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private limited company formation - accountant, paypal ?

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private limited company formation - accountant, paypal ?

Postby jamesblunt » Mon, 03 Mar 2014 7:22 am

Basically i Wanted to form a private limited company in Singapore as the sole shareholder and become the non-resident director. The company in question will be similar to 99designs.com, which is basically a graphics design contest company. And all payments made from the customer will be through paypal payment gateway directed the funds to a new business bank account after company formation. However I had a question i would like to know as well as the potential of this business.

1)Assuming all income is generated in paypal, should it be transfer to the business bank account on monthly, daily basis?

2)can a non-executive director fees be paid on a monthly basis as set forth in IRAS "Director’s fees approved in advance" without any requested service rendered requirement in the AGM or for a vague requisite such as "ensuring the company is running" or "ensuring the website and its features are active".

3) With regards to paypal i have heard that you required a singapore ID when payment reaches 7500 SGD however after looking through harwarezone forums i found that new terms allow you to use your passport instead. Anybody know the truth about this.

4) If my home country has a treaty (thai) with Singapore is there any requirement to remit directors fee earned back to the home country or can we keep the funds in Singapore.

5) do you guys have any recommendation of good accounting and incorporation firms(must provide nominee local director and secretary service. Was looking at Janus for incorperation serviecs but was wondering if there is anything with better service quality for the price. And i dont know any company yet for accounting outsourcing saw guys at sc-mac.com using xero accounting software but not sure of their reputation.

6) Also parden my lack of knowledge in accounting but for example if i receive a thousand USD$100 payment does each of these count as a single transaction so theres 1000 transaction for accounting purposes?

7) Also do you guys have recommendation for banks? was looking at dbs multi-currency personal account and their business account but wasnt sure about their requirement as a non-resident? would i be able to apply simply by using the incorporation business address and passport?


thanks for the answers guys

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Re: private limited company formation - accountant, paypal ?

Postby Strong Eagle » Mon, 03 Mar 2014 11:49 am

jamesblunt wrote:Basically i Wanted to form a private limited company in Singapore as the sole shareholder and become the non-resident director. The company in question will be similar to 99designs.com, which is basically a graphics design contest company. And all payments made from the customer will be through paypal payment gateway directed the funds to a new business bank account after company formation. However I had a question i would like to know as well as the potential of this business.

1)Assuming all income is generated in paypal, should it be transfer to the business bank account on monthly, daily basis?

2)can a non-executive director fees be paid on a monthly basis as set forth in IRAS "Director’s fees approved in advance" without any requested service rendered requirement in the AGM or for a vague requisite such as "ensuring the company is running" or "ensuring the website and its features are active".


You AGM/EGM resolutions don't need to state anything more than amounts, dates, people, etc. You can set up monthly fee payments if you wish. Be aware that non-resident directors are taxed at 20 percent and that tax must be withheld before the payment is made. Earn $1000, withhold $200 which goes directly to the IRAS at tax time.

3) With regards to paypal i have heard that you required a singapore ID when payment reaches 7500 SGD however after looking through harwarezone forums i found that new terms allow you to use your passport instead. Anybody know the truth about this.

4) If my home country has a treaty (thai) with Singapore is there any requirement to remit directors fee earned back to the home country or can we keep the funds in Singapore.


Singapore doesn't care. However, once you have declared directors fees to be paid on a given date, taxes become due on that date regardless if the director has actually received the fees or not. This applies to both resident and non resident directors.

5) do you guys have any recommendation of good accounting and incorporation firms(must provide nominee local director and secretary service. Was looking at Janus for incorperation serviecs but was wondering if there is anything with better service quality for the price. And i dont know any company yet for accounting outsourcing saw guys at sc-mac.com using xero accounting software but not sure of their reputation.


My recommendation would be to email CPA's in Singapore until you find one that will give you a nominee director. A nominee director will run between $1000 and $1500 per year. They are getting more scarce as they realize they are liable for your actions.


6) Also parden my lack of knowledge in accounting but for example if i receive a thousand USD$100 payment does each of these count as a single transaction so theres 1000 transaction for accounting purposes?


Correct. Since you will have mostly automated transactions, you will want to negotiate accounting fees since some CPA's try to do it on a per transaction basis.

7) Also do you guys have recommendation for banks? was looking at dbs multi-currency personal account and their business account but wasnt sure about their requirement as a non-resident? would i be able to apply simply by using the incorporation business address and passport?


thanks for the answers guys


I'd probably go with HSBC as it has Thai branches, making it somewhat easier to transfer funds.

