Key Takeaways
- A Singapore home-based business may fall under either the Home-Based Business Scheme or the Home Office Scheme.
- Small-scale home-based activities generally do not require HDB approval, but they must not disturb neighbours or change the residential character of the home.
- Home Office Scheme users must register the home office and pay the applicable administrative fee.
- ACRA registration is required unless the business operates only under the owner’s full NRIC name.
- Food, beauty, tuition, employment, GST, PDPA and sector-specific rules should be checked before operations begin.
As the entrepreneurship landscape evolves, the prospect of running a business from the comfort of your home has gained unprecedented traction. This step-by-step guide is crafted to be your compass, navigating you through the intricacies of how to start a home based business in Singapore with precision and clarity.
What is a Home Based Business in Singapore?
A home based business in Singapore is a small-scale business activity carried out from a residential address, subject to HDB, URA and other agency conditions. Depending on the activity, it may fall under the Home-Based Business Scheme or the Home Office Scheme. The home must remain primarily residential, and the business must not create nuisance, safety risks or unauthorised traffic.
A home based business is a small-scale venture operated from home, eliminating the need for external office space. It’s a one-person show, with the business owner managing everything.
This approach has become increasingly popular in Singapore, especially since the COVID-19 pandemic, as more people opt for small businesses run from home. It’s a practical choice, minimizing costs and seamlessly integrating work into daily life. Home based businesses represent a shift towards independence and adaptability, shaping Singapore’s new era of entrepreneurship.
Singapore distinguishes between two common home-business routes. The Home-Based Business Scheme is generally meant for small-scale activities such as home-based food preparation, sewing, private tuition, beauty services and freelance work. Under this scheme, only residents living in the home should be involved in the business operations.
The Home Office Scheme is intended for small-scale office or administrative work, such as consultancy, accountancy, design, trading offices and technology-based services. It is not meant for customer-facing activities at the home, and physical meetings with clients or customers should not be conducted there.
Advantages of a Home Based Business in Singapore
Starting a home based business has clear perks. One significant advantage is the flexibility to set your work hours, fitting your business around your life. The low start-up costs make it an economical choice, especially for those wanting to be mindful of their savings.
Using your home as your business base lets you test your ideas without a significant financial commitment, making it a practical and cost-effective way to kickstart your entrepreneurial journey.
Disadvantages of a Home Based Business in Singapore
Starting a home based business in Singapore has downsides to consider. One challenge is the potential for isolation since working from home might limit networking opportunities. Another issue is blending personal and work life, which can lead to burnout.
Additionally, home based businesses may face limitations on growth due to space constraints. There’s also a concern about the perceived professionalism, as clients might question the credibility of a business run from a home address.
Common types of Singapore Home Based Businesses
In Singapore, home based businesses span diverse industries, offering entrepreneurs the flexibility to pursue their passion or expertise. Here are some common types:
- Food Businesses: Small-scale baking ventures are popular, allowing individuals to turn their culinary skills into a home based business.
- Beauty Services: Hairdressing, facial and beauty services and manicure or pedicure services can be conveniently offered from home.
- Private Tuition: Providing private tuition for no more than three students at a time may fall within the Home-Based Business Scheme, subject to the applicable residential and nuisance conditions.
- Freelance Professions: Various freelance opportunities exist, including roles as artists, journalists, photographers, and writers, enabling individuals to showcase their creative talents.
- Consultancy: Home-based consultancy services cover a broad spectrum, including business, engineering, IT, management, or education consultancy.
- Technology-based Businesses: With technological advancements, various knowledge-intensive businesses, such as software development or online consulting, can be run from home.
Government Requirements for Singapore Home Based Businesses
Setting up a home based business in Singapore involves meeting specific government requirements to ensure legal compliance. Here’s a simplified breakdown:
- Business Registration: Register your business with ACRA through Bizfile if you are carrying on business under a business name. Registration may not be required if the business uses only the owner’s full NRIC name, but names with additional descriptive words generally require registration.
- Zoning and Home Office Approval: Check whether the activity falls under the Home-Based Business Scheme or the Home Office Scheme. Small-scale Home-Based Business Scheme activities generally do not require HDB approval, but Home Office Scheme activities require registration with HDB or URA depending on whether the premises is an HDB flat or private residential property.
- Tax Registration: Register for GST if your taxable turnover exceeds S$1 million under the retrospective view, or is expected to exceed S$1 million in the next 12 months under the prospective view. The current GST rate is 9%.
- Permits and Licenses: Secure any necessary permits or licenses depending on your business type.
- Employment Regulations: If hiring, understand and comply with employment regulations and labor laws.
- Intellectual Property Protection: Protect your unique products or services through trademarks or patents.
- Industry-Specific Compliance: Be aware of and comply with industry-specific regulations relevant to your business.
Meeting these requirements ensures your business operates legally and is well-positioned to succeed in Singapore.
Business Registration Process
Starting a home based business in Singapore involves a straightforward business registration process. Here’s a step-by-step guide to help you navigate through the procedures:
1. Understand Your Home-Business Scheme
Before diving into the business registration process, identify the home-business scheme that best suits your activities. Two typical schemes are:
- Home Based Business Scheme: Ideal for small-scale activities such as home-based food businesses, hairdressing, facials, manicure or pedicure services, private tuition for no more than three students at a time, sewing, and freelance work. Only residents living in the home should work for the business.
