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Need advice on Pte.Ltd

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SGHope84
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Need advice on Pte.Ltd

Postby SGHope84 » Wed, 21 Oct 2015 6:02 pm

Hello,
I am new to the forum and really need advice on my situation:

-I am a SPR for 8 years. Currently, I am having a full-time job. Annual income is around 60k.

-Married. Wife is on LTVP now

- My daughter was born recently. Applying PR for her but not sure she can get it (no high hope taking into consideration of current Singapore immigration system). If not approved, plan to apply LTVP for daughter as well. Want my daughter to grow up and go schools here in Singapore.

- Planning to quit my job in a year to set up a pte ltd company with me as a sole director and shareholder. Paid up capital:100k.

- Company primarily focus on online futures trading like a prop trading firm.So, I can work at home and anywhere I want to.

I need advice on these things:
+ Want to employ my wife , who had a Degree in Finance, to be a Risk Manager(with decent salary) with the purpose of applying EP for her. Can I make her one of the shareholder as well?

- Should I pay myself as a director a decent salary for the tax purpose because I still want to remain in Singapore, sponsoring LTVP od my wife and daughter in the case wife not getting EP and daughter's PR application not approved.

Would appreciate if you guys can give me advice regarding my situations.

Many thanks

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Re: Need advice on Pte.Ltd

Postby Strong Eagle » Wed, 21 Oct 2015 10:17 pm

Unless there is a regulatory requirement for a minimum paid up capital in the line of business you are choosing, why put in 100K via stock? Loan the company the money as required.

Technically, you can apply for an EP for your wife. Realistically, you may want to ensure that your company has revenues sufficient to support both you and your wife, else it may be viewed that you are just burning through your startup cash to get your wife an EP.

Your wife can be a shareholder. She cannot be a director or other employee without an EP.

As a director you will want to pay yourself a salary, which is subject to income tax and CPF, and directors fees as appropriate, for example, a bonus. Directors fees are subject to tax but not CPF.

If I were to start a business, I'd ensure that I had my REP renewed before doing it. If you have only one year left on your REP, and your business is still not profitable enough to support you, and given the current climate regarding PR's, you just might find your REP not renewed. It's hard to say... maybe others can chime in.

As a small business owner I would advise you to have your business plan critically reviewed. Your assumptions about profits you can make from trading, risks, etc are exceptionally important, especially when one considers that the majority of businesses fail in the first five years.

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Re: Need advice on Pte.Ltd

Postby SGHope84 » Thu, 22 Oct 2015 8:08 am

Strong Eagle wrote:Unless there is a regulatory requirement for a minimum paid up capital in the line of business you are choosing, why put in 100K via stock? Loan the company the money as required.

Technically, you can apply for an EP for your wife. Realistically, you may want to ensure that your company has revenues sufficient to support both you and your wife, else it may be viewed that you are just burning through your startup cash to get your wife an EP.

Your wife can be a shareholder. She cannot be a director or other employee without an EP.

As a director you will want to pay yourself a salary, which is subject to income tax and CPF, and directors fees as appropriate, for example, a bonus. Directors fees are subject to tax but not CPF.

If I were to start a business, I'd ensure that I had my REP renewed before doing it. If you have only one year left on your REP, and your business is still not profitable enough to support you, and given the current climate regarding PR's, you just might find your REP not renewed. It's hard to say... maybe others can chime in.

As a small business owner I would advise you to have your business plan critically reviewed. Your assumptions about profits you can make from trading, risks, etc are exceptionally important, especially when one considers that the majority of businesses fail in the first five years.


Strong Eagle,
Thanks for your advice

My reason I want to put paip up capital of 100k because I am thinking of funding my trading account 50k, the rest just makes the company look good on paper for my wife EP application and immigration status stuff later on ( plan to make wife hold 50% of the share) .Can they really check how much you really put into your business in term of paid up capital or I just declare 100k but in fact putting in only 50k?.

-Should I engage professional service to help incorporate the company and apply EP for my wife or I can just do it my self?

- You are right about the REP. My Rep will expire next year. So I plan to renew my REP first before quitting my job and focus solely on my business.

-As a diretctor, how can I go about declaring salary for myself with IRAs for income tax and CPF in term of paper work? I am quite blurred on this.

-How about the paper work for employing my wife as a Risk Manager and her salary and everything?

Many thanks for replying.

