Setting up a Company in Singapore as an Expat

There is an entire cottage industry of expatriate Accountants running company incorporation and employment pass services to other new-to-the-island expatriates. It’s a lucrative business, upwards of $4,000 SGD a go, if you include company secretarial, bank account setup etc.

But here’s the big secret, it’s easy. You have to have a little patience and have to battle some incompetence both on- and off-line, but it’s actually a pretty straightforward procedure. To save others the cash I have here’s a not-so-quick guide.

My experience is that the wheels of Government turn slowly, so you’re not even going to be able to rush through an application even using one of these companies. Of course normal caveats apply and this isn’t qualified advice, merely my own experience. Your milage may vary.

My Situation

Firstly I’m a Brit, so having an excellent passport helps, no need to apply for tourist visa for most Western-focussed countries; I can get it at the border.

I had been in Singapore for about two years, mostly on a dependants pass from my wife’s employment pass. Any work I was doing was on a freelance basis, mainly into the UK, or locally (accepted with a permission letter from my wife’s company to the Ministry of Manpower).

I’d also spent 6 months on a ‘standard’ employment pass work for a local startup.

So I was already allowed to be in the country, which does make things a bit easier and less time-pressured. If you’re outside the country that’s your first hiccup, however the standard tourist visa is 30 days, which is within the maximum processing time for a single application. Possibly even a second, anyway if you overrun a short hop over the bridge to Malaysia, or the cheap ferry to Bintan will refresh your visa.

It’s also just me, not dependants. If you have them you’ll need to guarantee each of them and fill out the dependant pass forms as well.

The Process

Companies in Singapore need a resident director and secretary, i.e. either a citizen, permanent resident or someone on an employment pass. A bit of a catch-22 situation, which is why you’re able to apply for an “EntrePass”, a special pass that you can apply for before incorporating your company.

Note: As of 2010 this pass now has some strange conditions, and is a pain to get

When the accounting companies form a company for you, they actually execute this backwards. They set up a company utilising their own staff as company secretarial and directors and then install you as an employee, on a normal employment pass, before finally making you the sole director and shareholder once (and if) your employment pass is approved.

All the time you are slightly divorced from proceedings as you’re not involved in the company until you become and employee. Additionally they most likely provide a company secretarial service as a fee, helpfully making them the first port of call for all accountancy queries and business decisions. While this service might be useful in a larger firm in a small cost focussed start-up and with a ‘resident’ wife I’m able to have her as my company secretary and avoid any fees.

Once you have obtained an EntrePass you can remain in the country and apply to ACRA to incorporate your new company. Then the joy of setting up banking facilities.

EntrePass & The Ministry of Manpower

Note: As of 2010 this pass now has some strong conditions, and is a pain to get. You probably need to get help from an accountant.

The process and forms for obtaining your EntrePass are lengthy but straightforward and require some extra written documentation Timescales quoted on the site indicate processing can take up to fourteen days, but in my case it took under a week before I got an In Principle Approval Letter in the post.

Other anecdotal evidence from colleagues suggests it can take up to the specified two weeks, but it’s dependent on what your company does. Starting a web design firm in a country obsessed with technology and ‘the future’ I guess is quite an easy sell. Beware government bureaucracy here, a friend of mine had to battle to point out that although he had no ‘cleaning experience’ running a green cleaning business meant he wasn’t exactly going to be pulling on the biodegradable marigolds himself.

The form itself is straightforward, the only slight stumbling point is the requirement of a guarantor, to ensure you do not abscond the country without paying your tax. Whilst you can ask a friend or business associate to monetarily guarantee you it seemed simpler to sort my self out. More on that later.

Business Plan & CV

You have to include your CV, proof of qualifications and recent work history and a short business plan with your application form.

Although I am not privy to the ‘scoring’ of the applications, I have some general advice. Make sure your supporting documentation is concise, clear and spelled correctly. Bear in mind the person reviewing your documentation will be doing it over and over, everything you can do to make his life easier will help you; I even went to the extend of labelling each ‘section’ with a small sticky note on the top of the first page.

It is worth baring in mind that having at least an undergraduate degree helps get any sort of employment pass in Singapore. To support your CV work history you can easily get simple ‘proof of work’ letters from your previous employers, though do this early as this can take some time, dependant on the company. Photocopies of qualifications should also be included.

Your CV should be pretty straight-forward, there are a million websites telling you how to write a compelling resume, but in my experience keep it to two pages maximum, list your qualifications briefly and concentrate on work experience relevant to your new venture and don’t be afraid cull the rest to a sentence or less. The person reviewing your application does not care much about your passion for stamp collection.

