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How to Start a Business in Singapore With No Capital 2024

how to start a business in singapore with no capital
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Can you start a business with no money in Singapore? While setting up a business needs some capital, it doesn’t require a massive amount to get started. In fact, the Accounting and Corporate Regulatory Authority (ACRA) requires a minimum capital of S$1 to start a business in Singapore.

To get your business registered, you’ll need to pay a name approval fee of S$15 and a one-off registration fee of S$300. If you opt for self-registration, it’ll cost you S$100. Best of all, Singapore taxes corporations at an attractive flat rate of 17%. Local companies and start-up SMEs can take advantage of exemptions and tax breaks.

How To Start a Business in Singapore With No Financial Source 

1. Research Your Business Idea and Make Sure There Is a Market for It

Say you want to start a food business that has a high demand. But since it has a high demand, you’ll be facing tough competition who have already made a name for themselves. On the other hand, starting a more niched business will have less competition, but will you have a market for it?

Here are some of the trending yet profitable business ideas that don’t need huge capital:

  • Telemedicine
  • Affiliate marketing
  • Dropshipping
  • Content or digital marketing
  • Virtual assistance services
  • Sustainable food business
  • Dog-walking or pet-sitting business
  • Niche cleaning service business

Take inspiration from Cajun on Wheels which sells its products both out of a food truck and through its own website. Food trucks became an in-demand business during the COVID-19 pandemic despite many restaurants struggling to stay open.

Another example of a business idea is dog walking or pet-sitting. It is a niche, localized business which you can offer where you’re located. Consider K9 Petcare Pte Ltd, a dog-walking business that offers pet sitting, dog walking, and home boarding services.

young Asian businessmen discussing outdoors

2. Create a Business Plan and Source Capital

Now that you have a business idea, it’s time to figure out how you can finance it. But first, you need to draw a road map in the form of a solid business plan. Your business plan should contain:

  • Your business structure and goals
  • How to achieve your business goals
  • Market analysis
  • Your products and services
  • Defined marketing plans
  • Financing needs

With a business plan, you can determine the amount of capital you need to get started and how much it costs to continue operating.

So how do you start a business in Singapore with no capital?

Plenty of entrepreneurs have started their small businesses from scratch, sometimes without outside funding. The barrier to entry for Singapore startups is low. You can register your company with paid-up capital for as low as S$1.

But if you really need extra financing, consider these:

Government Schemes

Singapore’s government provides plenty of support for startups and SMEs through various government-assistance loan financing schemes. For instance, entrepreneurs can tap into the SME Working Capital Loan scheme where they can borrow up to S$500,000 from 1 October 2022 to 31 March 2023.

Grants

You can consider schemes and grants, such as:

  • Enterprise Singapore
  • Startup SG Accelerator
  • Early Stage Venture Fund (ESVF)
  • Productivity and Innovation Credit (PIC)
  • Financial Sector Technology and Innovation (FSTI) scheme
  • Angel Investors Tax Deduction (AITD) Scheme

Loans

Another option is to take out a business loan. In Singapore, banks offer two kinds of loans: working capital loans and funding. A working capital loan will help you get the funds you need to jumpstart your business. Funding is perfect for long-term investments.

However, traditional bank loans have stringent eligibility criteria. If you don’t qualify, don’t fret! You can also consider a business loan with a licensed money lender. They have a lenient loan evaluation process and can disburse cash within the same day of application.

3. Understand Taxes in Singapore

As previously mentioned, Singapore has favorable tax policies. How much business tax you’ll pay will depend on various factors:

  • How your business operates
  • Your business entity type
  • Business turnover
  • Specific tax benefits you’ve won

Typically, a startup Singapore business should expect a corporate income tax rate of around 4.25% on the first S$100,000. The income tax rate may increase progressively to 17% for businesses earning up to S$10 million a year.

Note that your corporate tax filing is completed in December and it is done online via IRAS’s e-filing portal. But just like anything related to taxes, it’s best to seek professional advice.

4. Choose the Suitable Business Structure and Register Your Business

Entrepreneurs have various options in terms of business structure. In Singapore, here are the commonly used business entity types:

  • Sole Proprietorship: This type of business entity is owned by one person. It is perfect for low-risk entrepreneurs who plan to run their businesses alone and can shoulder unlimited liabilities.
  • Partnership: This business entity consists of two to twenty individuals under specific terms and conditions. Just like a sole proprietorship, a partnership is not a separate legal entity from the partners.
  • Limited Liability Partnerships: This type of business structure consists of two or more individuals or corporations. A limited liability company splits its equities into shares. Additionally, it is a separate entity from the partners, meaning the company liabilities are separate from personal obligations.
  • Company: Private companies are the most flexible business entity in Singapore. A company is a separate legal entity from its owners and directors, plus, it enjoys the most beneficial tax regimes.

5. Get a Business Address and Set Up Your Office

When you register your business, ACRA will require you to add a valid physical business address and residential address. If you don’t wish to disclose your residential address, you can provide an alternative address where you can be reached.

