Incorporating a company in Singapore is a relatively quick and straightforward process, thanks to the country’s business-friendly regulatory environment. However, many entrepreneurs—especially first-timers—often overlook important legal and procedural details, resulting in compliance issues, unnecessary costs, or even legal trouble later on.
To help you start off on the right foot, this article explores common mistakes to avoid when incorporating a company in Singapore, and provides tips on how to do it correctly from the start.
1. Not Understanding the Right Business Structure
One of the first and most crucial decisions is choosing the appropriate business structure. Many entrepreneurs jump straight into incorporation without evaluating whether a Private Limited Company (Pte Ltd) is the best option for their business.
Common mistake: Choosing a Sole Proprietorship or LLP without understanding the implications of liability, scalability, or tax treatment.
Tip: For most SMEs and startups with growth aspirations, a Private Limited Company offers better liability protection, tax incentives, and professional credibility.
2. Picking a Non-Compliant Company Name
The company name is one of the first steps in incorporation. While choosing a catchy or meaningful name is important, failing to check compliance rules can cause delays or rejections.
Common mistake: Submitting a name that is identical to another registered entity or contains restricted terms like “bank,” “finance,” or “school” without the required approvals.
Tip: Check the name availability using ACRA’s BizFile+ portal. Avoid using vulgar or sensitive words, and be mindful of trademarks or existing brand names that could pose legal risks.
3. Not Appointing a Resident Director
Singapore law requires every company to have at least one director who is ordinarily resident in Singapore (i.e., a Singapore citizen, permanent resident, or holder of an Employment Pass/EntrePass/Dependant Pass).
Common mistake: Foreign entrepreneurs trying to incorporate without meeting this requirement or assuming they can self-appoint as directors while living abroad.
Tip: If you’re a foreigner, consider engaging a nominee director service through a registered corporate service provider while you apply for an appropriate work visa.
4. Using an Invalid Registered Address
Every company in Singapore must have a local registered address where official notices and correspondence can be sent. It must be a physical address, not a P.O. Box.
Common mistake: Using an overseas address or a non-commercial address that doesn’t meet regulatory standards.
Tip: Use a virtual office or registered office address service provided by many incorporation firms if you don’t have a commercial premise yet.
5. Neglecting to Appoint a Company Secretary
Under the Companies Act, every Singapore company must appoint a qualified company secretary within six months of incorporation.
Common mistake: Failing to appoint a secretary or using an unqualified individual who doesn’t understand corporate compliance.
Tip: Outsource this responsibility to a professional firm that offers corporate secretarial services to ensure that statutory filings and deadlines are met.
6. Misunderstanding Paid-Up Capital Requirements
Singapore allows incorporation with a minimum paid-up capital of just S$1, which is attractive to small business owners.
Common mistake: Assuming that paid-up capital is a bank deposit or failing to declare the right amount for business licensing or bank account purposes.
Tip: While S$1 is sufficient to start, some sectors (e.g., finance, employment agencies) require a higher capital threshold. Always check the industry-specific requirements.
7. Overlooking Shareholder Agreements
While the Company Constitution outlines the legal framework for your company, it’s also wise to have a shareholder agreement to govern the relationship between shareholders.
Common mistake: Not drafting a shareholder agreement, which leads to disputes over roles, voting rights, profit distribution, or exit strategies.
Tip: Engage a legal professional to draft a clear shareholder agreement that covers equity distribution, roles and responsibilities, decision-making processes, and dispute resolution.
8. Incomplete or Incorrect Incorporation Documents
Incorporation requires submitting documents such as the company’s Constitution, consent forms for directors and shareholders, and identity proofs.
Common mistake: Uploading incomplete or incorrect documents to ACRA’s BizFile+, resulting in delays or rejection.
Tip: Work with a professional incorporation firm that reviews and prepares all documents to ensure compliance with ACRA’s standards.
9. Not Planning for Tax and GST Registration
Once incorporated, businesses must meet their tax obligations with the Inland Revenue Authority of Singapore (IRAS).
Common mistake: Forgetting to register for GST (Goods and Services Tax) when revenue exceeds S$1 million, or not understanding filing requirements such as ECI (Estimated Chargeable Income) and corporate tax returns.
Tip: Hire a tax consultant or accounting firm to guide you through your obligations and avoid penalties. If your business is expected to hit S$1 million in revenue, register for GST early to remain compliant.
10. Failing to Budget for Ongoing Compliance
Incorporation is just the beginning. Companies in Singapore must meet annual compliance obligations like:
- Filing Annual Returns with ACRA
- Submitting ECI and Form C/C-S to IRAS
- Conducting AGMs (unless exempted)
- Maintaining proper financial records
Common mistake: Budgeting only for initial incorporation and neglecting yearly maintenance costs, leading to late penalties or strike-offs.
Tip: Plan for ongoing expenses like company secretarial services, accounting, and tax filing. Bundled corporate service packages can help you save costs while staying compliant.
11. Ignoring Work Pass Requirements for Foreign Owners
If you’re a foreigner planning to run the business from Singapore, you’ll need a valid work pass such as the Employment Pass or EntrePass.
Common mistake: Incorporating the company without the intention or ability to legally work in Singapore.
Tip: Speak to a professional firm about visa eligibility and application procedures before registering your company. They can guide you on timelines and required documents.
12. Assuming All Licenses Are Covered by Incorporation
Incorporation does not automatically grant business licenses required for certain industries.
Common mistake: Operating a business in a regulated industry (like F&B, financial services, healthcare, education) without applying for the necessary licenses.
Tip: Use Singapore’s GoBusiness Licensing Portal to check licensing needs specific to your business activity.
Conclusion
Singapore offers one of the most efficient and entrepreneur-friendly environments for incorporating a company. However, to avoid costly missteps and future complications, it’s critical to understand the compliance landscape and fulfill all legal and procedural obligations properly.
By avoiding these common mistakes—such as ignoring resident director requirements, mismanaging compliance obligations, or underestimating the importance of professional advice—you’ll set a strong foundation for a successful business in Singapore.
If you’re unsure about any step, consider engaging a reliable corporate services provider. They can help you navigate the process, meet all statutory requirements, and ensure that your company incorporation journey in Singapore is smooth, compliant, and future-ready.