When you have successfully immigrated to Singapore as a Dependent pass (DP) holder but now suddenly decided to set up and operate a business in Singapore. But the question that arises is, Can I Start a business via Dependent Pass in Singapore? Yes, you can operate a business in Singapore, provided that you met specific requirements.
This article is all about the complete process of incorporating a business and applying for the Letter of Consent (LOC) that makes you eligible to operate a business in Singapore.
After establishing a company in Singapore, you need to open a corporate bank account for all business-related transactions. For more information on opening a corporate bank account, you can check our article on how to open a Corporate Bank Account in Singapore.
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Determining Your Business Structure
Before you decide to register your business in Singapore with Accounting and Corporate Regulatory Authority (ACRA), as a dependent pass holder, you need to determine the type of business structure you are looking to register in Singapore. Here are the different types of business structure that dependent pass holder gets eligible to operate.
Sole proprietorship
A sole proprietorship is defined as the type of business structure whose ownership and management rest in the hand of one individual. If you seek to operate a business as a sole owner, you must consider choosing sole proprietorship as your business structure.
Among all the business structures, a sole proprietorship business is one of the easiest and less expensive businesses to set up in Singapore. In a sole proprietorship business, you won’t face complicated requirements as compared to Companies. As the owner of the sole proprietorship business, you will be entirely responsible for all the losses and profits generated in the business.
In the sole proprietorship business, the taxes charged are based on the personal income tax rate instead of corporate tax rates. This is because you and your business both will be considered a single legal entity so that you will enjoy unlimited liability. As mentioned, you will be liable for all types of business debt or any kind of legal action taken against your business.
You must read our complete guide on forming a company in Singapore to get more details on the sole proprietorship business.
Partnership
If the business entity is owned and managed by more than one person, including yourself, you must choose to register as a partnership. A partnership is a type of business structure owned and managed by a minimum of two but less than 20 partners.
In most aspects, the partnership business is all the more similar to the sole proprietorship.
- In partnership business, you will face fewer challenges in terms of compliance requirements to that of registering the company.
- A partner and several other partners will be considered as the single legal entity. However, the partner will be liable to unlimited liability not just for their own actions and debts of the partnership but also for the actions of several other partners having shares in the business.
- The tax charged by partnership businesses is based on the personal income tax rate instead of the corporate tax rate.
Company
Another type of business structure you can choose as a dependent pass holder is the company. According to the Singapore Company, a partnership with more than 20 partners can register in Singapore as a company, excluding professional partnerships. The company is considered as a separate legal entity from its owner is commonly known as shareholders. In Singapore, the private company is one of the most common and most chosen types of business structure.
A private company can be termed a non-exempt private company limited by shares or an exempt private limited company. However, a private company limited by shares has a maximum of 50 shareholders. In contrast, an exempt private limited company has a maximum of 20 shareholders. No Corporation group is granted to hold the shares in an exempt private limited company except for a non-exempt private limited company.
In comparison with the sole proprietorship and partnership, the shareholders of the company enjoy Ltd liability. This is because the company has a separate legal entity from its owners. Due to this, the company’s shareholders will not be completely responsible for any debt incurred by the company or any of the legal actions taken against the company.
However, there are several challenging compliance requirements for setting up a company in Singapore compared to sole proprietorship, including organizing annual general meetings and filing annual returns. If any of the companies fail in doing so, it might result in legal action taken against the specific company from ACRA.
Should you opt to register your business as a company as a dependent pass holder, then it must be determined that to get eligible for a letter of consent, you need to qualify as a company’s director owing up to 30% of the shareholding of the Company.
The director of the company is the individual responsible for managing all the company-related matters. They are responsible for making decisions in the favor of the company and making sure that all the compliance requirements must be met. A company director can also act as an employee of the company, but it is not mandatory that the director should be the employee.
Besides this, you can also register an offshore company in Singapore. You can check our guide on offshore companies to get more details.
Registering Your Business
Once you have decided on the type of business structure and name you are willing to choose for your business in Singapore, the Next step is to proceed with registering your business. You can do so by signing into ACRA’s Biz File+ website using your provided identification number and Sing Pass.
If you do not have Sing Pass, you can also go with the service of the registered filing agent like accounting firm, corporate services firm, and law firm, which will complete the business registration process in Singapore on your behalf.
For partnership and sole proprietorships business, you need to pay the one-year registration fees, i.e., $115, and for three-year registration fee is $175. In contrast, the standard registration fee for the company is $315.
You need to renew the partnership and sole proprietorship business registration every one or three years, depending upon the years of registration you have applied for. While company registration does not get expires.
If you’re an ex-pat looking to set up a business in Singapore, the answer is yes. In fact, foreigners are finding it easier than ever to start a company here thanks to relaxed government regulations and increased incentives.
What is a Letter of Consent?
Letter of Consent (LOC)is the certificate provided by the Ministry of manpower(MOM) to the concerned dependent pass holder to start operating their business in Singapore.
For the beginners (means for first-time candidates), the Letter of Consent (LOC)will be valid for one year following the date of its issuance or till the expiry of the dependent pass, whichever time is shorter. The Letter of Consent (LOC) can be renewed afterwards, and it will continue to be valid till the expiry of the dependent pass.
Moreover, there are several conditions that the dependent pass holder needs to fulfil for the renewal of the letter of consent.
If you already have a LOC
If you were earlier working as an employee in one of the Singapore-based companies before 1 May 2021, then you might have already acquired a letter of consent. If that Letter of Consent (LOC) is still valid and you are presently operating a business in Singapore, then you can continue to use the same letter of consent until it expires.