If your business is set up at home, you will need to get approval based on the type of property you own. For instance, if you live in an HDB flat, you’ll need to get approval from HDB before you can register your residential address as an office address.

6. Open a Business Bank Account in Singapore

It is imperative to have a separate bank account for your business – even if you’re running a sole proprietorship.

A business bank account will serve as a hub for your company’s financial activities, profits, payroll, accounts payable, and more. A business account will help safeguard your funds, as well as help you keep track of cash inflows and outflows.

Here are a few things to consider when opening a business bank account:

  • Initial minimum deposit: Most banks in Singapore may require you to make an initial deposit that can range from S$1,000 to S$30,000.
  • Account fees: Choose business bank accounts with low fees. This will help lower the maintenance costs. Plus, it will help you save your capital for more important investments and expenses. Some business accounts, like OCBC Business Growth Account, only require a S$10 monthly account fee.
  • Minimum monthly balance: Another thing to consider is the minimum monthly balance requirement and fall-below fees. Choose a business bank account with a min. average balance that you can comfortably maintain.

7. Apply for Business Licenses and Permits

When you start a business in Singapore, the first thing you need to do is register the business name with ACRA. This process typically precedes company incorporation. Here’s how:

  • Check if the name you’ve selected is unique
  • If yes, reserve the business name on BizFile and pay a S$15 fee
  • You’ll also need to specify your business activity type for licensing

Note that the reservation lasts for 120 days, during which you need to finish your business registration.

Once you’ve set up your business, you need to apply for licenses and permits. The licenses and permits you need will depend on the type of business.

For example, if you plan to set up a new food service business, you need to get a Food Shop License from the National Environment Agency (NEA) for retailing food/drinks products. You may also need to apply for Halal Certification or Import Export License for food products.

You can visit here to find out which licyou need before applying.

8. Hire Employees

Companies need to hire an auditor within 3 months, as well as a company secretary within 6 months from the date of incorporation.

Here are a few things you need to do to hire a local employee:

  • Apply for a CPF Submission Number so you can make CPF contributions as an employer. You can do so online via BizFile.

Note: Make sure that you understand the CPF contribution processes and requirements. Find out more about CPF contribution rates here.

  • Write a contract. Make sure that it complies with the Employment Act.
  • Based on the type of work, consider getting Work Injury Compensation Insurance.

Hiring foreign workers will require a different set of requirements and processes. You can check here for more information.

9. Filing for Taxes

The process for corporate tax e-filing will depend on your business entity type. For example, sole proprietorship or most partnership types of businesses are not considered separate legal entities. As such, you can easily file your taxes online with IRAS using your SingPass.

However, if your business entity is a limited liability partnership, then your business is considered a separate entity. Your corporate tax filing is completed in December and must be done via IRAS’s e-filing portal.

Note: Singapore has different common tax reliefs:

  • Tax exemption scheme for startups in Singapore
  • Partial tax exemption for all companies
  • Deduction of expenses incurred before the start of business.

Visit the IRAS website to learn more.

young beautiful student taking exams on laptop

How Can Foreigners Open a Business in Singapore?

In Singapore, a foreigner can register their own business. However, they must obtain a pass that specifies the permissions of their residency or visit.

If you are a legal resident and hold the appropriate pass, you may register your company on your own – without the need for a Singaporean director. If you’re a foreigner working, visiting, or studying in Singapore, you must appoint a local director or manager, depending on your business type.

Type of Pass

Sole Proprietorship

Partnership

Company

  • Work Permit
  • S Pass
  • Employment Pass
  • Personalized Employment Pass
  • Training Work Permit
  • Training Employment Pass
  • Work Holiday Pass
  • Visit Pass

Not Allowed

Not Allowed

May incorporate and own shares of a Singapore company. Must appoint a local director or employee of the company

  • Dependent’s Pass
  • Long-Term Visit Pass

Not Allowed

Not Allowed

May incorporate and own shares of a Singapore company. Must appoint a local director or employee of the company

  • EntrePass

Allowed

Allowed

Allowed

Other Resources for Business Owners

Need more help? You can check out these government websites to find more information:

Closing

Anyone can start a business in Singapore – be it a local or a foreigner. It will feel like a huge undertaking, but the process is pretty straightforward. You just need a local address and a paid-up capital of at least S$1.

Key Takeaways

  • You’ll need to pay a S$15 fee to register your business name and a one-off registration fee of S$300.
  • If you need extra financing, you can look into grants and government schemes, such as the SME Working Capital Loan.
  • Another financing option is taking out a loan with banks or licensed money lenders. With licensed lenders, you can get approval within 30 minutes and receive your funds on the same day of application.
  • Open a separate business or corporate bank account and choose one with minimal fees.

Looking to jumpstart your small business idea but you’re short on cash? Loan Advisor will help you find the best loan plans from the top licensed money lenders in Singapore. Request up to three loan quotes today–commitment free!

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