With the increasing presence of web-based businesses in Singapore, you may find different sources of information online which hint that web-based businesses do not need be registered in Singapore.
Well, there is no better way to find out than to check with the relevant authorities in Singapore, which is Accounting and Corporate Regulatory Authority (ACRA).
I recently attended a talk “ACRA@The Heartlands Public Talk – Doing Business in Singapore” where the official representative from ACRA made it clear that if you are carrying out an activity continuously for the purpose of gain/profit, you are required to be registered with ACRA.
So if you are starting a web-based business to make money, yes – you will have to register with ACRA. You can refer to the official page on ACRA’s website for more details.
Source: ACRA Facebook page
There is one exception to the above rule of thumb, which is if you decide to use only your personal name to run your business, then you are exempted from registration. But this means that you can’t use any other name to represent your business other than your personal name if you do not register your business with ACRA.
Point to note is, even if you are running a business under your personal name, your income is still taxable. Which means you will still need to declare how much money you made online every year to IRAS (Inland Revenue Authority Of Singapore).
I started my business back in 2008 and I realised the importance of having a proper business name in order to present a professional image to your website visitors, especially if your target audience are businesses.
Examples of Web-Based Businesses
Let’s take a look at some common examples of web-based businesses.
Website Advertisement / Sponsorship – Your income comes from selling advertisements online – on your website or blog. Some bloggers earn a living online by writing reviews of products or services that are sponsored by merchants. This model typically applies to people who focus on creating content online.
Selling items online – Commonly known as eCommerce, this is where you run an online shop selling physical items that you ship locally or overseas to your customers. Most eCommerce owners collect payment directly through their websites, while others choose to collect payment via bank transfer or upon goods delivery.
Selling digital items online – Examples of digital items that people sell online include eBooks, music, software, graphics and games. Most people sell these digital items through third-party platforms such as Amazon Kindle, Apple Store or ClickBank.
Providing services online – In this case, you don’t have a product but you provide a service to help people to get things done, such as designing logos, websites or business cards. You can sell your services on your own website or leverage the traffic from major platforms like Fiverr.
Why Register A Company For Your Web-Based Business?
If you are starting your own web-based business, I would strongly encourage you to consider the pros and cons of registering a formal entity for your business.
Registering a company would be beneficial especially if you have plans to scale up your business for higher income in future.
There are several advantages of registering a private limited company for your web-based business and the following are my top reasons:
No Personal Liability – When you run a business – ANY type of business – under your own name or as a sole proprietorship, your personal assets will also be liable for business damages. For example, if you provide a service online and your client decides to sue you, your personal assets will be involved, depending on the amount of the damages that you have to pay. However, when you have a private limited company, your personal and company liabilities are separate. So if you want to protect your personal assets, then registering a company is the way to go.
Lower Tax Rates – Corporate tax rates in Singapore is about 17%, which is lower than personal tax rates which can go up to 22% (as of 2017). Furthermore, there are tax exemptions for newly registered companies for the first $300,000 of chargeable income for the first three years. Refer here for the detailed breakdown.
After the first three years, companies can enjoy Partial Tax Exemption (PTE). You can read more about PTE on IRAS website.
Professionalism – In any case, carrying out business activities using a formal business name is much more professional than using your personal name. This is especially true if you are serving in the B2B (Business to Business) market. Wouldn’t it be more professional to have your customers write a cheque that is payable to your company name than your own name? Registering a company also means that you are serious about your business and this will help to improve the image of your service or product.
Things You’ll Need For Registering A Company For Your Web-Based Business In Singapore
If you are ready to register a company for your web-based business, I would suggest that you get professional help to save you the hassle of figuring out everything on your own.
Most importantly, you will have the assurance that someone is here to make sure that your business setup goes smoothly while staying in compliance with the regulations.
Here is a useful checklist of what you’ll need to prepare to register a company:
- A proposed company name – I will usually come up with a few names just in case my first or second choices have been used by other companies in Singapore.
- Business Activities – You will also need to think about the category that the nature of your business falls under. For example, if you are providing services to other businesses, your main business activity could be ‘Business Support Services’. I would suggest that you talk to your professional for advice.
- Paid up share capital – This is the amount that each shareholder pays to start this company.
- Share structure – This details how much shares are allocated to each shareholder.
- One company secretary – If you engage a corporate secretarial service provider, they will be able to help you on this.
- Registered address – This will be your office address. You can either apply for the Home Office Scheme under HDB or URA, or you can engage a corporate secretarial service provider that allows you to use their corporate address for your business.
- Personal particulars of directors and shareholders – You will need their NRIC, email address and contact number.
In conclusion, I believe it is well worth your time to consider whether you want to register a private limited company for your web-based business sooner rather than later.
I hope you have found the above information useful to help you make a better decision!
The above article is contributed by KC Tan, who has been helping small businesses to grow their business since 2008.