Singapore is the perfect place to start up your dream business – just ask Charlie Cameron of interiors and lifestyle blog Lottie is Loving, stylist Hong Henwood of Affordable Style Files, or our very own Honeycombers founder, Chris Edwards! Being struck by that lightbulb moment may seem hard, but what’s much tougher is negotiating the minefield of The Ministry of Manpower (MoM) rules for foreigners registering a small business in Singapore. Previously, if you were on a Dependent’s Pass and wanted to launch a small business – or work as a freelancer or consultant – you could register your own business and apply for the crucial Letter of Consent (LOC) that would enable you to work. But the laws changed last year, making the whole thing even more confusing. Scroll down the feed of Facebook support groups in Singapore and you’ll see that the biggest question on everyone’s lips is: “If I’m on a DP, can I still be a sole proprietor to freelance, or start my own business?” As working mums at HoneyKids HQ, we know how important it is to pursue your passion, so we’ve gone straight to the experts, Jan Young of Expat Consulting and Lorraine Rajeck of The Expat Touch Partnership, for clear advice on how to do just that…
There are loads of clever mumpreneurs (and dadpreneurs) keen to freelance or start a business in Singapore. How do the recent changes to MoM laws relating to small businesses affect them?
Jan: Holding a Dependant’s Pass (DP) has never been enough to be employed legally in Singapore; prospective business owners must also apply for a Letter of Consent (LOC). In May 2016 The Ministry of Manpower changed the rules so that applications for LOC are now considered only for employment with Singapore employers. What that means in practice is that it’s now not possible to be a foreign business owner and be approved a LOC. This is why many people are now looking to register companies.
Is it possible to still obtain a simple letter of consent (LOC)?
Lorraine: Yes, it’s possible and not hard to obtain a Letter of Consent. However, DP holders can’t obtain a LOC to freelance or work for their own (or their spouse’s) business. LOCs are only available if you secure employment with an employer in Singapore. It’s very important that foreigners know they must receive permission from the MoM in order to carry out any work in Singapore.
Are there now two different types of business models: (a) proprietary limited company, and (b) sole trader? Does this make it harder for those on a DP to start a business?
Jan: There are several different types of legal entities for business owners, with sole proprietorships, partnerships and limited companies being the most common. Sole proprietorships have always been the most attractive as they are cheaper to set up and administer. However, the rule changes now encourage entrepreneurs to set up companies more seriously – it’s an alternative way to achieving your goals with the added benefit of a sizeable tax relief in the first three years of assessment.
So, if the sole proprietor option is not readily open to foreigners, how do you go about setting up a company?
Jan: There are five key requirements to register a company in Singapore: a shareholder, a resident director, a minimum of $1 share capital, a registered office address and a company secretary. Foreigners can’t register the company themselves but must appoint a Filing Agent authorised by the Accounting and Corporate Regulatory Authority (ACRA) to guide them through the process.
Is it true that you need to get an EntrePass and have capital of $50,000 to be eligible to register a business?
Lorraine: No, you don’t need an EntrePass to register a business in Singapore. An EntrePass is for eligible foreign entrepreneurs who want to start a particular type of new business in Singapore and there are many strict criteria (including funding from an accredited source, intellectual property, research collaboration and $50k in paid-up capital). The EntrePass is only valid for 12 months. For more info head to the MoM website.
Thanks ladies – if we need a little help, what services do you offer to help ease the process for DPs getting back into the workforce?
Jan: At Expat Consulting we support small and medium-sized businesses in four core areas: business start-ups, finance, HR and consultancy services. I love helping people kick-start their dream businesses! For all potential clients, I offer a free initial consultation. It’s important for me to have a clear understanding of their plans to ensure I’m giving them the most appropriate advice for their situation. I also tailor a clear action plan to help them meet their objectives. As a Filing Agent, I aim to make things as simple and straightforward as possible from beginning to end.
Lorraine Rajeck: My business, The Expat Touch Partnership is a licensed employment agency focused on obtaining work and related visas for foreigners with the MoM. I’m a MoM licensed agent – I handle everything necessary required by them for foreigners to obtain a visa to work for an employer in Singapore. I saw a gap in the Singapore market so started my niche business – and I’ve never looked back!