7 Common Mistakes Foreign Entrepreneurs in Singapore Should Avoid

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As one of the easiest places in the world to do business, Singapore has succeeded in attracting hundreds of foreign entrepreneurs to incorporate their business into the country every year. As a result, the city-state has become a hub for more than 7,000 multinational organizations. 

Its relatively easy business setup and favorable tax system are two of so many reasons why foreign entrepreneurs have chosen Singapore as their headquarters in Asia. However, just because the country offers many conveniences for foreigners to set up their businesses, it does not mean that they can just do so independently without making a single mistake. Having said that, foreign entrepreneurs can avoid costly mistakes if they know what to do.

Below are common mistakes most foreign entrepreneurs in Singapore make and how to avoid them.

 

#1 Not understanding the laws and obligations for foreign entrepreneurs

The first thing that can be overwhelming to foreigners is the company incorporation process in Singapore, which is a bit different from most Western countries. While the procedure is straightforward, many things can go wrong if you try to handle it alone. There is a high probability of submitting the wrong documents, which could result in the cancellation of the business application. 

The second most fatal mistake made by foreign entrepreneurs is failing to file annual returns. It is a document that every Singapore company must submit annually to the Accounting and Corporate Regulatory Authority (ACRA). The document contains important details of the company, such as the names of directors, secretaries, shareholders, and the date the company’s financial statements are prepared.

Filing taxes in Singapore can also be confusing for some foreign entrepreneurs. However, with low corporate taxes and tax incentives available to companies, you should be able to handle the tax filing process well by learning about it first. 

 

#2 Not asking help from a professional firm to fulfill compliance requirements

Trying to do everything yourself is a trivial mistake that can lead to a lot of trouble. Starting a new business, for example, can bring a lot of uncertainty. Things sometimes don’t go as expected, and when you do it on your own, you get tied up with many tasks, which is never a good thing.

To avoid this situation, you should look for the services of a trusted business establishment agent. They offer guidance on the paperwork to prepare, and most importantly, they will do the online application for you. With the help of experts, the chances of application cancellation or delayed approval are very low as they research the application documents and provide appropriate advice.

 

#3 Knowing nothing about the tax system

Not having comprehensive knowledge of Singapore’s tax system can have dire consequences for foreign entrepreneurs. Some of them fail to understand that low taxes do not mean no taxes at all. This is a costly error that is not easy to fix, so it’s crucial to pay your taxes on time, no matter how low they are.

In addition, some foreign entrepreneurs also do not know about the tax incentives from the Singapore government, which can lighten their financial burden significantly. For example, qualified new companies are granted a 100% tax exemption on the first S$100,000 taxable income and an additional 50% tax exemption on subsequent S$200,000 taxable income.

Moreover, companies that receive income from abroad can also get a tax exemption if they meet the requirements. For in-depth information about tax exemptions in Singapore, you may refer to:

What are Tax Exemptions for Singapore Companies Like?

 

There are also various other tax incentives available to companies in Singapore, such as the Development and Expansion Incentive (DEI). Thus, it is worth doing more research on tax exemptions in Singapore to know how your company can benefit from them.

Aside from doing proper research, you can also engage the services of a professional firm to help you better understand Singapore’s tax regime and government support.

 

#3 Choosing a wrong company name

Not being careful in choosing a company name can lead to trademark infringement. Therefore, it is important to do some research when selecting a company name to make sure that it is available for use.

You may be infringing someone’s trademark if you use a company name similar to an existing one. This could also confuse customers. Here are some tips to avoid such problems:

  • First, conduct a search on the name to see if another company may already be using the same or similar name;
  • Make sure the name is distinctive and easy to remember;
  • You may want to consider having your intellectual property attorney perform a professional trademark search; and
  • Lastly, make sure that the name is not so restrictive, so you won’t need to change it as your business grows.

 

#5 Having insufficient funds 

Despite claiming the top spot as the best place to do business globally, Singapore is also one of the most expensive places to live. Unfortunately, many foreigners fail to realize this once they start a business in the country, causing them to face financial difficulties later.

In Singapore, rent and labor costs can be very high, making running a business a daunting task. Therefore, it is advisable to exercise caution when budgeting and planning and even overestimating prices to absorb any shocks. Apart from that, you can also find out about business startup funding plans available to foreign investors to avoid a lack of funds.

 

#6 Hiring the wrong people

One of the biggest challenges for any entrepreneur in Singapore is attracting high-performing talent so that foreign entrepreneurs may face the same obstacles. Apart from that, talent retention is also a considerable challenge, so startups may have problems getting and retaining the best talent with the right skills and mindset to work for their companies.

A straightforward solution that can be done to overcome hiring and retention problems is to have a core team from the parent company or head office to train and guide your staff in Singapore. This way, you will save many of your company’s resources—including time and money—involved in hiring.

 

#7 Forgetting intellectual property issues

If your business is focused on developing a unique product, technology, or service, you need to consider appropriate steps to protect the intellectual property that you have created. Following are some standard protective measures you should consider:

  • Patent: This is the best protection you can get for a new product. A patent gives you the right to prevent others from making, using, or selling your patented invention.
  • Copyright: Includes original works of authorship, such as art, advertising copy, books, articles, music, films, and software. Copyright gives you the exclusive right to make copies of the work.
  • Trademarks: They protect the symbolic value of a word, name, symbol, or device that you use to differentiate your goods from others.

 

Final thoughts

By avoiding the mistakes above through the ways we have shared, you will find incorporating and running your business in Singapore easier. However, if you are not sure you can avoid all those common mistakes on your own, then it is best to consult an experienced corporate agent to lead you through every process.

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