E-commerce has become a viable and more practical substitute for traditional brick-and-mortar retailing. Many companies now have online stores where customers can make purchases directly.
Starting a company and the company incorporation process can be a challenging task, especially for new business owners. This article presents the five steps on how to start an online business in Singapore.
It will also cover the benefits of launching an online business venture and why Singapore is the ideal place to do so.
What Is An Online Business?
Before diving into how to start an online business in Singapore, what exactly is considered to be an online business?
An online or e-commerce business is any type of business activity that occurs on the Internet. Its framework is unique and distinct from a regular corporation or a private limited company. Online businesses usually adopt one of the following forms:
- Retail: sale of goods via an online store or marketplace
- Services: Remotely delivering services like instruction, consulting, and management
- Apps/SaaS: Making apps or software available as a service (SaaS) for sale or subscriptions
- Content: Creating online material, such as podcasts, videos, blogs, music, and books that are available for purchase or subscription or to draw sponsors and advertisers
In contrast to traditional businesses, learning how to start an online business in Singapore would allow you to use web-based platforms to do business with potential clients and customers, and focus its promotional campaign on online advertising.
5 Benefits Of Starting An Online Business
E-commerce, also called electronic commerce, is the purchasing and selling of goods and services over the Internet.
The growth of e-commerce and the steady rise of online stores has been happening fast, which is why many people are now interested in learning how to start an online business in Singapore. Here are the top 5 benefits of launching an online business.
1. Low Startup Costs
Creating your online store will cost less money than opening at a physical location. You won’t have to consider the significant costs associated with rent, store design, building, and maintenance.
If you’re looking for the easiest ways of how to start an online business in Singapore, you can start by selling through e-commerce platforms like Shopee or Lazada.
You won’t even need to spend money on website development and maintenance because signing up for these platforms is free.
2. Large Customer And Client Base
Another major reason you should learn how to start an online business in Singapore is that there is already a large existing potential client base. Out of the 5.6 million people in Singapore, 4.7 million use the Internet every day and 2.9 million have engaged in e-commerce.
This means businesses have a vast pool of potential customers to sell online to. With nearly 100% internet penetration and a developed online payment and logistics infrastructure, Singapore is one of ASEAN’s top markets for e-commerce.
3. Open 24/7
Your business is open 24/7 if your goods and services are offered online. Customers can still buy your goods at any time of day or night. You can still have your operating hours and be available to answer calls and emails and talk to customers, but there isn’t a “closing time” for your business.
4. Location Independence
A significant benefit of starting an online business in Singapore is that you do not need a physical place for your business.
Depending on the scale of your company, you can work from home or rent an office. Plus, moving to a new site to accommodate growth is relatively simple as your business grows.
5. Ability To Automate Many Parts Of The Business
Running an online business allows you to automate tasks that you would otherwise need to subcontract or take the time to complete yourself. This advantage lowers your operating expenses in addition to simplifying processes.
Everything can be pre-scheduled to automatically occur, including social media postings and email communications. Orders can automatically be sent to suppliers as they come in, allowing your company to run independently.
3 Reasons Why Singapore Is The Best Place To Start An Online Business
E-commerce has enormous business potential, especially given Singapore’s accommodating business environment. Before learning how to start an online business in Singapore, learn why Singapore is the best place to launch an online business.
1. Singapore Has A Business-Friendly Government
One of the top reasons why you should start an online business in Singapore is that you will receive ample government support.
There are numerous commercial and merchant banks, fund managers, and capital markets in Singapore that make it easy to obtain essential capital at reasonable interest rates. The government also oversees several programs encouraging businesses to expand their online presence.
Singapore’s government supports local enterprises, especially those foraying into the science and technology-related sectors, as part of its effort to foster digital transformation in the city-state.
For instance, the government has made it easier for business owners to get started with an online business in Singapore by making the cost of business registration low and straightforward via the GoBusiness platform, which was introduced in 2019.
2. Singapore Has An Efficient Tax System
Singapore’s effective tax structure is another advantage of getting into how to start an online business in Singapore here.
All legally established companies in Singapore can take advantage of competitive tax rates and occasionally even tax exemptions that help them increase their profit margins.
By satisfying requirements under the city state’s free trade agreements with other nations, your business may be eligible for tax incentives.
3. Singapore’s Population Is Dependent On The Internet
Most Singaporeans use the Internet for nearly everything, including bill payment, shopping, service bookings, communicating with friends, etc.
Learning how to start an online business in Singapore allows you greater marketing reach without the limitations of running a physical store that mainly depends on foot traffic.
Around 3.3 million Singaporeans purchase online, according to data on online behavior in the city-state. In 2022, it was predicted that Singapore’s e-commerce market would generate $7.29 billion in revenues.
In terms of turning data into insights, Singapore offers you a market with an embedded tech-savvy culture and a favorable attitude toward online shopping, making it an ideal location for starting an online business in Singapore.
How To Start An Online Business In Singapore
While launching an online business can potentially be a successful business idea, learning how to start an online business in Singapore entails more than just creating a website and making some progress on sales.
Starting an e-commerce company involves careful planning, time investment, innovation, and initial financial backing. Here are the five steps for how to start an online business in Singapore.
1. Research and plan
The first step in learning how to start an online business in Singapore is preparing good market research, analysis, and planning that can help significantly establish the potential of your business idea. Think of a plausible business idea that answers market demand.
Your potential market can be broad or narrow, but there must be a definite need that your company should attempt to meet. In general, it is crucial to evaluate the feasibility of your idea before forming your business and beginning to invest your hard-earned money in the endeavor.