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Re: Need advice on Pte.Ltd

Postby SGHope84 » Thu, 22 Oct 2015 9:04 am

Another question is:

-Should my trading company have a physical address to add a bit of professional image for it? The fact is that the business can be conducted entirely and sufficiently online. So, I can work feom home and anywhere I want to. Would virtual office with the local address work just fine? How about using my HDB address (does this make company image look sloppy?

Thanks

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Re: Need advice on Pte.Ltd

Postby Strong Eagle » Thu, 22 Oct 2015 10:52 am

SGHope84 wrote:Another question is:

-Should my trading company have a physical address to add a bit of professional image for it? The fact is that the business can be conducted entirely and sufficiently online. So, I can work feom home and anywhere I want to. Would virtual office with the local address work just fine? How about using my HDB address (does this make company image look sloppy?

Thanks


Mate, you HAVE to have a physical address, the registered address. It can usually be your residence if you don't have an office. How the hell does an HDB address add to professional image? I kept an address on Battery Road, 31st floor for "image"... cost a hell of a lot of money... and clients liked the harbor view.

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Re: Need advice on Pte.Ltd

Postby SGHope84 » Thu, 22 Oct 2015 12:50 pm

Strong Eagle wrote:
SGHope84 wrote:Another question is:

-Should my trading company have a physical address to add a bit of professional image for it? The fact is that the business can be conducted entirely and sufficiently online. So, I can work feom home and anywhere I want to. Would virtual office with the local address work just fine? How about using my HDB address (does this make company image look sloppy?

Thanks


Mate, you HAVE to have a physical address, the registered address. It can usually be your residence if you don't have an office. How the hell does an HDB address add to professional image? I kept an address on Battery Road, 31st floor for "image"... cost a hell of a lot of money... and clients liked the harbor view.


-I dont have any clients to entertain actually. So still have to waste money on the business adress that I dont actually use?
Read about the Home Office Scheme that why thinking about using residential address (HDB) to register business address.
- How much does your office at Battery Road cost you monthly?
- I am thinking to use the Virtual office which you can use the legitimate loval business adress to register your business. And this doesnt cost much compared to actual physical office. Is that okay?

- can you give advice on previous question regarding the company incorporation, Wife's EP, paperwork of director and wife s salary?

Thanks

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Re: Need advice on Pte.Ltd

Postby Strong Eagle » Thu, 22 Oct 2015 10:01 pm

Premium serviced office space is very expensive (S$4,000 and up). Even class B serviced office space is expensive. If you really want an office out of your home, find a business that will rent you a room or a desk.

Yes, you can use the physical office address of a service office firm if you have a virtual office with them. The whole point of a registered address is to have a known place where the company can be served with papers and official documents.

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Re: Need advice on Pte.Ltd

Postby JR8 » Fri, 23 Oct 2015 2:42 am

Hi SGHope and welcome to the forum!
I come is at a slightly different angle, and who knows maybe my thoughts/questions might add some value for you (that is the intention :)).
I had a professional career and segued to self-employed. I.e. I didn’t quit one to begin another, as that seemed too risky. I did the two initially in parallel for 2-3 years as much as it ‘half killed me’ given the required hours of working for two masters, pretty much until one proved itself and won the day (self-employment, as it turned out). So in your shoes I’d want to know a) your wife, has she the security of work, and base-level income to support the household whilst you hopefully get up to speed? b) do you really have to ‘leap the Rubicon’ and quit your work to prove (or disprove) that this 2nd career will work?
What is your income requirement? What yield/assets would that imply and require? 50k of working capital is (IMHO) not a huge amount; at say 5% income => $2.5k a year. IME/O 5% is the stable and passive div/coupon from an investment portfolio. So what do you have that beats that; hopefully materially beats that?
Next up: Your wife as risk manager. How is she qualified and experienced to be a risk manager? The way I look at it a risk manager has usually worked as a trader, i.e. they completely ‘get’ the inside track, the human impulses, mechanical, logical, addictive and otherwise. Added to which they’re usually some PhD mathematician. If the trader is the buzz-addicted renegade, his risk manager is the ex-addict who polices absolute black-and-white limits (etc etc). Often the RM has remit to trade versus their own traders gross position to reduce overall ‘house risk’, same as the head-trader does. Consider what you think of ‘risk manager’ and what it entails and achieves. Have you considered your wife trading contra to you? ... to intentionally restrict your risk?
I think you have to convince yourself you as a couple are born to be a natural ‘prop’ trading operation. IME that is the hardest and most *brutal* end of trading, and best of luck and respect if you have what it takes. // I expect the SGn authorities might approach things from a similar angle... i.e. you’re going to have to wave like a huge flag why what you’re proposing WILL work.
'Do it or do not do it: You will regret both' - Kierkegaard

