore for Indian Nationals

How to start a business in Singapore for Indian

The ease of doing business coupled with a transparent legal environment provides an Indian national with the best avenue for setting up a business in Singapore. An Indian national, desirous of setting up a business in Singapore, may consider the following steps:

1. Choose the Right Business Structure: They mostly opt for a Private Limited Company because of its legal entity, scalability, and popularity all over the world. A private limited company limits the liability of the shareholders in regard to the amount of capital invested within the corporation.
2. Appoint a Resident Director: As mentioned, Indian nationals starting a business in Singapore must appoint a resident director. This can be achieved by either obtaining a Dependant’s Pass, Employment Pass, or EntrePass, or by appointing a local Singaporean or Permanent Resident as the director.
3. Register the Business: The next step is to register the business with ACRA. This can be done online, and the entire process is usually completed within a day or two. Indian nationals will need the following documents for registration:
   • Company name
   • Brief description of business activities
   • Shareholder and director details
   • Registered office address in Singapore
4. Open a Corporate Bank Account: While this is not a prerequisite for the incorporation of the company, a corporate account is a necessity to operate finances. Most of the banks in Singapore require at least one of the company directors to be there in person while opening the account. Few offer the possibility of opening an account remotely.
5. Apply for Relevant Permits and Licenses: Further, depending on the type of business, there are specific licensing and permits required, which can be availed by an Indian national from the Singapore authorities. In most cases, they are vertical; therefore, proper study and such approvals should be acquired before the actual operation.
6. Visa Options: Indian nationals who wish to relocate to Singapore to manage their business can apply for either an Employment Pass or an EntrePass. The Employment Pass is suitable for skilled professionals, while the EntrePass is ideal for entrepreneurs looking to establish an innovative business.

Tax and Compliance in Singapore

Though taxes are not a key focus of this article, it is essential for foreign entrepreneurs to comply with Singapore’s regulatory framework. Companies are required to file annual returns with ACRA and comply with local tax laws. The Inland Revenue Authority of Singapore (IRAS) oversees tax obligations, and businesses must ensure they meet their filing deadlines and financial reporting requirements.

Additionally, hiring employees in Singapore requires businesses to contribute to the Central Provident Fund (CPF), the country’s social security scheme. Employers must ensure that contributions are made on behalf of both local and foreign employees.

Conclusion

Foreigner open business in Singapore is relatively easy for foreigners, including Indian nationals and EPass holders. In fact, if the right steps are taken, due compliance with the local regulations is observed, and more importantly, if there is an understanding of what the law stipulates, then foreign entrepreneurs will have no problem setting up and operating a business in the city-state. Moreover, One IBC Singapore can be an effective assistant to support you with opening business in this country. It continues to be one of the most attractive destinations in the world for entrepreneurs who wish to extend their businesses in Asia, having a pro-business environment, strong rule of law, and strategic location.