First year in business: What are the regulatory requirements?

Aha! You have come up with a brilliant idea for a new product or service that will revolutionise the market and are eager to bring your vision to reality. But as you begin doing your research on where to begin, you soon find yourself chest-deep in regulations, administrative processes and operational matters that you scarcely understand.

Ask any business owner and they will tell you that the road to a thriving business is long, hard and uncertain. The learning curve is steep, particularly so in the first year when you are diving into completely unfamiliar territory.

Through the lens of an aspiring bookstore owner, learn about the different regulatory hoops new business owners need to jump through when running a business, including administrative processes, financials, and hiring.

Month 0: Incorporating the business

The first thing entrepreneurs need to do is to register their business, which comprises a few steps.

First, they will need to determine basic information like the Singapore Standard Industrial Classification (SSIC) code which defines the nature of the business activity, business structure and address. For instance, a bookstore business would have a SSIC code of 47610 on the bizFile+ site.

New business owners can also turn to GoBusiness’ e-Adviser for Business Structure for guidance on which business structure to register under. In this case, the entrepreneur eventually decides to proceed as a Local Company and proceeds to source a potential site for the bookstore.

Upon finding a perfect location for the bookstore, the entrepreneur now has a business address and can register the business with the Accounting and Corporate Regulatory Authority (ACRA). The entrepreneur then applies for a company name and officially incorporates the business.

This involves providing key information like when the financial year will end and personal information about appointed business officers, including the entrepreneur as the director and the business partner as the secretary.

With the incorporation completed, the entrepreneur is officially a business owner and will receive a UEN for the business, which can then be used to register for a Corppass to access the necessary government services.

Month 1: Licences, bank accounts and more admin matters

With the basics covered, the bookstore owner can start looking into the next steps. This includes discovering which licences are required, opening a corporate bank account, and registering for a CPF Submission Number in preparation for hiring their first employee.

Besides the above, business owners also need to set up a Register of Registrable Controllers (RORC) and file the required information with ACRA.

The RORC is a register that comprises the particulars of the company’s registrable controllers (RCs) - individuals with an interest in more than 25 per cent of shares in a company, holds more than 25 per cent of members’ voting rights in a company or can exercise significant influence or control over a company. This needs to be done within 30 days of business incorporation.

Month 2: Hiring and grand opening

With a majority of the administrative matters out of the way, now comes the fun part! Entrepreneurs can look into renovating their shopfronts and begin hiring staff in preparation for opening.

Since the bookstore owner intends to hire both local and foreign workers, there are still a few steps to take before opening the doors. This includes assigning the Work Pass eServices to required officers on Corppass, registering for a Work Pass Account, setting up GIRO for Foreign Worker Levy payments, arranging accommodations for the workers if needed, and ensuring that the staff has attended the necessary training courses.

Additionally, the bookstore owner will need to obtain work injury compensation insurance for all staff before they begin work.

And now, the bookstore is ready to open its doors!

Month 3: Routine administrative requirements

Business is up and running, but on the backend, there are still administrative and financial matters to take care of month-to-month.

Since there are foreign employees on the payroll, the bookstore owner will need to keep an eye out for the MOM Foreign Worker Levy bill that will come in on the 6th of every month. Having set up GIRO the month before, payment for the levy will be automatically deducted by the 17th of each month.

Additionally, having Singapore Citizens and Permanent Residents means that the business owner needs to make an employee CPF monthly contribution and Skills Development Levy payment by the last day of each month.

Months 4-6: Take note of quarterly requirements

The new bookstore has found its way to the pages of several popular lifestyle blogs! Business is booming, and there is a need to hire more staff to keep up with the crowd.

As the team expands, business owners need to update the Occupational Employment Dataset (OED). This needs to be done within 14 days from the end of each quarter. For instance, employment data from January to March will need to be updated by 14 April.

While the new shopfront may not be GST-registered yet, GST filing and payment is another quarterly requirement that business owners may need to take note of if their taxable turnover is more than $1 million at the end of the calendar year or expected to be more than $1 million in the next 12 months. GST-registered businesses will need to e-file their GST returns quarterly, via IRAS’ Seamless-Filing-From-Software (#SFFS) or myTax portal, within one month from the end of the GST accounting period.

This means that for a quarterly GST accounting period of 1 July to 30 September, businesses will need to e-file the GST returns and make payment by 31 October if they are not on GIRO. Alternatively, if there is a GIRO arrangement with IRAS, payment deduction will take place on 15 November. GIRO is the preferred payment mode as it provides businesses with hassle-free tax payment through automatic payment deduction from bank account.

Months 7-12: Taxes

For new business owners, corporate taxes need not be filed during the first year of incorporation. Business owners are required to file their Estimated Chargeable Income and Corporate Income Tax annually, from the second or third year depending on when they close their first set of accounts.

Finally, businesses will have to file the annual returns with ACRA. This involves holding an annual general meeting, and presenting financial statements and updates to company members within six months from the end of the financial year, and subsequently filing annual returns one month after that.

Congratulations! You’ve survived your first year in business!

Starting and running a business is no easy feat. Entrepreneurs will have their hands full with trying to ensure healthy margins, managing staff, daily operations, and navigating the numerous regulations surrounding administrative and financial matters.

If this journey resonates with you, check out GoBusiness’ Regulatory Requirements Guides. Organised according to business structures and by timeline, these guides provide a comprehensive overview of the essential tax and compliance rules that every business owners in Singapore need to undertake when running a business.