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Re: Need advice on Pte.Ltd

Postby SGHope84 » Sat, 24 Oct 2015 5:43 pm

JR8 wrote:Hi SGHope and welcome to the forum!
I come is at a slightly different angle, and who knows maybe my thoughts/questions might add some value for you (that is the intention :)).
I had a professional career and segued to self-employed. I.e. I didn’t quit one to begin another, as that seemed too risky. I did the two initially in parallel for 2-3 years as much as it ‘half killed me’ given the required hours of working for two masters, pretty much until one proved itself and won the day (self-employment, as it turned out). So in your shoes I’d want to know a) your wife, has she the security of work, and base-level income to support the household whilst you hopefully get up to speed? b) do you really have to ‘leap the Rubicon’ and quit your work to prove (or disprove) that this 2nd career will work?
What is your income requirement? What yield/assets would that imply and require? 50k of working capital is (IMHO) not a huge amount; at say 5% income => $2.5k a year. IME/O 5% is the stable and passive div/coupon from an investment portfolio. So what do you have that beats that; hopefully materially beats that?
Next up: Your wife as risk manager. How is she qualified and experienced to be a risk manager? The way I look at it a risk manager has usually worked as a trader, i.e. they completely ‘get’ the inside track, the human impulses, mechanical, logical, addictive and otherwise. Added to which they’re usually some PhD mathematician. If the trader is the buzz-addicted renegade, his risk manager is the ex-addict who polices absolute black-and-white limits (etc etc). Often the RM has remit to trade versus their own traders gross position to reduce overall ‘house risk’, same as the head-trader does. Consider what you think of ‘risk manager’ and what it entails and achieves. Have you considered your wife trading contra to you? ... to intentionally restrict your risk?
I think you have to convince yourself you as a couple are born to be a natural ‘prop’ trading operation. IME that is the hardest and most *brutal* end of trading, and best of luck and respect if you have what it takes. // I expect the SGn authorities might approach things from a similar angle... i.e. you’re going to have to wave like a huge flag why what you’re proposing WILL work.


Hello JR8,

Thanks so much for your kind reply.Yes, definitely, you give me some thoughts to ponder. Your advice is very valuable for my situation.
These are my answers to some of your questions:
a) your wife, has she the security of work, and base-level income to support the household whilst you hopefully get up to speed
No, she doesn't. She worked as Assistant Accountant for a year or so and quit coz she didn't like the corporate world (like myself :d). After that, she wanted to focus on having a baby and happy to be a home-maker. She wants to do some kind of F&B business later but I insist I wanna do my trading business first coz with LTVP, she can't work without having to convert to S pass or EP
b) do you really have to ‘leap the Rubicon’ and quit your work to prove (or disprove) that this 2nd career will work?
Yes, sort of . Coz I don't enjoy doing my current job. kind of forcing myself to do it for almost 7 years without any progress. think because of the nature of job. Got tired of corporate world also. Have passion in trading and I know I can do it pretty well with my skills and personality. I wanna devote more time for it to make it work.

What is your income requirement? What yield/assets would that imply and require? 50k of working capital is (IMHO) not a huge amount; at say 5% income => $2.5k a year. IME/O 5% is the stable and passive div/coupon from an investment portfolio. So what do you have that beats that; hopefully materially beats that?
I guess I can be comforatble with 5k monthly income at first. Coz for me as long as I can do something I feel passionate about everyday and have enough income to raise up my daughter here, I feel happy and contented. I don't need more money than that and don't wanna get rich just want to live my life the way I want it.
I know 50k working capital doesn't seem to be alot. But I am not doing passive investing or thing like that. This is very active intraday short term forex/futures trading where I am looking to make 5-10% monthly


-For my wife EP thing. Just wanna to give her some my kind of working status here in Singapore coz want to apply PR for her down the road. With LTVP and no job, I think Singapore government just doesn't give her PR no matter how high my income is.