You must be able to identify the following after conducting your research and planning:
- Goods or services you’ll provide
- Your target customers
- Advantages and disadvantages of potential competitors
- Suppliers
- Your business’ strength
- A contingency plan
Then, you should develop a practical action plan for your online business after conducting your research and analysis.
2. Define your product or service
There are a vast number of online businesses. Due to this, you must ensure that your product or service stands out from any possible competitors. Review the following essential product categories:
- Physical goods. These tangible items must go through production, warehousing, and delivery to customers.
- Digital products. You can also market and sell digital goods, which a buyer can download. These include eBooks, audiobooks, podcasts, online courses, and more.
- Services. One of the quickest methods to launch an online business and make money is by selling services. But you must remember that this is a business model where you offer your time, which may constrain your earning potential.
3. Understand Singapore’s regulations for online businesses
All online content in Singapore, including those from online businesses, is deemed broadcast media entities under Singapore law. It is therefore governed by Singapore’s Broadcasting Act and the Infocomm Media Development Authority (IMDA).
While preparing yourself on how to start an online business in Singapore, you should check to see whether you need a permit depending on the goods or service you want to sell to the general public.
Some online businesses (commonly referred to as “class licensees”) are automatically licensed and, as a result, are not required to apply for one to start operating as an online business.
Additionally, depending on the goods or services you’re offering, your online business may be subject to additional restrictions. This means that you should contact the appropriate agencies to find out if these regulations apply to your online business.
4. Incorporate your business
You must incorporate your business before you can implement your plan. Specifically, you are required by law to register your company with the Accounting and Corporate Regulatory Authority (ACRA) before beginning commercial operations in Singapore.
Remember that your business structure will affect your liability risk, taxes, and capacity to raise funds and operate the business. The four common business structures are:
- Sole proprietorship
- General partnership
- Limited liability partnership
- Limited liability company (also known as a private limited company)
Due to the many benefits, most business owners in Singapore choose to form a private limited company. These benefits include the capacity to operate legally, limited liability, a reputable image, perpetual succession, and tax breaks.
The government requires the following when incorporating an online business:
- Business name
- A minimum of one local director
- One local secretary
- Registered address in Singapore
- Company constitution
- Particulars of the officers
- Financial year end of the company
5. Establish necessary infrastructure
Depending on the goods or service you intend to market, you may need a supporting infrastructure. Everything you require to sell and deliver your goods to online customers is considered infrastructure.
This can comprise resources like facilities, personnel, IT systems, and business procedures to support your company’s functional divisions. Your activities can be efficiently carried out by selecting the appropriate infrastructure compatible with your business strategy.
The following are the common infrastructure you need to secure when starting an online business in Singapore:
- Website or online platform
You should hire someone to create a website for you if you want to establish your own brand. Think about your website’s host, design, and domain name. You may want to consider using Shopify or other subscription-based e-commerce software while creating your online store.
- Marketing and advertising
To ensure that more people are aware of your business, you need to have a solid marketing strategy. Many online business owners use social media sites, and other paid marketing channels to promote their goods and services.
- Financing
Your bookkeeping and accounting obligations for financial matters can be outsourced to a company, handled internally or combined.
This is particularly important since, in addition to ensuring that your business remains compliant with the government’s tax and accounting laws to avoid any fines, these duties also help ensure that your cash flow is kept under control.
How We Can Help – Our Company Incorporation Services
Now that you know how to start an online business in Singapore, you know that company incorporation is the first step to becoming a legitimate online business. That said, your legal paperwork must be done right the first time.
Do you have a new online business or startup that you want to establish in Singapore? Premia TNC is here to help.
Our highly qualified corporate professionals are here to assist you with all company incorporation registration requirements and guide you as you embark on your online business venture.
Our mission is to streamline the process of starting a new business while providing unmatched service, so you can hit the ground running.
Let Premia TNC remove the stress and worries of incorporating your online business in Singapore. Contact us today for a FREE consultation!
Frequently Asked Questions
1. Do I need to register my online business in Singapore?
Yes. Entrepreneurs in Singapore who engage in revenue-generating activities, including running online stores, must register their businesses. Even if you run a small business, you must complete the necessary paperwork and adhere to government regulations.
2. Is e-commerce business profitable in Singapore?
Yes. An e-commerce business in Singapore can be lucrative if you understand your market, have a strong lineup of goods to sell, and invest in your online marketing campaigns at the opportune moment.
Remember that online businesses thrive due to people’s reliance on the Internet for daily tasks.
3. How much does it cost to register an online business in Singapore?
While various applications have different fees, the general registration cost in Singapore is S$315.
4. Do I need to register my small online business in Singapore?
Yes. Any business venture, whether it is a physical store or an online store, needs to be registered in Singapore. Specifically, you are required to register as a business if you engage in any profit-generating activity regularly unless you are exempt.
5. Which businesses are exempted from registration?
If you and all of your business partners (if any) decide to use your complete names as they appear on your NRICs to conduct business, your company is exempt from registration.
Otherwise, engaging in business without registration carries a fine of up to $10,000 or a period of imprisonment not exceeding two years, or both.
6. Do I need to pay taxes for an online business in Singapore?
Yes. If you sell products or services consumed in Singapore, you must pay the Goods and Services Tax (GST), sometimes known as VAT in other countries.
If your annual revenue is less than SGD 1 million, you are exempt from GST registration, but you must be GST-registered to be allowed to levy this tax (the current rate is 8%).