I’ve included a slightly homogenised version of my business plan as an example; although if you are unable to describe the why and how of your business and throw in a few quick ‘how much I want to earn’ projections together into a coherent document you’ve got more problems with your start-up than governmental form-filling.

Banker’s Guarantee

I used DBS for mine. You simply take a check for $3,000, payable to yourself (full passport name!) and your passport into a branch and set up a fixed-term savings account.

This isn’t actually needed until you pick up your pass but it’s worth getting the process underway as production of the letter took seven days and can only be picked up at one DBS branch in the CBD.

When you go into the Bank you will most likely be met by blank stares, despite this being a quite simple operation. The main sticking point is getting hold of the correct format of the Banker’s Guarantee letter, the Ministry of Manpower can only fax out a template. Which is incredibly backwards. I got them to fax it direct to the branch to the individual helping with my setup.

Seven days later I head into town and pick up my letter. Utterly backwards.

You can then head to the Ministry of Manpower in person to hand in your passport, letter and guarantee. Three hours later you return to collect a tiny green card for a nominal fee, then the fun can really begin. You have a month to send them the details of your newly incorporated company.

Company Setup & ACRA

In Singapore you can only submit an application for a new business online using Bizfile which in principle is a fine idea, but in practice can be quite painful. Even if you go to the ACRA offices you are confronted with a load of ageing Windows machines with which you can submit your application to their website!

Here’s the trick, in order to use the website you need a SingPass an all purpose login for multiple government sites. In order to get one you must first wait five days, for the data to migrate from the Ministry of Manpower into the systems of the SingPass people. Why this takes so long is beyond me. Then you can apply online, and few days later you get your SingPass and PIN in the post.

You can then log into the BizFile system and begin your registration, there’s a whole website with link to PDFs and suchlike. I didn’t know of the site at the time and still managed to successfully bumble through the dreadful bizfile user interface myself.

You’ll need to nominate a Singapore-resident secretary for the company during the process, anyone with their own SingPass will do; including employment pass holders, PRs and native Singaporeans. They don’t need any shares, so you can retain complete control of you company, don’t panic. You can use a local accountancy firm to provide company secretarial services for a few hundred bucks, but as long as you have ready access your secretary’s signature I wouldn’t bother. My wife is my company secretary. If you’re a massive corporation there are serious requirements of this role, but we’re talking about a new small business.

I used the standard memorandum they give you during the process and although you can make share structures quite complicated I simply went for a single shareholder (me) holding 500 ordinary shares at 1 dollar each. I am aiming for simplicity with a little flexibility.

Note: Actually if you are looking to raise money this can be a pain. Make each share have the value of a single cent, this gives more flexibility later on.

To ‘activate’ your company every director, company secretary and shareholder needs to log into Bizfile and make a endorsement of the formation. Once all that is done, you can pay your $300 fee and at the same time buy a a business information pack (in PDF) as you’ll need this for banking and sending to the Ministry of Manpower.

Banking

You can run a very small business from your personal account, but don’t. Having a good separation between work money and personal money is very important come ‘working out tax’ time.

Having had poor experiences with Standard Chartered and pretty rubbish personal online banking with UOB I chose to go with DBS. I’ve also heard good things about HSBC.

DBS provide a Visa Debit by default and they have (comparatively) reasonable online banking. They do levy a ridiculous charge ($30/month) if you want to make payments, as opposed to just view transactions. It must surely cost them more money in staff costs to process all the cheques I’ll write, but nevermind. They also didn’t impress with the length of time it took to actually get my Visa card, and phoning the _help_line was next to useless as apparently they cannot talk to the card application department.

To open the account you need passports and in person signatures at the bank, for every director, company secretary and individual who needs to access the account or have a card. The forms are typically epic but the lady at the bank was very helpful. There was just a fair bit of sitting around while she filled stuff in, take a magazine or something.

But eventually I’m all set up.

One last thing

Fax your business information pack to the Ministry of Manpower, I posted mine initially and they managed to lose it so I had to fax it anyway. The process for setting up a business could take a little while, what with all the waiting times or if you need approval from another government agency, meaning you could get close to your 30 day limit on your EntrePass but I was reliably informed that if you are getting close you can always ring them to extend the deadline.

In Summary

It’s straightforward in theory but a bit rubbish in practice because you’re dealing with government processes and a surprisingly inefficient consumer banking industry, but perhaps not worth $5,000 of your money to pay someone to do it for you.

However if you are not already resident you’re probably going to have to get in touch with an accountant.