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The key requirements to register a private limited company in Singapore are as follows:
Private limited company (popular known as ‘Private Limited Company’ or ‘PLC’) is the most common type of business vehicle for doing business in Singapore. PLC provides limited liability protection to shareholders (i.e. business owners). The limited liability protection protects the entrepreneurs against trading losses, especially when working within an unstable and ever-changing economic climate.
Advantages of Forming a Company:-
Before registering, all Singapore companies must first have their name approved by ACRA. The name approval is a simple online procedure and the company name is subject to the following guidelines:
Key facts to keep in mind for the name approval process:
There are 4 main types of business structures to choose from. They are:
Refer to this table for more details of each type of business structure.
The type of business structure you choose depends on your business needs. You should consider the following factors to determine the best structure for you:
You may wish to close the company for various reasons. One of the options available is to strike off the name of the company from the register.
As a director, you may apply to ACRA to strike off the company’s name from the register. ACRA may approve the application if it has reasonable cause to believe that the company is not carrying on business and the company is able to satisfy the following criteria for striking off.
To provide greater clarity for companies and reduce the compliance burden, the timelines for holding Annual General Meetings (AGMs) and the filing of annual returns will be aligned with the company’s FYE.
For listed companies:
For non-listed companies:
Annual return can be filed only:
There are various circumstances where a director may face disqualification. Once a person is disqualified, he will not be allowed to be a director or take part in the management of any local or foreign company unless he seeks permission from the High Court or Official Assignee, if applicable.
The circumstances which disqualify a person from being a director include the following (but not exhaustive):
The annual return is an electronic form lodged with ACRA and contains important particulars of the company such as the name of the directors, secretary, its members, and the date to which the financial statements of the company are made up to. The annual return provides critical information that helps the company’s stakeholders to make informed decisions.
The appointed officer of your company (e.g. a director or company secretary) can file the annual return on ACRA’s online filing portal BizFile+. Alternatively, you can engage the services of a registered filing agent to do this on behalf of the company.
An audit is the examination of the financial report of an organisation – as presented in the annual report – by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.
The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organisation at a given date, for example:
When examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work.
In Singapore, a company that does not meet the audit exemption is required to have the accounts audited. To qualify for the audit exemption, the company needs to be a “small company” whereby it fulfills at least 2 of the 3 following criteria for the immediate past 2 consecutive financial years:
For a company that is part of a group. the entire group of companies must be qualified as a “small company” in order to be exempted from audit obligations.
The audit exemption is applicable for financial years beginning on or after the change in the law (1 Jul 2015).
Auditor’s main duties are as follows:
Here’s what you can gain from audited financial statements.
To provide audit services to public, you must meet the following requirements:
The Public Accountants Oversight Committee (PAOC) may refuse to register any applicant who, in their opinion:
IRAS may take the following actions if companies fail to file the Form C-S/ Form C together with financial statements and tax computation before the due date:
Companies have one month from the date of the Notice of Assessment (NOA) to pay their tax.
A company is required to pay the tax assessed as shown in the NOA before the payment due date even if it has filed an objection and is awaiting the outcome. If the assessment is subsequently revised, any excess payment would be refunded to the company.
If payment is not received before the due date, a 5% late payment penalty will be imposed.
Additional penalties of 1% per month may be imposed if the tax remains unpaid 60 days after the imposition of the 5% penalty. The 1% additional penalty will be imposed for each completed month that the tax remains unpaid, up to a maximum of 12% of the unpaid tax
Common filing mistakes made by companies include:
For other common filing mistakes made, please refer to Specific Compliance-Related Mistakes and Issues.
ECI is an estimate of the company’s taxable income (after deducting tax-allowable expenses) for a Year of Assessment (YA).
All companies including new companies are required to file ECI within three months from the end of their financial year except for companies that qualify for the administrative concession and those that are specifically not required to file.
Singapore-registered companies that submit their ECI within the qualifying period may opt to pay corporate taxes by instalments. To encourage early filing, the earlier a company files, the greater the number of instalments they will be given. Please refer to Filing ECI and Paying Estimated Taxes for more information.
