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Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

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Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Wed, 13 May 2015 7:11 pm

I'm setting up an online clothing brand, and have been stuck on the registering part for weeks now.
My issue is where/ how to register.

I've read the thread about applying for a LOC for myself, but understand that getting it approved is harder now days. Another issue mentioned was that to get LOC you need to prove that business will cease when you leave Singapore, as the LOC will expire with my DP. I'm not planning on staying here more than a few years, but I want by online brand to continue after I leave, as it will ideally become a source of income as I move around with my husband.

So now I'm looking at alternatives. Like registering the brand in UK, where I lived/worked before moving to SG. However someone told me this is not a good idea (didn't say why). It's worth mentioning that I freelance for a company in UK as well, so I'm already self employed over there, just not a registered business.

Does anyone have experience in setting up a brand in UK from Singapore, or is it a better direction to set up the brand through a LOC in Singapore?

Thanks
Ana

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby Strong Eagle » Wed, 13 May 2015 9:25 pm

You are comparing Apples and Oranges... setting up a brand is not starting up a SP or a company is not getting a LOC. They are all completely different and done for different purposes.

Registering a brand, ie, trademarking, is a long drawn out and expensive process that applies only to the country in which you are registering. And even if you were successful in trademarking your brand's logo, tagline, etc, what would you do if some Chinese firm decided to appropriate it and use it? This is useful only if you are Apple, GM, Coke, or some such, or you are aware of a local competitor that is trying to create a knock off name to trade on your goodwill.

In reality, your 'brand' is the website you create... it's look, feel, content, eCommerce engine... this has nothing to do with registering a brand, nor forming a company. It's what people see, it's how people identify your brand... and as time progresses, it is the ratings that you get... the recommendations you receive that create your brand. Look at any small online specialty retailer and you'll get my drift.

So, how do you register your online brand? You decide on a name, then decide on a URL. You make sure it is not in use, then you go to a domain registrar like GoDaddy and register the .com, .org, .net, and maybe several other varieties so that others can't use them... Google carlyfiorina.org to see what happens when you don't grab all the domain names. You may also wish to register .sg or other domains which means you will also need to register with a local registrar.

Now, onto the business. You are required to have a legal entity of some sort by almost every country in the world so that they can keep track of how much you make and how much they can tax you. Legal entities don't just 'go away' because you don't have a LOC anymore... while you may have problems with residency and other legal issues if your LOC goes away, the SP or private limited is still alive until it is officially closed. You could sell the business or have a local keep it alive in name to continue your legal entity in Singapore if that's what you wanted.

Your business name doesn't have anything to do with your brand name. You could call it Acme Trading, doing business as 'Online Fashions', and you could create multiple legal entities if you so desired.

To increase your chances of getting approved for a LOC, or even an EP, you need a business plan with pro forma financials to convince the gahmen of your ability to run the business, that you have sufficient cash to get it going to profitability, and that it is viable.

So... forget trademarking or registering a brand. Do create and register a domain. Do copyright logos and other aspects of your website. Do form a SP or pte ltd. And do your homework to convince the authorities to grant you the necessary permits.

PS: Technically, you should be paying Singapore income tax on your freelancing work unless you can demonstrate that the services you provide are 'rendered through a fixed place of operation in a foreign jurisdiction'. This would also have implications on the UK tax you are presumably paying right now for your freelance work.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Thu, 14 May 2015 6:18 pm

Hi Strong Eagle,

I appreciate that you took the time to respond, but I think you've misunderstood my question.
I'm not asking about trademarking, or how to build a brand. I am also not interested in starting a company, but a business. I design and sew clothes myself, and other than outsourcing some admin bits, I'll do everything myself. As I won't hire anyone, sole proprietorship is the way to go for me. So only one business, and one brand for me, which will have the same name, Very simple (I wish)