As far as the bank account set up goes in Singapore, pick up the bolierplate commercial account resolutions from your bank of choice. Pass a directors resolution at an AGM/EGM to authorize a bank account, specify signatories, max withdrawal amounts, etc. Take both to bank. Signatories to account must appear personally.

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Re: private limited company formation - accountant, paypal ?

Postby jamesblunt » Mon, 03 Mar 2014 6:44 pm

My recommendation would be to email CPA's in Singapore until you find one that will give you a nominee director. A nominee director will run between $1000 and $1500 per year. They are getting more scarce as they realize they are liable for your actions.



Thank you Strong Eagle for the detail reply. With regards to accountancy and incorporation do you mean to say that it is better to find a CPA practitioners that will be the exact person that also act as a nominee direct or secretary which ever is better?so does this mean they are more liable to accounting actions on my firm?
If this is not too much to ask. Do you mind PM me the CPA you use.

Thanks

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Re: private limited company formation - accountant, paypal ?

Postby Strong Eagle » Mon, 03 Mar 2014 11:57 pm

jamesblunt wrote:
My recommendation would be to email CPA's in Singapore until you find one that will give you a nominee director. A nominee director will run between $1000 and $1500 per year. They are getting more scarce as they realize they are liable for your actions.



Thank you Strong Eagle for the detail reply. With regards to accountancy and incorporation do you mean to say that it is better to find a CPA practitioners that will be the exact person that also act as a nominee direct or secretary which ever is better?so does this mean they are more liable to accounting actions on my firm?
If this is not too much to ask. Do you mind PM me the CPA you use.

Thanks


What I am saying is that your nominee director runs your company, by law, at least in partnership with you. "Nominee" is an arf-arf word with no real meaning, other than you nominated to use the person as a director. A director is a director. So, you want someone who will be honest in dealings with you, and who is at least associated with a CPA who knows all of the directors resolutions, meeting notices, etc, that must be filed in order to keep the company legal. Just dragging someone off the street and offering to make them a director is not something I would do.

At the same time, the director is also responsible, by law, for your acts. If you screw a supplier or creditor, the director can be sued for malfeasance for failure to manage the finances of the company, even if he didn't have direct control. So, most people who agree to be a nominee director will want to work through a CPA so that they have at least some understanding of what the business is doing. Being a nominee director is easy money, with only a few signatures required to earn the dough but it does carry legal risk.

Both sides protect themselves with a pre-signed, undated letter of resignation. If you don't like what your director is doing, you predate the letter and file it with ACRA. Same thing the other way around.

I never used a nominee director because I went the Entrepass route before it became so onerous. My friend did, though, and I believe the yearly costs were about S$1500. A CPA should set you up for around $600, file your audit and annual reports for about $600 each year, give or take. Your accounting charges are based on the amount of work that needs to be done.

You might could be secretary but you'll probably need to get a secretary as well since there is a requirement that the secretary or designated agent must be present at the registered address for a certain amount of time each day. Thus, it is common to make your CPA your secretary and make her offices your registered address to comply with the law, although there are other ways of doing this.

My CPA no longer supplies nominee directors. She's a little bit dense about this. Once the requirement for two directors was dropped, she saw no reason to stay in the director business. Even though I pointed out that there are situations like yours, or professional people who want to start a business and need a local director to apply for their EP, she doesn't go that route anymore.

Bottom line: Find a single firm that a) is your accountant, b) acts as your secretary and registered address, and c) knows of people they trust to be a nominee director.

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Postby sandhurst » Wed, 12 Mar 2014 2:40 pm

i am new here but could not help reading some points that i feel are quite accurate.

Both sides protect themselves with a pre-signed, undated letter of resignation. If you don't like what your director is doing, you predate the letter and file it with ACRA. Same thing the other way around.

The filing of a resignation letter with ACRA will not result in the nominee director being removed. The nominee director can only be removed if he has a replacement. I have seen cases where the nominee has resigned a year back but he cannot remove his name from the registers.

There is a difference in the way the law looks at a nominee director, for example if a nominee director is from a corporate firm that provides such services as against a nominee who is not a professional but qualifies to act as one ( such as a person who is ordinarily resident in Singapore eg EP holder, SPR, SC).

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Postby Strong Eagle » Wed, 12 Mar 2014 10:17 pm

sandhurst wrote:There is a difference in the way the law looks at a nominee director, for example if a nominee director is from a corporate firm that provides such services as against a nominee who is not a professional but qualifies to act as one ( such as a person who is ordinarily resident in Singapore eg EP holder, SPR, SC).


Please provide the statute and citation. I have been unable to find anything that supports this statement.