Again, thanks for your advice. I look forward to your valuable inputs

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Re: Need advice on Pte.Ltd

Postby JR8 » Sat, 24 Oct 2015 11:06 pm

a) First thing I'd be asking (if I were the authorities), is what qualifications she has to be employed as a Risk Manager. One of the enjoyable things about going from a career in Banking/Fin, to self-employed trading is you are responsible for everything to putting on a trade, the legals, risk, accounts... to making the tea to handling any post. (You learn an awful lot, you have to as in every facet 'The buck stops here'). Would your operation naturally require a separate employee as Risk Manager? IME that's only required where an external force/control is required, perhaps to control imprudent levels of risk, or meet reg requirements etc.
Furthermore, if she understands less about trading than you do, I have difficulty seeing how she could fulfil her function. If were thinking of a role for her, more of 'general manager+accounts', and that fitted her skills/exp. then it might stack up better.
b) 5k/mo, 60k/yr @ say 5% would suggest as asset base of $1.2 million. To be frank the chance of you sustaining a $60k/yr profit off a $50k capital base are zero. Think about it, if it were that easy everyone would do it right? And if everyone did it then the opportunity would soon disappear.

So there seems to something of a disconnect that you should consider. As I'm sure you know, the greater the return you seek, the greater the risk you have to take. Look at some of the top-star fund managers, and see how much they consistently return on something like a 5-yr rolling average, or across an entire economic cycle. I've no idea, but I doubt it's above 15%. [Of course 15%pa over say 15 years [perhaps an average macro economic cycle] would be a dream come true to a passive investor].

I'll tell you what I'd do though, how about you find an online trading platform that allows you to open an unfunded dummy-account to trade futures. i.e. 'paper-trading'. Sit down with your wife, agree what your working capital is, outline and agree your trading strategy, then get your positions on... and see how it goes.

The Chicago exchange (CBOE) is a reputable one -> https://www.cboe.com/tradtool/virtualtrade.aspx I'm sure you can find others with the products that you have in mind. Google it, and avoid any links that are not direct to an exchange floor, there is no reason you have to interface via a profit-driven company to give your ideas a road test.
'Do it or do not do it: You will regret both' - Kierkegaard

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Re: Need advice on Pte.Ltd

Postby Strong Eagle » Sun, 25 Oct 2015 4:23 am

Very good points about the amount of cash needed and expected returns, JR8. The OP is not very realistic concerning what returns will actually be. If he were to make 10% per month he'd be doing better than 99.9% of the traders out there. He will need to be very highly leveraged to make that much each month, making it even riskier.

The best hedge fund traders can't manage that kind of return. And, if the OP can actually manage that kind of return, then bunches of firms will pay him millions a year to do that for them.

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Re: Need advice on Pte.Ltd

Postby JR8 » Sun, 25 Oct 2015 4:03 pm

To achieve potential 'professional' levels of returns you need everything a pro has access to, and even at a base-level you won't get a live price feed from any exchange for free (IME any free intra-day feeds are delayed 15-20 minutes), so for a small active-investment operation the total of such costs will equal a large slice of the hoped for returns. And if you can't afford them, then what hope is there of competing?

I previously linked the URL to a film called 'Floored: Into the pit' https://www.youtube.com/watch?v=tCcxr-fyF4Q. Anyone considering active trading, especially geared up risks (derivatives, like futures) should watch that film very closely, and ask themselves 'Am I likely to sit at home and beat people like this'? Because that is what would be required: I.e there is someone else out there who has the reverse of your trade on, and you're wagering you're right and he's wrong. A bit like choosing to walk into a gunfight where the other side has 20 times as much ammo as you have - 'Do you feel lucky?' :)

While I have it mind I'll also add, that each Bloomberg terminal a trader has costs about US$5-10k a month. A baseline trader's desk used to have say 3 of them, these days (per film) it's more, 4, 5, 6. 'You at home on a delayed price feed versus that = well, good luck to you!'.
It's one of those scenarios - maybe there is a term for it, who knows :) - where just by floating a proposition, you have 99.9% demonstrated that it can't work. You don't know what you don't know.

And so on..., there are many other reasons why you are handicapped as a small trader vs those on 'the other side' sitting in a bank, and yet you would have to beat them. And that's why most 'day traders' end up getting skinned alive.

An alternative is passive investing. You are not wagering you have more ammo than 'the other side of the fixed size pie'. Instead you choose a good looking pie and the pie subsequently grows. An associated maxim is 'Invest and forget'. That growth tends to slow and steady, but it wouldn't provide the return the OP is seeking, nor support work visas...
'Do it or do not do it: You will regret both' - Kierkegaard


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