I would not be setting up a domain, but using existing online stores and marketplaces, and selling from one country. So the way I understood it would have worked in UK (in a nut shell) is: register self employed, register business name, sell in online shop, pay taxes in UK.
Singapore on the other hand is a mess, and the more I read about it the less I seem to understand. Which brings me back to my original question. Can I, in some way, as a sole proprietor, make clothes, sell them on UK online shops and marketplaces and pay taxes to UK? Or, is this a violation against some Singaporean law and I have to do it all through Singapore?
I was hoping to speak to someone who has gone through something similar and can share their experience.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby Strong Eagle » Thu, 14 May 2015 8:37 pm

If you make clothes in Singapore, you will need to register a SP in order to be legal. End of story. It doesn't matter where you sell your wares. I got this information directly from an ACRA query I made before responding to another poster. "Any activity which is carried out on a continual basis in Singapore for the purpose of gain is required to be registered with ACRA."

If you make money you will have to file a Singapore income tax return and pay personal income tax in Singapore. You cannot perform work in Singapore and not pay taxes in Singapore on your income. I don't know for sure but I believe that tax treaties would mean you will pay no UK personal income tax.

It's not a mess in Singapore. Like the UK, you register a SP (and a DBA if applicable). You can sell your product wherever you want. The complication is that you will need either a LOC or EP in order to work legally in Singapore, even if it is self employment. That is why I suggest a proper business plan. Prove up that you can run your business and you'll probably be approved.

If you set up a UK SP, it won't matter... you are still producing your product in Singapore and selling it to or through the UK company... either way, you are still producing goods in Singapore and still need a SP here.

I can't comment on the tax consequences of selling on UK registered domains. You probably know more about VAT and such than I do.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Tue, 19 May 2015 3:05 pm

Thanks, that was really helpful! I was about to do the process you listed above, but someone on a different forum suggested I register the business in a different country, which has only confused me.

I have already written a business plan, and received my SingPass in the mail, so I'm pretty much good to go. I think it might be a good idea for me to speak to an accountant first though, as I feel like there are still some things I don't fully understand, and I don't like jumping into this head first. You don't happen to know where I can find a decent accountant, do you?

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby Strong Eagle » Tue, 19 May 2015 9:49 pm

_anabanana wrote:You don't happen to know where I can find a decent accountant, do you?


I had a local accountant for about 8 years... neither the cheapest nor the most expensive. She is a CPA and very familiar with accounting law and practice in Singapore. Having said that, she, like others, sometimes does not see the forest for the trees, that is, she can be very good at helping you understand all the forms and reporting requirements, and not so good when it comes to business strategy. If you want to talk to her, I'll PM you her contact details.

Might I suggest that if you have questions regarding a business start up that you post them here. There are quite a few people here who have started their own business, either through an Entrepass, forming a company and claiming an EP or forming a SP and obtaining a LOC. In particular, if you're planning on going the LOC route, you should read that thread and post any questions you may have... I think it's in the Careers forum.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Tue, 19 May 2015 10:20 pm

I've seen the thread, that's where I got most of my original information from. :) Still, I might do what you suggest, and post some questions there.

I had a quick chat with an accountant today and he suggested that I forget the LOC and instead appoint someone as a local manager. Said if I don't have any local friends (and I don't) I can pay someone. He said it doesn't cost much, but I haven't had time to look into it yet so I wouldn't know how much is "not much".
This sounds like an interesting way to go, especially after reading that getting the LOC has gotten harder (I don;t remember which thread it was, but there was mentions of LOC approvals halfing).

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby Strong Eagle » Tue, 19 May 2015 10:26 pm

_anabanana wrote:I had a quick chat with an accountant today and he suggested that I forget the LOC and instead appoint someone as a local manager.


I'll let others chime in as well... and this won't work for you. The primary reason is that you are the person that will be working. You need a work permit of some sort. What this accountant is suggesting is that you 'pretend' someone else in the business is doing the work and you, as SP owner, are reaping the profits from the work being done by this person. You, as SP owner, will have an employee that you must pay, pay CPF, and file paperwork for.