And what would those differences be? The Companies Act is quite clear in stating, "157A.—(1) The business of a company shall be managed by or under the direction of the directors.

(2) The directors may exercise all the powers of a company except any power that this Act or the memorandum and articles of the company require the company to exercise in general meeting."


Any director is clearly liable for the operations of the company. I find it difficult to envision the circumstances where a corporate, for profit director would have reduced liability. They would be gaining this protection at the expense of suppliers, shareholders, and employees.

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Postby sandhurst » Wed, 12 Mar 2014 10:47 pm

[i]And what would those differences be? The Companies Act is quite clear in stating, "157A.—

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Postby sundaymorningstaple » Wed, 12 Mar 2014 10:57 pm

tic...toc..tic...toc....

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Postby Strong Eagle » Thu, 13 Mar 2014 4:56 am

[quote="sandhurst"][i]And what would those differences be? The Companies Act is quite clear in stating, "157A.—

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Postby sandhurst » Thu, 13 Mar 2014 12:04 pm

If you say they are treated differently, then you must have some case law which backs you up. Otherwise, you are saying the director from a corporate service firm gets a free ride even though he has a fiduciary responsibility to keep others from being fleeced.

Please read carefully what i have said. My contention is that the role of a nominee director is passive, your contention is that the nominee is part of the operations of a company. I did not say that a nominee in one form is absolved from his fiduciary duties. My point of view is from the role of the nominee not his fiduciary duties. Your point of view is from the party that has suffered a loss.

To put it another way, are you implying that if I were to sue this corporate service supplied director for malfeasance and damages, the outcome would be different than it would be if some "joe" took on the role of director?

Again your point of view is from a party who has suffered a loss. My point of view is from the role of the nominee in an investigation for say being a director of a company investigated for alleged money laundering. A nominee not from a service provider will have a harder time proving to the authorities that he is indeed not involved in the laundering process.

I really have a hard time with this because it seriously implies that my rights of redress can be abridged just because this person is an alleged "professional director".

Again you are looking from the point of view of an aggrieved party who has suffered a loss. Not once did i say that a nominee is absolved of his fiduciary duties to aggrieved party.

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Postby Beeroclock » Thu, 13 Mar 2014 12:18 pm

sandhurst wrote:My point of view is from the role of the nominee in an investigation for say being a director of a company investigated for alleged money laundering. A nominee not from a service provider will have a harder time proving to the authorities that he is indeed not involved in the laundering process.
why exactly is that though ? Won't the authorities just judge it based on the evidence they uncover in investigation, irrespective of the origin of the nominee director ?

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Postby Strong Eagle » Thu, 13 Mar 2014 8:31 pm

sandhurst wrote:If you say they are treated differently, then you must have some case law which backs you up. Otherwise, you are saying the director from a corporate service firm gets a free ride even though he has a fiduciary responsibility to keep others from being fleeced.

Please read carefully what i have said. My contention is that the role of a nominee director is passive, your contention is that the nominee is part of the operations of a company. I did not say that a nominee in one form is absolved from his fiduciary duties. My point of view is from the role of the nominee not his fiduciary duties. Your point of view is from the party that has suffered a loss.

To put it another way, are you implying that if I were to sue this corporate service supplied director for malfeasance and damages, the outcome would be different than it would be if some "joe" took on the role of director?

Again your point of view is from a party who has suffered a loss. My point of view is from the role of the nominee in an investigation for say being a director of a company investigated for alleged money laundering. A nominee not from a service provider will have a harder time proving to the authorities that he is indeed not involved in the laundering process.

I really have a hard time with this because it seriously implies that my rights of redress can be abridged just because this person is an alleged "professional director".

Again you are looking from the point of view of an aggrieved party who has suffered a loss. Not once did i say that a nominee is absolved of his fiduciary duties to aggrieved party.


Let's use your money laundering example. What difference does it make whether or not the director is involved in the money laundering process. It happened under her watch. According to law, she is responsible. This is why (for the USA at least) there is always directors insurance provided for outside directors.

And even if a nominee from a service provider demonstrates no involvement, why would the government or the courts treat them differently.

You seem to be saying, "Since I am a professional services director, you know that I wouldn't be involved in anything untoward, just because of my reputation". But, what difference does it make if there has been a breach. You can be the nicest, most straight up guy in the world, and still fail to exercise your duties.

Let me put it this way. From your point of view, would the outcomes of an investigation, a court case, or other action come out any differently with a director supplied by a services firm versus one I picked up off the street? Would the complaining party be treated any differently? Would the director be treated any differently with respect to penalties and/or investigation?


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