Your liability for GST registration depends on the value of your taxable turnover. This refers to the value of goods and services supplied by you which are regarded as taxable supplies for GST purposes.
You must register for GST if:
Retrospective View
Prospective View
If at any time, you can reasonably expect your taxable turnover in the next 12 months to be more than S$1 million.
You will have to register for GST when there is certainty that your taxable turnover will exceed S$1 million in the next 12 months. You must have supporting documents to support your forecast value of $1million. For example:
On the other hand, you are not required to register for GST if there is no certainty in your forecast. For example, you made a forecast based on market assessment, business plans or sales targets.
A GST-registered business’ responsibilities include the followings:
International Financial Reporting Standards (IFRS) is a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of general purpose financial statements, being financial statements that are intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs.
The IASB is an independent accounting standard-setting body of the IFRS Foundation. The principal objectives of the IFRS Foundation are:
The IASB, based in London, consists of 15 members. It began operations in 2001 when it succeeded the International Accounting Standards Committee.
In fulfilling its standard-setting duties the IASB follows a thorough, open and transparent due process of which the publication of consultative documents, such as discussion papers and exposure drafts, for public comment is an important component. The IASB engages closely with stakeholders around the world, including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession.
The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests with its Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation. The Trustees are publicly accountable to a Monitoring Board of public authorities. For more information about the IASB and IFRS Foundation, please visit www.ifrs.org
In Singapore, the Singapore Accountancy Commission, established under the Singapore Accountancy Act, is a statutory body of the Singapore government that oversees the strategic direction and promotion of the accountancy sector while the Accounting Corporate Regulatory Authority (ACRA), established by the Accounting and Corporate Regulatory Authority Act, is responsible for regulating public accountants in Singapore.
You must pay CPF contributions for your employees who are Singapore citizens or Singapore permanent residents (SPRs).
An employee is any person who is employed in Singapore. This includes any Singaporean seaman who is employed under a contract of service or other agreement entered into in Singapore.
The following employees are also eligible for CPF contributions:
Under Employment Act, salary must be paid by employers at least once a month. They can also pay it at shorter intervals if they choose.
Salary must be paid:
The relationship between employer and employee in Singapore is regulated largely by the contract of employment between them. Generally parties are free to contract as they choose subject to complying with the Employment Act and certain limits. The Singapore Employment Act does not apply to all employees. Instead, it applies only to “employees” as defined under the Act. Specifically, the Employment Act does not apply to:
Furthermore, employees earning below SGD 2,000/month are provided additional protection (concerning “Rest Day, Hours of Work and Overtime, Public Holidays, Annual Leave, Sick Leave, Retrenchment Benefits, Retirement Benefits, Annual Wage Supplement and other variable payment”) under Part IV of the Employment Act.
Employment Contract is also known as Employment Agreement, Appointment Letter, Offer Letter, etc. It is an agreement between an employee and employer that specifies the terms and conditions of employment. It is advisable to have a written employment contract in Singapore. Typically, only senior management employees might have the option of negotiating their employment contracts. A violation of one or more of the terms in an employment contract by either an employee or employer is considered breach of contract. Most employment contracts include several important clauses such as:
The terms and conditions of the employment contract cannot be less favorable than what is stipulated in the Employment Act.
Statutory Requirement: For employees earning less than SGD 2,000/month, the statutory annual leave is outlined in the Employment Act. To qualify for annual leave, the employee must have served at least 3 months with the employer. The amount of annual leave is dependent on the contractual agreement between the employee and your employer, but is subject to a minimum of 7 days during the first year, and 1 extra day for each additional year of service. Annual leave taken even on a half-working day is considered 1 day’s leave, unless otherwise stated in the employment contract. In the case of dismissal for misconduct, absenteeism from work without permission for more than 20% of working days in the month, or if the leave is not used up within 12 months of every year of continuous service, the employee’s annual leave will be forfeited, unless otherwise specified in the employment agreement.
Common Practice: As a common practice in Singapore, all employees are given an annual leave around 14 days per year, well above the minimum required under the Singapore Employment Act.
