Approvals and Licenses

We talked about the technicalities; we talked about the business structures. So now is the time to talk about different licenses you might need for doing business in Singapore. In my previous blogs, I have always mentioned that Singapore is a very Pro-business country. That applies here as well. Ok, you need certain licenses to get your business started, but the point to be noted is that it is a very simple to get one.

For the starters, most business entities do not need more than a Certificate of Registration or Incorporation from the registry of Companies and Businesses (RCB) to carry on business. However certain types of business entities need the necessary approvals and licenses from Government Authorities so as to safeguard the public when health, environmental, security or moral interests are involved.

So it is for your own good, that do check the requirement for any approvals or licenses before you actually begin you business. You can do that easily on www.business.gov.sg

Technicalities…

Let us assume you have decided to register a business, agreed upon the appropriate business structure. Now is the time to get a bit technical.

You need to decide how many members can join you in the business (Except for sole proprietorship which is limited to only one). Technically, more members will bring more capital for the business, but then there are also certain legal limits on number of people. E.g. for all the types of partnership the minimum number is 2 with certain conditions.

Also you need to appoint an officer who is resident in Singapore as local manager for proprietorship and partnerships whereas company secretary and director for companies.

Then you need to check on the renewal status for the registered business. For Sole proprietorship, General Partnership and Limited Partnerships you need to renew your business yearly with a fee and with up to date medisave payment.

Then you need to check on the requirement to appoint auditor, company secretary which will be based upon what type of business you have registered and your turnover at the year end.

So once all this is taken care of you are almost set to open up the shop…..

Representative office- way to go….

You have a parent company in your home country and intend to venture abroad. Representative Office is the way to go. Representative Office is the best bet to get into a new market. It helps you to do market research, feasibility studies at a reasonable cost.

RO helps to explore the new market and it does not add on to overheads which generally come with any other type of establishment. RO is generally a temporary arrangement till the parent company can get the market feel and is confident enough to incorporate a subsidiary company or registering branch office.

Singapore gives an excellent opportunity for foreign companies to open Representative Offices. There are certain pre-requisites such as submission of the audited accounts of Parent Company with the application form and of course payment of fees.

For most of the business sectors the RO option is available, though banking, finance, insurance and legal sectors are excluded.

And the best part is the foreign company can lease office space and also appoint staff who can be from the HQ of the parent company or a Singapore employee of the parent company.

The thing to keep in mind is that only limited activities are under the scope of a RO. So any commercial money making activity is excluded.

Business Formation

Doing business in Singapore is efficient and transparent. What I mean by this is Singapore has very efficient support systems and the rules are very transparent. On the top of this, it has certain tax advantages, etc for startups. But I will not elaborate on those in this blog instead let us concentrate on formation of the Business.

I have been told by people that they have super great/innovative ideas with them and they sometimes also know how to generate the revenue but they do not start business just because they are not sure which type of business to go with.

So let’s first see what type of business entities can be registered in Singapore. You can register either

1. A sole proprietorship or
2. A partnership which can be general or limited liability or limited partnership or
3. Incorporate a Company- Private Limited Company

The difference being in case of Company the liability of the shareholder is limited while in case of sole proprietorship and general partnership the liability is unlimited. Though there is a way out of this by forming either limited liability partnership or limited partnership.

So you will ask what all this talk about ‘limited liability’ is. But I believe this is a very important consideration. Let me simplify this with the following chart.

1	Sole proprietorship	Unlimited liability of the owner. That means owner and business are one and the same.
2	General Partnership	Unlimited liability for debts of partnership, jointly and severally liable
3	Limited Partnership	Limited Partner has limited liability and General Partner has unlimited liability
4	Limited Liability Partnership	Limited to capital contribution to the LLP
5	Private Limited Company	Limited-Shareholders are not liable for debts of Company

Of course there are other pros and cons for each of business type we discussed, but this is one of the major considerations before starting up the business.