How to Start an Online Business in Singapore
Prepare to embark on a strategic journey towards online success with confidence. This guide not only highlights the strategic benefits of launching your online business in Singapore but also offers a detailed roadmap for each crucial phase of the process. From meticulous planning to legal incorporation and the setup of a robust business infrastructure, you’ll gain the knowledge needed for a powerful start in the digital marketplace.
In the same way that Singapore is widely ranked as one of the top business incorporation locations, it doesn’t fall short from the rankings to register an online business. In fact, according to the International Wealth, it was amongst the 6 best countries to start an online business in 2022. Why exactly? Well, that’s a question we will answer throughout the length of this guide, but – for you to have a brief idea – it is expected for the net revenue of e-commerce companies in Singapore to reach $5.4 billion by the end of 2023.
As a prospective business owner, the question “how to start an online business” can be tough to even think about, especially because identifying the starting steps and path to success can often be complex. In contrast to a traditional business that operates in physical headquarters but may partially use online systems for various purposes, an online or e-commerce business is one that conducts all of its operations through the internet. In this guide, we will present you with detailed and practical steps to establish a successful online business in Singapore. Let’s get started!
Benefits of Starting an Online Business in Singapore
Singapore offers a variety of financial, compliance, and market benefits for online companies.
Business-Friendly Environment
Singapore’s business-friendly environment makes it an ideal location for entrepreneurs. Indeed, government authorities such as ACRA (Accounting and Corporate Regulatory Authority) – the registrar of companies in Singapore – provide startups and other businesses with numerous tax incentives and exemption opportunities that can help companies save hundreds of thousands in taxes. Other government bodies like the IRAS (Inland Revenue Authority of Singapore) – the government body in charge of financial matters such as tax collection – have established a stable framework that makes Singapore one of the most reliable and ethical places to manage a business. Additionally, Singapore companies are subject to a flat corporate tax rate of 17%, which is amongst the lowest in Asia. To learn more about other tax benefits in Singapore, check out our Corporate Tax Guide.
Fast and Simple Incorporation
Perhaps you thought that registering an online company in Singapore involved physically traveling to the country or taking a break from your computer. Well, we have some exciting news to share: the entire incorporation process is fully conducted digitally. It’s a very straightforward procedure, requiring just a few essentials, such as obtaining company name approval and submitting your company’s details to ACRA. In most cases, the incorporation of an online company in Singapore is no different to that of other types of companies, meaning that the process can be completed within 1-2 days.
Leading Digital Market
Aside from the impressive online revenue that the Lion City is projected to attain, another key characteristic that makes Singapore the ideal location for an online business is its highly internet-dependent population. According to Statista, 92% (5.42 million) of Singapore’s population in 2022 (5.9 million) were internet users, a number that has spiked since the Covid-19 pandemic and is expected to continue growing.
Step 1: Research and Planning
Before you begin the formation of your online company it’s indispensable to have a thorough understanding of all the different aspects that will help your company create a strong foundation. As a result, the very first step is to extensively research and plan to answer questions such as the following:
- What products/services will my business be offering?
- What is my company’s target market?
- Who are my competitors and what has made them successful?
- How will my business be financed and what is my budget?
Important Note: These questions are mere general examples, and should not represent your entire strategy. The planning phase of your company may vary by industry and other factors.
Identify Your Products or Services
Before diving into the world of online business, it is crucial to identify the products or services you plan to offer. A good starting point is to conduct in-depth market research to understand the demand for your chosen products or services.
Once you have identified your niche, consider evaluating the feasibility of sourcing or creating your products/services. In other words, determine whether you will manufacture or provide the products yourself or source them from suppliers/employees. Oftentimes there are a variety of factors that can affect this decision, including production costs.
Define Your Target Customers
To effectively market your products or services, you need to have a clear understanding of your target customers. Start by creating buyer personas, which are fictional representations of your ideal customers. Consider information such as age, gender, location, income level, interests, and needs. This information will help you tailor your marketing messages and strategies to resonate with your target audience.
Analyze the Competition
If your prospective business corresponds to a market that has been present for a long time, it is very likely that your company will face some level of competition, which can be beneficial and detrimental. Although having extensive competition might make it difficult to gain new customers, it can also serve as an analysis point to establish the core goals of your business. By analyzing your competitors, you can find the steps that have led them to success and you can identify gaps in the market that your company can tackle.
Secure Funding
Starting an online business in Singapore may require initial funding to cover expenses such as product sourcing, website development, marketing, and operational costs. Sources of funding can include personal savings, bank loans, grants, and crowdfunding. A very common source of funding is known as private equity funding, which is when private investors buy shares in your company and in return provide capital for financial investments. Additionally, as aforementioned, the Singapore government provides several tax incentives for startups such as the Tax Exemption Scheme for New Startups, which can largely reduce the required corporate taxes for the initial years of a company.
