Beyond incorporation part 2: Common requirements on operational matters
Even if you have registered your company in Singapore does not necessarily mean that you are ready to do business. There are many operational matters to look into before your company is ready for operations, such as applying for work passes, looking for an office space and tasks related to statutory regulations. In Part 2 of the Beyond Incorporation series, we cover some of the common requirements on operational matters that you will need to consider after you have incorporated your company.
1. Open Bank Account
When the company has been successfully incorporated, the next step is to open the corporate bank account. Singapore being a financial hub, houses many banks both local and foreign, These are OCBC, DBS, UOB, Standard Chartered, Citibank, Maybank, ABN Amro Bank NV and Credit Suisse, among many others.
Each bank have its own set of requirements and rules. E.g. some banks charge a set-up fee for opening a corporate bank account and some don’t. The quantum also differs from bank to bank.
As part of the increasing regulation on fighting money laundering and terrorist financing, the banks in Singapore go through stringent Know-Your-Client (KYC) reviews. Based on the various prevailing sanctions or rules by the various countries or global bodies, this affects the speed of bank account opening or whether a bank account can be opened at all. The Banks will request to meet with executive director/s or business owners of the company to understand the business.
2. Work Passes
Foreigners will require a work pass to legally work and live in Singapore.The types of Singapore work passes available are Employment Pass (EP), S Pass and Work Permit (WP). Each type of pass has its own set of rules and requirements. Find out more about work passes to understand which one you are eligible for.
There is no employment quota for the EP. However, for S Pass and WP, it is mandatory for a company to employ a number of local staff before they are allowed to hire one foreign staff. Depending on your situation, a number of options may be available that will suit you business needs.
Depending on the nature of your business, you may need to hire additional manpower. Singapore’s population is highly educated and have the necessary skills to fill various roles across different industries. The various channels of getting manpower for your business could be through job portals, recruitment firms or internal referrals.
Like many other countries, Singapore encourages the employment of local staff. However, it is also open and welcomes foreign talent with the necessary background, experience and skills. The expectation is that these skills are shared with local staff so that a local base is grown and developed.
All staff must have legally binding employment contracts which should cover various important legal aspects to ensure clarity and avoid confusion. Many companies also prepare the employee handbook, which clearly spells out the more detailed human resource policies.
An important aspect that you need to consider when it comes to employing staff is the payroll. In Singapore, there are mandatory contributions such the Central Provident Fund (CPF) for Singaporeans and Singapore PRs. There is also the Skills Development Levy (SDL) for all staff. It is also a requirement that all staff must receive payslips with mandatory information.
4. Office Space
Depending on the type of business, office space could be a requirement. There are various office space options that one can avail to.
- Working from home. There are some businesses where the business owner is allowed to work from home. Working from home helps the business to reduce cost and allows more flexibility.
- Co-working space. There are many co-working spaces in Singapore where businesses pay an hourly or daily rate to rent a desk that they can use for their business needs.. Due to the flexibility and infrastructure, many young start-ups prefer this concept since it allows them to mingle with like-minded business owners.
- Serviced office space. Instead of renting an office space from office buildings, these are dedicated rooms that can house from 1 to more staff members. Serviced offices come with phone answering and mail services, and companies share the front desk and office space resources. A service office would be recommended for businesses that require a certain level of privacy but do not want the burden of a high rental cost.
- Renting office space. This is the renting of an office space from a building landlord, which is usually a lease period of 2 years. The office space is purely dedicated to your business and you can renovate and decorate it however you wish. This can be an expensive option as rental in Singapore can be quite costly depending on the area – either in industrial parks or business district areas.
Singapore is one of the safest countries with a very low crime rate. The country is broadly divided into the North, South, East, West and Central areas. In every area, you will be able to find residential spaces and all areas are well-equipped with shopping malls, supermarkets and other amenities. The type of accommodation that you can find in Singapore include public and private housing, and rental cost is based on the type of housing and area you would like to live in. Renting a private housing, such as condominiums or landed homes, often comes with higher rental cost, with landed homes costing more than condominiums. Condomuniums though, usually come with facilities such as tennis court, swimming pool and function rooms.
Regardless of where you choose to stay, Singapore’s public transport system is one of the best in the world, accordingly to the McKinsey report on Urban Transportation System in 24 Global Cities. The Singapore public transport system is very well planned out, easily accessible, reliable, safe and affordable.
6. Business Licensing
Some businesses in Singapore will require you to possess a license before you can begin operations. Some of these businesses include:
- Employment Agency – regulated by the Ministry of Manpower (MOM)
- Travel Agency – regulated by Singapore Tourism Board (STB)
- Funds services – regulated by Monetary Authority of Singapore (MAS)
- F&B business – regulated by National Environment Authority (NEA)
- Sale & distribution of liquor – regulated by the Singapore Police Force
7. Goods and Services Tax
The Goods and Services Tax (GST) is equivalent to VAT in other jurisdictions. In Singapore, the GST is 7%. When a company’s turnover is S$1 million or more, it is compulsory for the company to register for GST and file its GST returns every quarter. You can only charge and claim for GST if you are GST-registered.
A company can also choose to register for GST voluntarily, depending on the type of business activity. There are however, conditions attached to voluntarily opting in to be GST-registered. Understandign about GST in Singapore and if you need to make your business GST-registered is one of the important steps to take before you commence operations.
8. Setting up an accounting system
It is important to keep accurate track of the income and expenses of your business from its very first day of operations. Not only will this help you track and manage the revenue, expenses and profitability of your business but also because the tax regulations in most countries mandate that you must maintain accurate records of these transactions. An accounting system software can manage this function for you and the implementation of an accounting system is a task that you should not delay. In fact, accounting system for your firm should be set upbefore you transact any business. You should consult with your accounts personnel on the selection of the accounting software since most of these systems require training and any prior familiarity that your staff have with a system can reduce the learning time significantly.
An alternative to setting up your own accounting system is to outsource this function to an external accounting firm. During the early stages of your business, your needs may be very limited such that you may not need full time staff for this function; in such case, an outsourcing approach may be very cost-effective.
9. Business Insurance
You should obtain general liability insurance, workers compensation insurance, and any business specific insurance that may be applicable to you. A good insurance broker can be a great help during this process. Your insurance needs will expand as your business grows.
This article is produced by Hawksford, and does not constitute legal advice. It is intended to provide general information only.