The prospect of starting either a small or large business in Singapore can be very appealing. Over the years, the country has proven to be an excellent place for businesses to thrive in because of its favourable policies and measures. And many prospective local and international business owners have made serious attempts to establish themselves in the country.
There is, however, a catch. Thinking about starting a business in Singapore is a long way from actually starting one. Most people become bogged down by the costs and other requirements for incorporating a business in Singapore. As such, this article will go over the various costs you should anticipate when starting a new business in the city-state.
The Costs Of Starting A Business In Singapore
It’s natural for someone who is about to start a business to try to come up with brilliant ideas. However, they frequently overlook the critical process of keeping track of their projected business income and expenses. As a result, they fail to anticipate the expenditures that may arise as a result of actually running it. And this subsequently leads to business failure. To avoid this, we have divided the costs of starting a business in Singapore into four categories and elaborated further on them. They are as follows:
Costs Associated With Business Registration
The Accounting and Corporate Regulatory Authority (ACRA) is responsible for business registration in Singapore. This body does not provide this service for free but at a cost to the registering business. Typically, you will be required to pay the registration fees listed below.
Business Name Approval
Businesses must pay ACRA at least $15 to reserve their proposed names. This fee should be paid through the BizFile+ portal during your business registration. Completing this process ensures that your company name is reserved for 60 days.
Company Incorporation
Once your business name has been approved, you should have it incorporated, which, like business name approval, will cost money. Pricing will be presented to you based on the type of application you are submitting. You can expect to pay around $300 on average.
Registered Address
During the registration process, you will be required to provide your business address. This refers to a local address where ACRA and other government bodies can correspond with your company. What you need to do to meet this requirement is get an office, which costs money. In Singapore’s Central Business District, a basic furnished office for 2-3 workers costs between $2,000 and $3,000 per month. Alternatively, you can also take the services of a virtual office provider and use that as your registered office address.
You can also set up the business as a home-based one, with your residential address serving as the business address. However, if yours is a government flat, you must first obtain approval from the Housing & Development Board (HBD). You can also choose to use your incorporation agent’s address as your business address.
Licenses
Most businesses require specific licenses before they can begin operations. As a result, you will be required to pay a fee for such licensing, and that could amount to hundreds of dollars.
Other fees, such as filing fees for partnerships or any other entity type you choose for yourself, have also to be paid by businesses. All of these fees can be found on Singapore’s GoBusiness licensing portal. In total, you should get ready at least $315 to register a new business in Singapore. If you hire an agency to handle the registration, the cost will almost certainly be higher.
Costs Associated With Financing Your Business
There are several ways to finance your business, but the three most common are as follows:
Bootstrapping
You have the option of funding your business with your personal income. The amount you choose to invest in your business from your income is entirely up to you, and there are no fees associated with doing so.
Engaging investors
Obtaining funds from investors is another excellent way to fund your business. You get to fund the company for now while agreeing to repay them in the future through shares, dividends, and debt with interest. This type of funding, like bootstrapping, has no fees.
Securing loans
This means of accessing funding would almost certainly incur fees. However, it is less complicated than other funding options. Interest rates and application fees are involved, and they will vary depending on the lender and the amount in question.
Costs Associated With Setting Up A Business In Singapore
After meeting the above-mentioned requirements, you will incur certain further costs to set up your business. Some examples are as follows:
Renovation
If you have rented a space for your company, chances are it isn’t configured to your liking. As a result, you will need to invest in having it renovated. You will have to pay to give the place a new look by painting it or bringing in new cabinets and desks. Larger businesses usually are the ones to do the most renovations, which also costs the most in terms of money.
Business Insurance
Insurance protects your business, as well as yourself and your employees. Before being approved for certain services, you may be asked about your insurance coverage. For a million dollars in insurance, you should expect to pay a few hundred dollars in premiums.
Recruitment
To properly run your business, you will require the services of specialised individuals to assist in specific corporate tasks. The recruitment firm you hire will charge you for the task of bringing such people into your company.
Recruitment fees are typically calculated as a percentage of the candidate’s annual salary, typically 20%. Suppose you are forming a private limited company in Singapore. In that case, you must hire at least one director, a corporate secretary, a minimum of one shareholder, a registered address, and a minimum paid-up capital of $1. All of these will cost you money.
Operational Costs Involved In Starting A Business In Singapore
These are expenses incurred during the normal course of business. They are usually recurring expenses and are as follows.
Raw Materials
You’ll need to purchase raw materials regularly to keep your business running. Manufacturing businesses, unlike service businesses, will require a consistent supply of materials to carry out their operations. Since the prices of raw materials fluctuate, they should properly be factored into the business’s costs.
Marketing
It would be best if you planned for constant promotion of your products or services. As a general rule, 10% of your projected income should go toward marketing activities. So, put that into consideration for the projected cost of starting your business.
Overheads
Overhead costs such as payroll, utilities, and equipment will consume a portion of your company’s finances each month. The size of your company determines the amount that is required.
Accounting Services
Because your finances and other aspects of your business are important, you will need the services of accounting and taxation professionals other than your employees. Accountants, for example, assist in keeping your spending under control while ensuring that your financial obligations, such as taxes, are met. The costs of these services must also be included in your business budget.
Conclusion
Setting up a business in Singapore entails more than just mulling over a business concept. It goes beyond making plans for it and includes a lot about paying for each step of the creation process. And drawing up a budget that covers these costs has always been a stressful task. However, it must be completed because it is an important aspect of business creation. It is recommended that you either determine these necessary costs with the specifics of your business in mind or, better still, hire a professional firm to assist you in the incorporation process.