Step 2: Choosing Your Business Structure
When it comes to choosing a business structure in Singapore, entrepreneurs usually have several options to consider. The most common business structures are private limited company (Pte Ltd), partnership, limited liability partnership (LLP), and sole proprietorship. Although each structure has its own advantages and disadvantages, in the case of overseas online companies established in Singapore, a private limited company is the only option.
As the most common company structure in Singapore, a private limited company is a separate legal entity from its shareholders that offers limited liability protection, perpetual existence, and easy transferability of shares. This structure is ideal for online businesses with high growth potential, as it allows for the raising of funds through equity financing and offers credibility to potential investors.
To learn more, check out our guide about the Types of Business Structures in Singapore.
Step 3: Incorporating Your Business
Since you can only incorporate a Singapore company on your own if you are a Singapore resident, engaging a Registered Filing Agent (RFA) such as Intracorp can streamline the process and ensure compliance with all legal requirements. To register your online business, you will need to have the following information at hand:
- Company Name: Choose a name that abides by ACRA’s standards.
- Directors: Appoint qualifying company directors (Managing Director, CEO, or CFO).
- Resident director: Have at least one resident director (Singapore permanent resident, citizen, or EntrePass holder) or a Nominee Director.
- Shareholders: Shareholders can be either entities or individuals depending on the business structure.
- Registered address: Choose a registered address in Singapore (cannot be a P.O. box).
Once you provide the above information to your RFA, you can expect them to take the following steps:
- Apply for the company name approval
- Submit all company details (e.g., company directors, shareholders) to ACRA
- File the Company Constitution (formerly known as Memorandum and Articles of Association)
For most small companies it takes an estimate of 20 minutes to complete the incorporation process, which consists of the procedures highlighted above.
For a comprehensive dive into the details of company incorporation in Singapore, visit our Ultimate Guide to Register a Company in Singapore.
Step 4: Setting Up Your Company Infrastructure
At this point your online business is officially registered and you have a clear understanding of the components it should entail. Now, the process of running your business begins, which comes with the management of infrastructure and operations.
Website and E-commerce Platform
An online platform where your customers can find your company or perform e-commerce transactions – depending on your company type – is essential in today’s technology-based world. Decide whether you want to build your website by outsourcing the services of a web developer or to use an existing e-commerce platform such as Shopify. A professionally designed website built with best practices and with user-friendly navigation will enhance the customer experience and build an online presence that attracts new customers.
Accounting and Bookkeeping
Accurate accounting and bookkeeping are crucial for any business as they are legal requirements in Singapore and also necessary for effective financial management. Even though many people choose to deal with accounting later, or even prepare the accounts for the whole year in one shot, it is highly recommended to implement an accounting system in real time. There are multiple options, including completely outsourced ones, how it can be done. At Intracorp, accounting and bookkeeping are at the core of our expertise. Learn more about our Accounting Services or contact us today for professional guidance.
Business Licenses and Permits
To operate your online company in Singapore, you may need to obtain certain business licenses and permits, depending on your company’s industry and products/services. For example, if your online business involves importing high-technology products to Singapore, it is required to obtain an Import Certificate and Delivery Verification (ICDV).
Online Banking
Having a reliable banking system is crucial for managing your finances and facilitating seamless transactions for your online business. But wait! If you are planning to start an online overseas company in Singapore, how can you set a banking system in place? The answer is simple – you can conduct your banking operations with an online bank. There are numerous options you can consider to accomplish this, but they primarily fall into two categories: international banks (e.g., Airwallex, Wise) and Singapore banks (e.g., Anext, Aspire). When setting up your Singapore online company infrastructure, it is important to choose a reputable bank that offers online banking services that can fulfill your company’s specific needs.
Step 5: Marketing and Promoting Your Online Business
Even if your company already has a stable customer base, marketing your business can land you many new clients that would have otherwise never learned about your business, and – as a result – help you scale your business.
Search Engine Optimization (SEO)
When it comes to online marketing, SEO plays a vital role in ensuring that your website ranks high on search engine result pages. In Singapore, where competition is fierce, it is essential to optimize your website so that it appears in the top search results.
Social Media Marketing
Social media marketing in Singapore is highly effective due to the country’s high internet penetration rate and active social media users. To kickstart your social media marketing efforts, it is crucial to identify the right platforms where your target audience is most active (e.g., Facebook, Instagram, LinkedIn). Through these platforms, your company can create content to build its digital identity and gain new customers. Additionally, many of these platforms have advertising options that can be beneficial.
Over to You
After reading this guide, it may be clear to you that company incorporation is the easiest part of starting an online business in Singapore. Nonetheless, there are several aspects that must be accounted for after starting an online business, including gathering business permits and performing marketing strategies. To get started with the incorporation or accounting process for your company, reach out to us today! Our experts are eager to help you.
