Singapore is one of the most business-friendly countries on the globe. With its world-class infrastructure, high quality of life, and strong economic position, the city-state offers plenty of opportunities to both multinational companies and prospective startup founders like you. But before you incorporate your company in Singapore, you should first understand the costs that come with setting up your company.
From office upkeep to insurance premiums, there are a lot of factors to consider when tallying your recurring expenses. Companies in any part of the world face these recurring costs, but you may find that some of these expenses are less burdensome in Singapore. In this article, we’ll discuss some of the expenses you may incur regularly if you decide to establish operations in the Lion City.
All businesses should promptly file their taxes, but Singapore lessens this burden on business owners through various government-initiated incentives. The country’s Economic Development Board (EDB) allows qualified foreign businesses that intend to set up an office in Singapore to enjoy tax rates of 0–15 percent. Business owners also benefit from avoiding double taxation as Singapore is a signatory to the Double Tax Avoidance Agreement (DTA).
The corporate tax Singapore-based foreign companies must pay is only applicable to taxable income generated after the first three years of incorporation. While this will save you money on operational costs, it would be good to hire an accounting team that can help you keep track of these deadlines come tax season.
Rent, Upgrades, and Maintenance
Finding the right space for your operations is essential for your business to grow and survive. When setting up your business, you may need to lease an office space and pay one month’s worth of rent along with one to two months of deposit. Leased space may also go beyond the office area and include parking for employees. Rental rates in Singapore vary per district, although they usually fall within the range of SGD 4.5–9 per square metre.
As your operations grow, you may need to scale up or downsize as needed. Depending on the nature of your business, renovations could cost you a hefty amount of money. You should also take into account periodic maintenance operations to prevent health and safety hazards.
Having business insurance will ensure financial security for you and your employees in times of unavoidable circumstances. Some landlords even require businesses to have this insurance before leasing a space. General liability insurance in Singapore costs around SGD 250–280 per year, depending on the policy and coverage.
It’s not unusual for your starting capital to be insufficient to cover all that you need to start a business. Getting a business loan can help you cover the costs of renovations, equipment, and furniture. When signing up for a loan, make sure that you can repay the amount along with interest and application fees within a strict agreed-upon schedule.
Salaries and Wages
Employees are the lifeblood of any business. Staffing can be a challenge, especially for early-stage companies. You need to adequately assess the number of employees you may need in the first year of operations before choosing the right people for your team. You also need to consider the various levels of seniority in your company. Entry-level employees or positions with a more general range of responsibilities often entail lower recruitment costs. Expenses for specialised or senior positions may reach up to 20 percent of the annual salary corresponding to the position.
In January 2022, the average monthly salary for Singaporean workers was around SGD 5,783. You and your hiring team may need to do market research to determine average salaries for different positions and industries.
Marketing and promotions are key aspects of setting up a business that you should not disregard. For your marketing budget, a safe ballpark would be 8–10 percent of your projected revenue. As such, you need to set aside a workable amount to cover a year’s worth of sales campaigns and other strategies to generate leads.
Equipment, Utilities, and Raw Materials
What you pay for utilities, equipment, and related overhead expenses largely depends on the nature as well as the size of your business. For example, a constant supply of power and water is crucial for businesses in the food and beverage (F&B) industry. On the other hand, tech and media-related companies may need software subscriptions, desktop equipment, fast internet connection, and IT support.
If your business sells products rather than services, you need to consider the cost of raw materials. As in the case of F&B businesses, commodities can be price-sensitive and food always needs to be fresh.
Expenses with Good Returns
Establishing business operations takes months or even years of planning and budgeting. But while there are a lot of expenses you should consider, you shouldn’t get discouraged from starting your operations in the prime gateway of Southeast Asia. Singapore boasts a competitive economy, transparent government, and a tech-forward commerce and industry landscape that makes it attractive to both emerging entrepreneurs and multinational enterprises. Starting a business may require a lot of investing, but in Singapore, getting your venture off the ground doesn’t have to be too much of a gamble.
Aside from being a businessman, Josh Austria has been working in PR and media industry for more more than a decade. From his years of experience as the Marketing and Advertising Head of Village Pipol Magazine, he has built strong relationships with creative people, brands, and organizations.