Notes on operating a startup business in Singapore

Introduction

Notes about operating a startup in Singapore for myself to reference from.

Guides and Resources

Government Schemes and Grants

Budget 2023

Find out which schemes a business may be eligible for at Budget 2023 - Budget Navigator (for Businesses) or visit the Budget 2023 page for businesses.

GoBusiness

A one-stop platform for integrated, personalised and seamless access to Government resources and services, GoBusiness supports businesses across various functions.

Whether you’re a new business owner or an experienced one, GoBusiness is here to support your needs.

Read the GoBusiness guide here.

GoBusiness.gov.sg is a government operated portal providing e-Services for businesses. Benefit from useful content like:

• start-up guides
• licensing overview
• access to over 300 government e-services
• GovAssist schemes

Get recommendations on over 100 government schemes to assist and support your business on GoBusiness.

There is a free online tool called e-Adviser for Government Assistance, which helps to recommend relevant assistance schemes for a business.

Before Incorporation

Is the entry barrier of the selected business high enough?

Is there a high entry barrier to the business you have in mind? If not, business risks include the business being cloned by others and waging a price war against you. There is also a risk that your workers quit and set up a competing business after learning the ropes.

Pick a business that is suitable for your personality

From personal experience, if one is soft-hearted and passive, it is difficult to succeed in a rental collection based business. I used to operate a car leasing business serving GrabCar drivers. I thought the business model was pretty straightforward; just pump in the capital to purchase some vehicles, and then collect rent.

It turned out that renters were never timely in their weekly payments, always coming up with sob stories and family difficulties as excuses. They also had no money to pay up the insurance excess after getting into accidents and I had to absorb a lot of bad debts because I didn’t have the heart to push them too hard. I felt like I was running a charity instead of a business.

On hindsight, if the renters were doing ok financially, they needn’t have rented from my company and could have purchased a vehicle by themselves. I ended up winding up the business after a couple of years with substantial losses.

Business partners

what skill sets do the partners bring into the business?

Before agreeing to partner with someone, consider what value the potential business partner brings to the business? For example, is he a trained accountant, lawyer, software engineer etc

I would not partner with a person who only wants to inject capital, does not contribute to the business on a regular basis, and expects returns.

mismatch of business ethics and moral principles

Potential business partners may be willing to compromise on the quality and safety of products and services to maximise profits. Is this acceptable?

They may see nothing wrong in cutting corners, creating fake quotations for tenders, lying to customers, violating copyright and trademarks in order to win business. Is this acceptable?

See case study: Couple sentenced for cheating MHA into awarding them S$165,000 in building contracts with fake quotations [ChannelNewsAsia]

complement your personality

If you are a reserved and introverted person, it would be beneficial to have a business partner who is opposite in personality to front meetings with customers and is a go-getter.

foreign shareholders

If partnering with non-Singaporeans, note that some government grants require a minimum percentage of Singaporean ownership.

Setup

Incorporation

Can incorporate by oneself at bizfile.gov.sg or a service provider like Sleek.

Office space

virtual offices

Do you need a physical office? If not, consider a virtual office to help collect letters

less known options

Apart from the usual real estate portals to look for a commercial/industrial space, other less common options to find units include:

• community centres (under People’s Association)
• HDB office and shopping complexes
  • Portal: HDB Place2Lease
  • if no suitable unit is available currently, can register for alerts using SingPass

reference URA Master Plan

The Master Plan is a statutory land use plan that guides Singapore’s development in the medium term over the next 10 to 15 years. Reviewed every five years, the Master Plan translates the broad long-term strategies of the Concept Plan into detailed plans to guide the development of land and property.

Operating

Courier services

Qdelivery

Sometimes, we need to send documents, or small packages like samples to partners. I typically use Qdelivery from Qoo10.sg.

Services include:

• QX Next Day Delivery
• QX Quick (3 Hours) Delivery from S$6.99
• International Delivery
  • used it to send items to Malaysia

Marketing

AI generated content

• DALL·E 2 (OpenAI)
• Midjourney

Free stock photos

• Pixabay
• Unsplash

Salary matters

pay founders a salary too

Even if you own the company, you should pay yourself an employee salary.

Why it matters?

• during the COVID pandemic, there was a Job Support Scheme (JSS) that provided wage support for employers to retain their local employees. The government extended the JSS to include wages of employees who are also shareholders and directors of a company.
• even as a shareholder, one should be paid for the time invested and work done for the company. It makes it easier to figure out whether the company is doing well.

Diversify supply chain

Target to have more than one supplier to avoid having a single point of failure in the supply chain.

Regulatory Compliance

Auto-Inclusion Scheme (AIS)

Submit your employees’ employment income information so that they can view their information when e-Filing their Income Tax Returns.

Late or inaccurate AIS submission may incur a fine of up to $5,000 for late AIS submission and a penalty of two times the amount of tax undercharged for an incorrect AIS return.

ECI (Estimated Chargeable Income)

Estimated Chargeable Income (ECI) is an estimate of your company’s taxable profits (after deducting tax-allowable expenses) for a Year of Assessment (YA). In order for you and your company to stay compliant with Inland Revenue Authority of Singapore (IRAS), every company is required to submit an ECI for the Year of Assessment within three months after the financial year ends.

More details on ECI on Sleek.com

Tax Matters

Resources:

• www.startupdecisions.com.sg
  • Singapore Corporate Tax Guide
• www.guidemesingapore.com
  • Singapore Corporate Tax Guide

Tax on capital gains

There is no tax on capital gains in Singapore.

Examples of capitals gains include:

• gains on sale of fixed assets
• gains on foreign exchange on capital transactions

Tax on dividends to shareholders

Singapore has a single-tier corporate income tax system, which means there is no double-taxation for stakeholders. Tax paid by a company on its chargeable income is the final tax and all dividends paid by a company to its shareholders are exempted from further taxation.

Others

Business continuity in the case of unfortunate events (e.g. owner pass away)

Is the business able to continue and thrive if I am suddenly not around? What measures are there to ensure that my family members or other shareholders can take over the business without hiccups? E.g. store important information on a shared storage like OneDrive. Put passwords in a secure vault like ‘My Legacy vault’ on mylegacy.life.gov.sg.