- Home Office Scheme: Suited for small-scale office or administrative functions such as accountancy services, consultancy, design, technology-based services or trading offices. For HDB flats, up to two non-resident employees may work in the flat, subject to the scheme conditions.
2. Comply with Provisions and Guidelines
Once you’ve identified your scheme, ensure compliance with provisions and guidelines. Key steps include:
- Registering with ACRA: Most businesses carrying on business under a business name must register with ACRA through Bizfile. You generally do not need to register if you use only your full NRIC name, but adding descriptive words such as “Flowers by Tan Mei Ling” would require registration.
- Criteria for Exemption: Familiarize yourself with the requirements for exemption outlined in the Business Names Registration Act.
- Registration Process: Use ACRA’s Bizfile to reserve a business name and register the appropriate business structure, such as a sole proprietorship, partnership or company. GoBusiness should be used for relevant licences, permits and Home Office Scheme applications where applicable.
Applying For Relevant Licenses And Permits
Once your home based business is registered, obtaining the necessary permits and approvals is the next crucial step. Here’s a guide on the appropriate procedures:
Relevant Licenses/Approvals
- Home Based Business Scheme: Businesses such as freelance artists or small-scale services under this scheme generally do not need HDB approval, provided the activity remains small-scale, does not cause nuisance and complies with all applicable agency requirements.
- Home Office Scheme: Home office operators must register under the applicable HDB or URA Home Office Scheme before using the home as an office. HDB’s Home Office Scheme registration is valid for the duration of the home office business and may be revoked if conditions are breached. A non-refundable S$20 administrative fee applies for HDB applications.
- You must obtain the owner’s consent prior to submitting an application.
- The business must also obtain any relevant approvals, permits or licences from other agencies before registration or operation, where applicable.
- Physical meetings with clients or customers should not be conducted in the home under the Home Office Scheme.
Residential Considerations
- Conditions of Use: Residents undertaking home-based activities must be courteous to their neighbors, and the property must keep its residential character.
- Conditions of usage for private residential homes and public housing (HDB flats) must be followed by home businesses.
- Prescribed Conditions: Under HDB and URA home based business schemes, residents must meet specified conditions, ensuring that the business doesn’t significantly alter the residential nature of the premises and doesn’t cause disturbances to neighbors.
- Non-compliance may result in a directive to cease operations or relocate to commercial units.
Industry-Specific Protocols
- Zooming In on Requirements: After registration and licensing, focus on industry-specific protocols and requirements.
- Different industries have varied protocols and licenses, so business owners must ensure all necessary paperwork is in order.
- Examples:
- Home-based food businesses currently do not require an SFA licence, but anyone preparing and selling food from home must comply with SFA’s prevailing food safety requirements.
- Attendance at food safety training may be useful for home-based food operators, but operators should check SFA’s current requirements for their specific food activity before selling.
- Technology companies should consider filing patent applications to protect their intellectual property.
Practical Compliance Checklist Before You Start
Before launching, prepare a simple compliance checklist:
- Confirm whether your activity falls under the Home-Based Business Scheme or Home Office Scheme.
- Check whether your business name must be registered with ACRA.
- Confirm whether your activity is prohibited from home, such as massage or spa services, animal-related services, catering, restaurants, clinics or other higher-impact uses.
- Check whether your industry needs a licence, permit or professional registration.
- Keep accounting records and monitor taxable turnover for GST registration.
- If collecting customer names, phone numbers, addresses or order details, put basic PDPA safeguards in place, including clear consent, secure storage and limited access.
- If hiring staff, comply with MOM employment requirements, CPF obligations and work pass rules where applicable.
How We Can Help: Our Incorporation Service
At Premia TNC, we understand the complexities of starting a home based business in Singapore. Our dedicated incorporation service is tailored to guide you seamlessly through the process, ensuring compliance with all regulatory requirements.
From navigating the complexities of registration to providing accounting services, our expert consultants are here to streamline your journey. Let us empower your entrepreneurial aspirations. Contact us today for a FREE consultation and take the first step toward realizing your home based business dream in Singapore.
FAQs
1. Which type of business can I run from home?
Many small-scale businesses can be run from home, including food preparation, selected beauty services, private tuition, freelance work, consultancy and administrative office activities. However, the permitted route depends on whether the activity falls under the Home-Based Business Scheme or the Home Office Scheme, and some activities are not allowed from residential premises.
2. Do I need a license to operate a home-based business?
It depends on the activity. Small-scale Home-Based Business Scheme activities generally do not require HDB approval, while Home Office Scheme activities require registration with HDB or URA. Separate licences or permits may still be required for regulated sectors.
3. What industry-specific requirements should I be aware of?
Different industries come with specific protocols and licenses. It’s essential to focus on the requirements relevant to your field to ensure comprehensive compliance.
4. Do home-based food businesses need an SFA licence?
Home-based food businesses currently do not require an SFA licence, but they must comply with SFA’s food safety requirements. Operators should maintain hygiene standards, avoid unsafe food handling practices and check the latest SFA guidance before selling food to the public.
5. Do I need to register for GST?
You must register for GST if your taxable turnover is more than S$1 million at the end of the calendar year or if you expect taxable turnover to exceed S$1 million in the next 12 months. Businesses below the threshold may consider voluntary registration if they can meet IRAS conditions.
6. Can I meet clients at home under the Home Office Scheme?
No. Under the Home Office Scheme, the home should be used for office or administrative work, and physical meetings with clients or customers should not be conducted at the residential premises.
