The harsh reality that faces startups is that 90% percent of them fail in the first five years. According to a recent study, intense market competition is closely followed by regulatory and legal difficulties as the fifth most common reason for startup failures. This emphasises how crucial it is to take exact first steps. For a startup to survive and thrive, navigating company incorporation and maintaining compliance become critical tasks rather than just decisions.

Starting a startup is a journey full of decisions and tasks, one of the most important ones being incorporating your business. This legal procedure helps you navigate the financial and legal spheres while defining the structure of your company. The process is not complete without choosing the best company secretarial service.

In this exhaustive guide, we are going to look at the benefits of company incorporation, available structures, how to incorporate your company, the role of a corporate secretary and much more.

Advantages of Incorporating a Company in Singapore 

There are many advantages that come with incorporating a company. Chief among them is having legal protection. By separating one’s personal possessions from those belonging to their business through incorporation; an individual ensures that his or her items cannot be used against them when settling debts or dealing with lawsuits. Another advantage is that it increases credibility; people tend to trust businesses which have been formally registered than those operating informally.

Types of Company Incorporation Structures

Businesses in Singapore have a variety of company incorporation structures to select from, each suited to their unique requirements. These are the main choices:

It’s critical to take into account various aspects when selecting a company incorporation structure in Singapore, including liability protection, management control, potential tax consequences, and the type of business. Entrepreneurs frequently consult experts to determine which structure best suits their unique needs and business objectives.

Steps in Incorporating a Company in Singapore 

The following crucial steps must be taken in a structured manner in order to establish your business successfully in Singapore’s business-friendly environment.

1. Selecting a Suitable Company Name

Select a name that is unique and not being used by anyone else. Steer clear of offensive or forbidden words. Register the name and receive the Accounting and Corporate Regulatory Authority’s (ACRA) approval. Indicate the planned business operations along with the applicable classification code.

1.1 Required Activities Specification

The applicant must list the business activities they intend to conduct using the pertinent Singapore Standard Industrial Classification Code when submitting the company name.

1.2 Name Approval and Incorporation

Following name approval, the applicant has 120 days from the date of name approval to begin the incorporation process. According to the Companies Act, the company name and registration number must also appear on all business correspondence.

It should be noted that registering a name does not give you exclusive rights to use it for intellectual property.

2. Designating Officers

Directors have to be legal individuals who are at least eighteen years old and in good standing. A minimum of one director needs to be a Singaporean citizen. Foreign corporations are not permitted to hold director positions, but they may appoint “nominee directors.”

Businesses can designate a “nominee director” if they want to establish themselves in Singapore but do not have any local partners. These professional directors oversee the company’s affairs and act on your advice when they are hired or subcontracted by a firm..

3. Choosing Stockholders and Allocating Equity

A minimum of one shareholder and one paid-up share capital of S$1 are required for every company. Shareholders in private limited companies may number up to 50. Shares may be issued in a variety of forms, at any time, and with transferability.

4. Designating a Company Secretary

After incorporation, a company secretary needs to be appointed within six months. They manage the required paperwork and make sure that all applicable laws are followed.

5. Choosing a Business Address

Make sure the registered address is a physical address in Singapore.

6. Getting Registration Papers Ready 

A company’s constitution and “Consent to act” forms are important documents. Give officers, beneficial owners, and shareholders their identifying information.

7. Obtaining a Licence for Business

Business licences or registrations are necessary for some industries. Make sure you possess the appropriate licences or registrations necessary for your sector.

8. GST Registration

If your anticipated revenue is more than S$1 million, you must register for the Goods and Services Tax (GST) with the Singapore Inland Revenue Authority in order to submit these taxes.

9. Fulfilling Compliance Conditions

Legal compliance, including the filing of yearly tax returns, GST returns, and compliance reports, is the responsibility of the directors.

Comprehensive Checklist of Legal Documents

The particular legal documents needed to incorporate a company can change based on the jurisdiction and kind of business structure you’re starting. On the other hand, the common documents required for company incorporation are generally included in the following list for startups:

The requirements and paperwork can differ greatly from nation to nation and occasionally even from region to region within a country, so it’s imperative that you speak with a local business attorney or a company formation service in your jurisdiction.

How to Start the Compliance Journey?

When you include your business, it is important to follow the rules. This ensures that your business meets all legal requirements and regulations. Failure to comply may bring about penalties or legal actions against you which can damage the reputation of your company.

It is necessary for a start-up to identify frameworks that suit its specific needs in relation to compliance. Consider factors such as the size of your business, type of data collected, industry engaged in, nature of business model adopted and most importantly customer expectations.

Here are some steps to help you begin on compliance:

• Establish Applicable Type(s) Of Compliance: Start-ups should be aware of different laws governing their industries. For instance if a new venture processes credit card payments and stores client information on cloud servers then it must attain PCI DSS compliance while those in medical field must meet HIPAA requirements
• Comprehend The Stage Of Compliance: Since there are many legal terms used during this phase one needs to understand what suits him/her best depending upon his/her current level of growth. With increase in size so does security demands for infrastructure thus tailor-making each stage’s needs as applicable when still at startup level.
• Talk to a Compliance Automation Company: Platforms for compliance automation, such as Sprinto, offer knowledge of numerous standards. They streamline your compliance procedure and enable you to easily traverse the regulatory environment.

Typical Errors to Steer Clear of

The process of incorporation has its own set of challenges. Choosing the incorrect structure, failing to draft a shareholders’ agreement, and improperly recording the issuance of stock are examples of common errors. Not obtaining an EIN, which is required for filing taxes and opening a business bank account, is another common mistake.

Tools and Resources

A plethora of resources are at your disposal to assist in incorporating your business. In addition to websites like LegalZoom and RocketLawyer offering one-size-fits-all tools for a subscription fee, law firms frequently offer advice and services. Some services are tailored especially for tech startups, such as Clerky and Stripe-Atlas.

Ideal Corporate Secretary

A company secretary is an essential member of the leadership team at your startup. They communicate with shareholders, take care of administrative duties, and advise directors. Think about a corporate secretary’s speed and efficiency, experience working with startups, and any hidden fees before choosing one. You need a secretary who can keep up with the quick growth and who is aware of the particular difficulties faced by a startup.

The duties of the corporate secretary are extensive and include:

• Record Keeping: They file crucial documents with the appropriate authorities and maintain current company registrations.

• Advising: On matters of compliance and law, the secretary counsels directors.

• Fiduciary Duties: They keep shareholders informed and make sure their interests are served.

Next Steps

In conclusion, an important step in your startup journey is incorporation. It calls for thorough thought and preparation. On the other hand, you can easily navigate the process if you have the necessary knowledge and tools.

As a startup founder, you should be more concerned with expanding your company than getting bogged down in legalese and paperwork. Growwth Partners is aware of the difficulties involved in incorporating a business and maintaining compliance in Singapore. With our completely paperless services, you can launch your business from anywhere in the globe with ease and without worry.

We manage the complexities of compliance with our committed corporate secretary services, making sure you adhere to Singaporean laws. Avoid letting non-compliance cause penalties or interfere with your business’s operations. Let us handle the specifics so you can focus.