A couple of years back there was an expat who wanted to buy into a hair salon. I think the end thinking was that the expat could buy the shop but not work in it because hair dressing is something that is generally reserved for locals.

Are you experienced in this business? Have you contemplated having a conversation with MOM about setting up this business?

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Tue, 19 May 2015 11:06 pm

That cheeky accountant! :O

Yes, I do have experience in the field. I studied design and clothing in Sweden, had a few assistant jobs in the industry, and during my time in UK I ran a "hobby" brand on the side of my full time job, selling clothes online. It's this same brand which I want to make into a business now (because technically, the brand already exists). Back in UK, because I had it as a hobby, I made so little money on it that it was under the tax limit. I have just left it as it is since moving here, until I figure out all this legal stuff, as I understand Singapore takes money matters very seriously. The plan is, after registering a business, bring life back into my brand. I already have a growing fan base as I've been doing this hobby thing for over 5 years. I've just never had the time to meet all the demand (which I have plenty of time now, being on a DP).

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby Strong Eagle » Wed, 20 May 2015 2:11 am

I don't know what's in your business plan... and... I'd put the following in a business plan, designed to convince MOM of your abilities.

a) Formal design and clothing training... a diploma of certificate would help.
b) Real world experience in designing, creating, and selling clothes online... you're not getting into anything new.
c) Existing brand and existing website, a growing base, with clothing expansion plans on tap.
d) Money to fund the startup in Singapore.

You'll also want to talk about employing Singaporeans. As a singleton in a start up emphasize your use of local talent... accountants, banks, graphics design, printers delivery people. Get a Singapore hosted website for your brand even though you'll be primarily selling elsewhere. And in your pro formas, as you grow, consider how you might slip in even a couple of part time people... cutters, delivery people, packers, etc. I'm assuming that if your line(s) took off, you'd be doing design and managing the cutting, assembly, shipping, etc... so make a reasonable growth estimate, inline with other clothing retailers, and add the people to support it.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Wed, 20 May 2015 3:24 pm

I thought it wasn't possible for a SP to employ people? Isn't that the whole point of a Sole Proprietorship?
However I do plan on outsourcing quite a lot of the work and I will have to buy materials plus use local post offices for delivery, so that's a profit for Singapore which I can include in the application.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby sundaymorningstaple » Wed, 20 May 2015 4:33 pm

Well, my wife has a cleaning business with a contract with one of the larges SME in Singapore and currently has a staff of three with CPF and Insurance and all the trimmings and it's a registered "business" e.g., Sole Proprietorship. No problem. However, not all companies will do business with SPs and she is planning once she gets ahead a little bit, converting to a Pte Ltd for the added protection that it provides by being an entity on it's own.

And, no. Using the post office for deliveries is not a profit for Singapore that you can use in the application. It's just an expense for you that will deduct from the profit to Singapore (Income taxes). SingPost is privatised so you aren't doing anything at all for the country but for another company's shareholders, nothing more.

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Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Wed, 20 May 2015 6:32 pm

I was told today on a different forum that MOM are no longer issuing LOCs for DP holders vi the ACRA / sole trader route - apparently a very recent development?
I think it's time to visit MOM...

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Re: RE: Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby ecureilx » Wed, 20 May 2015 7:15 pm

_anabanana wrote:I was told today on a different forum that MOM are no longer issuing LOCs for DP holders vi the ACRA / sole trader route - apparently a very recent development?
I think it's time to visit MOM...

Visit MOM and be ready to translate the 'maybe', 'possibly', 'likely' or 'should be' in their responses ... if you are expecting a direct Yes or No

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Re: RE: Re: Sole Proprietorship on Singapore DP vs Sole Proprietorship abroad

Postby _anabanana » Wed, 20 May 2015 7:23 pm

ecureilx wrote:Visit MOM and be ready to translate the 'maybe', 'possibly', 'likely' or 'should be' in their responses ... if you are expecting a direct Yes or No


Lovely. Will keep you updated.


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