Many of us dream of being entrepreneurs and starting our businesses. Today, many people succeed even as solopreneurs, making this reality less far-fetched. As people have adapted since the pandemic first surfaced in 2020, we have seen an increase in small businesses globally.
Singapore has not been an exception, and the crisis has inspired a new generation of prosperous businesspeople. These days, more and more entrepreneurs are keen to start small medium enterprises in Singapore.
This does not imply that it is simple. A startling 30% of Singaporean startups fail within three years, despite a thriving ecosystem of low startup costs, grants, and support from the government.
Even if establishing a small business is an exciting idea, there are actions you need to follow to lower risks and improve your chances of success. This guide covers everything you need to know about small medium enterprises in Singapore before you decide to start your own firm.
What Qualifies as Small Medium Enterprises in Singapore?
Knowing the requirements for an SME in Singapore is the next step before beginning your SME firm. The first thing that becomes a primary need for Singapore SMEs is registering and carrying out business in Singapore.
At least 30% of the SME must be owned directly or indirectly by a local (Singapore citizen or permanent resident). Additionally, your SME must not sell more than $100 million of goods annually.
Your company’s employee count should also not go over 200. Knowing how important SMEs are to the national economy, the Singapore government set up SPRING Singapore as the main agency to look after them.
SPRING collaborates with others to help SMEs with access to markets, technology and innovation development, and finance of managerial capabilities. As a result, you shouldn’t wait to launch your SME and grow.
Challenges Faced by Small Medium Enterprises in Singapore
In a business environment that is changing so quickly, small medium enterprises in Singapore are encountering increasing difficulties. Small medium enterprises account for 99% of all Singapore firms, and many struggle to survive in their first year of operation.
It’s a fantastic time to establish your own business and wake up every day to do what you love. Managing elements of your company where you lack expertise typically comes with the pleasure and delight of running your firm.
Below are the difficulties highlighted as the top 4 challenges faced by small medium enterprises in Singapore:
Financial Uncertainties
According to a poll by SPRING Singapore, 25% of small medium enterprises in Singapore see client payment delays as their main financial concern. Many business owners have to take on the twin burdens of supplier demands for payment and delays in collecting money from clients.
A fantastic approach to maintaining a close eye on your cash flow is to use accounting software that offers simple-to-access cash flow statements.
Fewer Resources
Resources are scarce for business owners of small medium enterprises in Singapore to complete everything they need to.
Cash flow and capital limitations frequently result in a lack of technical competence and knowledge inside the organization and postpone the choice to invest in business growth and IT automation solutions.
There will always be aspects of the business you shouldn’t handle on your own, so asking mentors or knowledgeable people for advice will go a long way toward easing this restriction.
Getting and Keeping Clientele
Keeping consumers happy is the only way to stay in business, no matter how big or small your company is. Strong word of mouth is the most effective (and free) strategy to increase your company’s visibility.
Utilizing digital platforms such as Google and Facebook allow you to self-serve, offering flexibility, not requiring budget commitments, and tracking performance in real-time. This makes it a targeted, affordable way to find customers.
Government Schemes and Grants to Help Small Medium Enterprises in Singapore
The Singapore government helps businesses grow their capacities, innovate, and alter their operations to be competitive and relevant in the present and the future marketplace.
Grants, support schemes, and programs assist businesses in digital solutions, market expansion, and workforce scalability. Here are the 3 main government grants that benefit small medium enterprises in Singapore most:
1. Small Business Recovery Grant
The Small Business Recovery Grant (SBRG) offers one-time monetary assistance to small medium enterprises in the F&B, retail, tourism, and hospitality sectors, whose COVID-19 limitations have most negatively impacted over the past year.
Small medium enterprises in Singapore who are eligible for the SBRG will receive $1,000 for every local employee hired from 1 November 2021 to 31 December 2021 for whom CPF contributions were made, to a maximum of $10,000/firm.
For sole proprietorships and partnerships, if the local business owner had a net income of less than the sum of $100,000 reported to IRAS in the Assessment Year – 2021 by December 31, 2021, and the business does not employ any local workers, it will receive a payment of $1,000.
2. Productivity Solutions Grant
Technology is not about opulent, high-end, and pricey solutions. The Productivity Solutions Grant (PSG) assists businesses eager to actively embrace IT tools to improve operational procedures.
You may jumpstart your technological journey by automating current procedures and boosting productivity. PSG, for example, offers solutions tailored to the retail, food, logistics, precision engineering, building, and landscaping sectors.
PSG also encourages using solutions that span industries, such as customer management, data analytics, financial management, and inventory tracking, in addition to sector-specific ones.
Several government organizations, including Enterprise Singapore, the National Environmental Agency (NEA), and the Singapore Tourism Board (STB), have pre-scoped these solutions.
Business Gov Assist has a collection of easily adaptable options. Small medium enterprises in Singapore who are applying for the grant should consider their business demands before choosing the appropriate and suitable PSG support packages.
3. Enterprise Development Grant
The Enterprise Development Grant (EDG) supports the expansion and change of Singapore businesses. This fund supports initiatives under three pillars that can improve your company, foster innovation, or expand internationally:
- Core Competencies
By bolstering their commercial underpinnings, projects under Core Capabilities assist firms in preparing for growth and transition. These ought to go beyond simple operations like sales and accounting.