You are also required to apply for the renewal of the previously issued letter of consent until 30 April 2022. Then you need to fulfil the specified eligibility criteria for a Letter of Consent (LOC) renewal to continue running a business in Singapore.
What about the LOC for LTVP/LTVP+ and PLOC holders?
You must not get confused between the Letter of Consent (LOC)for the dependent pass holder with the Letter of Consent (LOC) for Long-Term Visit Pass (LTVP or LTVP+)holders, which is generally issued by the immigration and checkpoints authority.
The Letter of Consent (LOC) for LTVP/LTVP+ holder only grants the holder to get employed in Singapore, and their concerned employer is responsible for applying for a Letter of Consent (LOC)for the applicant. On the other side, the dependent pass holder needs to apply the Letter of Consent (LOC) on their own, which grants them to operate a business in Singapore.
Being a dependent pass holder, if you intend to get employed in Singapore rather than operating your own business, in that situation, you will require applying for the employment pass, work permit, and S pass rather than a letter of consent.
The Letter of Consent (LOC) for dependent pass holders is also quite different from the Pre-approved LOC (PLOC) for LTVP/LTVP+ holders. By holding the pre-approved Letter of Consent (LOC)is pre-approved to get employed in Singapore, and you can only apply for a pre-approved Letter of Consent (LOC)at the time of applying or renewing LTVP/LTVP+. Being a dependent pass holder, you do not need to apply for the PLOC.
Applying for a Letter of Consent (LOC) as a DP holder in Singapore
You can apply for the Letter of Consent (LOC) without any charges, and its complete process takes up to 4 weeks. Moreover, prior to applying, make sure to check that your dependent pass has a validity of a minimum of three months. If the validity of your dependent pass is less than three months, you will first need to apply for the renewal of the dependent pass.
To apply for the letter of consent, the dependent pass holder will be required to submit an online request by submitting the LOC request form. You will receive the outcome of the request within one week.
If your request for the Letter of Consent (LOC) gets approved, the next step is to apply for the LOC through eService EP Online. You have the option to track your application status after three weeks. No doubt, your application might take longer only if the relevant authority requests the additional information for approval.
After your application for a Letter of Consent (LOC) gets approved, you can take the printout of your Letter of Consent (LOC) from EP online.
Remember that you can only proceed to operate your business in Singapore after acquiring the consent letter.
How to Renew the Letter of Consent
You can renew your Letter of Consent (LOC) at the time of renewing your dependent pass; you should not apply for the renewal earlier than six months prior to the expiry of LOC.
Luckily, you do not require to pay any fees for the renewal as well. In most cases, its renewal gets processed within three weeks. Just like earlier, when you check the validity of the dependent pass prior to applying for the new letter of consent, in the same way, you have to check the validity of the dependent pass prior to applying for the renewal of the letter of consent.
However, you are also required to fulfil the specified eligibility criteria for renewing your letter of consent. A few of the eligibility criteria include; you must appoint at least one Singaporean or permanent resident who is being paid the fixed monthly salary of $1,400 or more. The hired Singaporean or permanent resident must have received the central Provident fund contributions for a minimum of three months.
You can apply for the renewal of the Letter of Consent (LOC)by logging into the EP online.
What If Your Business Is No Longer Active?
If your business has been wound up or is no longer active, then you will require to apply for the cancellation of your letter of consent.
You need to apply for a Letter of Consent (LOC) cancellation within a week following your business final day of operation. However, you can submit the cancellation request of LOC 14 days prior to the designated date of cancellation.
You may also solve all the outstanding issues that are related to the winding up of your business. If any.
In order to cancel the letter of consent, you need to log in to the MOM portal. The cancellation of the consent gets processed immediately.
What Happens If Your Dependent’s Pass Expires?
Upon the expiry of the dependent pass, the Letter of Consent (LOC) will automatically become invalid. If this happens, you need to stop running your business in Singapore.
In simple words, you need to make sure that your business operation doesn’t get affected, so you need to apply for the renewal of the dependent pass prior to its expiry date. You can request the renewal for up to 6 months prior to its expiry by paying the fees of up to $225. If you missed the deadline to apply for the pass renewal, you would be required to again apply for the new pass, which will cost up to $105 for the application and an additional $225 for each pass issued.
What Should You Do If You Lose Your Letter of Consent?
If you have misplaced or lost your LOC, in that case, you will require to file a report regarding the loss of consent. At the same, you can also request the replacement of the LOC.
If You are Not a DP holder but Wish to Run a Business in Singapore
If you hold an employment pass or work permit, you will not be eligible to establish a partnership and sole proprietorships in Singapore. Still, you get eligible to establish and hold shares in the company, only on the condition that you do not register yourself as the director of the particular company. If you hold shares in a particular company, you will not be able to work or get employed in the company.
If you presently hold LTVP or LTVP+, you can register a company in Singapore and include a person who is generally a resident in Singapore (like Singapore permanent resident or Citizen) as a company director. You should not be serving as a director or a shareholder during the company registration in Singapore. However, you can work as an employee in a specific company if the company’s employer applies for the Letter of Consent (LOC) on your behalf.
Additionally, if you hold the EntrePass, you will enjoy the most flexibility in setting up business in Singapore. Being an Entre Pass holder, you get eligible to establish a business structure as per your own choice, whether it’s a partnership, sole proprietorship, or a company.
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The above article might have explained everything that you must know before starting a business via Dependent Pass in Singapore. Carefully read each term in the article to get familiar with everything that makes a successful business registration.
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