- Productivity and Innovation
Projects in the Innovation and Productivity category aid businesses that look for new opportunities for expansion or ways to improve productivity. Process and workflow reviews and redesigns may be among them. Additionally, businesses might use technology and automation to speed up mundane activities.
- Market Entry
Projects funded by Market Access assist Singapore businesses eager and willing to expand internationally. You might use the EDG to cover some expenses associated with entering international markets.
From 30 December 2020, the Market Readiness Assistance (MRA) Grant will fund Overseas Marketing Presence (OMP). Find out more about the MRA Grant on the Enterprise Singapore website.
Why You Should Consider Starting Small Medium Enterprises in Singapore
An advanced free market economy, centered mostly on commerce, banking, and manufacturing, is present in Singapore. With only 5.64 million inhabitants, it exports goods worth about S$500 billion annually, resulting in the tenth-largest foreign exchange reserves in the world.
Services comprise 80% of the labor force and contribute 75% of the nation’s GDP. The nation has managed to sustain low inflation while achieving a very low unemployment rate.
The nation’s growth rate was 4.4% in the 3rd quarter of 2022, and the per capita GDP by the end of 2022 is expected to exceed $80,000. As a percentage of GDP, its gross national savings are around 50%.
Resisting Double Taxation
With more than 50 nations, Singapore has a vast network of DTAs (avoidance of double taxation agreements). These agreements are intended to prevent double taxation on business dealings between Singapore and the treaty countries.
Furthermore, Singapore offers Unilateral Tax Credits (UTCs) for nations with which it doesn’t have a DTA. Therefore, it is improbable that a Singapore tax resident corporation will experience double taxes.
The Ease of Incorporating and Running Your Business
One of the world’s most effective and non-bureaucratic regulatory systems is found in Singapore. Singapore has topped the World Bank’s Ease of Doing Business rating for nine years.
The prerequisites and process for incorporating a business are both easy to understand. In most circumstances, registering a new company takes less than a day. Similarly, the annual compliance requirements are straightforward and free of overly burdensome documentation.
Assistance to Startups
The Singapore government’s policies, in particular, support innovation and economic progress. It offers numerous grants, tax breaks, and startup in-kind support programs.
The government can subsidize a new company’s labor expenses in a few selected sectors. Both domestically and internationally owned enterprises are eligible for these perks.
Singapore has fostered its venture funding community for the past ten years. It is currently Asia’s top location for venture capital. You can take advantage of access to these financial sources by incorporating your firm in Singapore and choosing Singapore as its location.
How We Can Help – Our Incorporation Services
Small medium enterprises in Singapore are businesses with fewer than 200 employees and a yearly revenue of less than $100 million. Small medium enterprises in Singapore are essential to maintaining economic growth since they create new jobs and increase foreign exchange.
The government is also conscious of how important small medium enterprises in Singapore are. It encourages the continuation of small medium enterprises in Singapore by providing grants and financial support.
Once you know the best way to launch small medium enterprises in Singapore, choosing Premia TNC‘s company incorporation services for your business is a crucial step that should not be overlooked.
Our business services will enhance the productivity of your company’s operations. We strive to provide customized solutions that small medium enterprises in Singapore can easily implement. Work together with our professional team of experts to improve the efficiency of your company.
Integrate accounting software with your business to automate financial statement generation, bank reconciliation, and invoice generation.
Premia TNC is ideal for any small medium enterprises in Singapore and will readily meet the organization’s needs. Contact us today for a FREE consultation with our experts on your business queries!
Small Medium Enterprises in Singapore – Frequently Asked Questions
1. How do small medium enterprises in Singapore apply for grants?
The full application procedure can be conducted online, most frequently through the Business Grants Portal, which will be welcomed news for small medium enterprises in Singapore.
The portal is a central location for submitting and following up on grant applications. Use the company’s CorpPass to log in.
2. What does Singapore consider to be small medium enterprises?
Small medium enterprises in Singapore are businesses with fewer than 200 employees and a yearly revenue of less than $100 million.
3. What exemptions are there for small medium enterprises in Singapore?
For the first 3 Years of Assessments (YA) for new companies, there is a 75% exemption on the first S$100,000 of taxable profit. Further but lower exemptions are available for subsequent profit amounts, as well as after the first 3 YAs.
4. What are the accounting standards in Singapore?
All Singapore-incorporated businesses are required by the Companies Act to compile and present financial statements under the Singapore Financial Reporting Standards (SFRS).
The SFRS, on the other hand, closely resembles the IFRS published by the International Accounting Standards Board (IASB). Contact us for a FREE consultation on how your business can comply with the SFRS.
5. What are the conditions for registering small medium enterprises in Singapore?
A foreign person or business cannot self-register a corporation. You must choose a qualified corporate services company registration to handle that on your behalf.
You must obtain an Entrepreneur Pass or Employment Pass if you intend to serve as the company’s local director. Get a FREE consultation on the company incorporation process for small medium enterprises in Singapore with us today!
6. How will I get paid from the Small Business Recovery Grant (SBRG)?
The following methods (listed in order of importance) will be used to credit payouts:
- Your GIRO bank account, which is used for income tax and GST, will be credited with the SBRG payout.
- The SBRG payout will be credited to persons without GIRO accounts who have a PayNow (for sole proprietors/individuals/private limited) or PayNow Corporate* for registered addresses for bank accounts.
