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Starting a dropshipping business in Singapore - advice needed

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Jadexpat
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Starting a dropshipping business in Singapore - advice needed

Post by Jadexpat » Thu, 22 Oct 2020 5:29 pm

Hi all, I've been thinking of starting a dropshipping business in Singapore, however i do not have much knowledge on how to start a business. Really hoping to get some advice.

I read that you have to incorporate your business in order to do a dropshipping business, so i have the following questions:-

1. Is it advisable to use an LLP instead of Pte Ltd? Pte Ltd comes with too many compliance costs (e.g. secretarial and accounting services) while LLP does not require all these. I don't really want to have all these compliance costs when i am not even sure if the business will work.

2. Is it possible to test out and get a few sales first before registering my business, or is that not legal?

3. I am thinking of dropshipping in the US (from US suppliers to US customers). Would there be a requirement to start a company there too?

Thanks in advance :)

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sundaymorningstaple
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Re: Starting a dropshipping business in Singapore - advice needed

Post by sundaymorningstaple » Fri, 23 Oct 2020 2:52 am

I believe you will also incur a tax liability there as well, both State & Federal Taxes as well as a tax liability to Singapore because you are actually working from Singapore. Also, be advised there is no tax reciprocity between Singapore and the US so you will be paying at least double taxation and possibility triple depending on the state of registration.

Myasis Dragon
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Re: Starting a dropshipping business in Singapore - advice needed

Post by Myasis Dragon » Fri, 23 Oct 2020 12:23 pm

Jadexpat wrote:
Thu, 22 Oct 2020 5:29 pm
Hi all, I've been thinking of starting a dropshipping business in Singapore, however i do not have much knowledge on how to start a business. Really hoping to get some advice.

I read that you have to incorporate your business in order to do a dropshipping business, so i have the following questions:-

1. Is it advisable to use an LLP instead of Pte Ltd? Pte Ltd comes with too many compliance costs (e.g. secretarial and accounting services) while LLP does not require all these. I don't really want to have all these compliance costs when i am not even sure if the business will work.

2. Is it possible to test out and get a few sales first before registering my business, or is that not legal?

3. I am thinking of dropshipping in the US (from US suppliers to US customers). Would there be a requirement to start a company there too?

Thanks in advance :)
Let's start at the beginning, shall we? I see you are "Jadexpat". Are you a Singapore citizen or PR? If yes, read on. If not, then you have a much more difficult task because not only are you going to form a business, you're going to try and convince the gahmen to give you a work permit for your business. There are hundreds of threads in these forums on trying to get an employment pass for your own startup.

LLP means "limited liability partnership". If there is only one of you, then you cannot form a LLP. Your only choices are pte ltd or a sole proprietorship. And if you're not a citizen or PR, then pte ltd is probably the only way you'll ever get to a work permit.

You must be registered in order to operate a business. You cannot open a bank account without a registration, and that means you cannot accept payments in the name of a company. In short, step 1 in any business is to become legally registered.

US taxation is complex and no definitive answer can be given with the limited information you have supplied. But, in general, if you have no US employees, and no US presence, you will not pay US taxes. You can sell directly to end customers, either other retailers or end users. You can sell into distributors who handle distribution, warranty services, etc. Beyond this, your exact proposal for selling and payments would need to be known.

Jadexpat
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Re: Starting a dropshipping business in Singapore - advice needed

Post by Jadexpat » Fri, 23 Oct 2020 10:16 pm

Myasis Dragon wrote:
Fri, 23 Oct 2020 12:23 pm
Jadexpat wrote:
Thu, 22 Oct 2020 5:29 pm
Hi all, I've been thinking of starting a dropshipping business in Singapore, however i do not have much knowledge on how to start a business. Really hoping to get some advice.

I read that you have to incorporate your business in order to do a dropshipping business, so i have the following questions:-

1. Is it advisable to use an LLP instead of Pte Ltd? Pte Ltd comes with too many compliance costs (e.g. secretarial and accounting services) while LLP does not require all these. I don't really want to have all these compliance costs when i am not even sure if the business will work.

2. Is it possible to test out and get a few sales first before registering my business, or is that not legal?

3. I am thinking of dropshipping in the US (from US suppliers to US customers). Would there be a requirement to start a company there too?

Thanks in advance :)
Let's start at the beginning, shall we? I see you are "Jadexpat". Are you a Singapore citizen or PR? If yes, read on. If not, then you have a much more difficult task because not only are you going to form a business, you're going to try and convince the gahmen to give you a work permit for your business. There are hundreds of threads in these forums on trying to get an employment pass for your own startup.

LLP means "limited liability partnership". If there is only one of you, then you cannot form a LLP. Your only choices are pte ltd or a sole proprietorship. And if you're not a citizen or PR, then pte ltd is probably the only way you'll ever get to a work permit.

You must be registered in order to operate a business. You cannot open a bank account without a registration, and that means you cannot accept payments in the name of a company. In short, step 1 in any business is to become legally registered.

US taxation is complex and no definitive answer can be given with the limited information you have supplied. But, in general, if you have no US employees, and no US presence, you will not pay US taxes. You can sell directly to end customers, either other retailers or end users. You can sell into distributors who handle distribution, warranty services, etc. Beyond this, your exact proposal for selling and payments would need to be known.
Hi Myasis Dragon,

Really appreciate your detailed reply.

I'm a PR.

In your opinion, would sole proprietorship be risky for a dropshipping business? I'm thinking of selling wellness products (e.g. soap, essential oils, environmentally friendly products, etc.) As opposed to food products etc. i suppose this would have a relatively lower risk?

As for LLP, i could rope in a friend. I think may be a better idea since it's separate legal entity. But are there certain compliance needed such as a partnership agreement?

Any thoughts on this? And in your opinion, is dropshipping a worthwhile venture?

Thanks once again :)

Myasis Dragon
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Re: Starting a dropshipping business in Singapore - advice needed

Post by Myasis Dragon » Sat, 24 Oct 2020 4:05 am

I am of the opinion that you don't operate a business that can leave you open to substantial liabilities without the protection of a corporate shield. Therefore, I would not recommend a sole proprietorship. But, that's me. Lots of other people do run a business as a SP. If you have no real assets that can be taken from you, it probably doesn't make much difference. I would encourage you to look at local businesses in Singapore on any street... the vast majority are all pte ltd's.

There is not much point in forming an LLP... you still need to register and file LLP tax returns... you need a partnership agreement in place of articles of incorporation... you need the equivalent of meetings and minutes to record the business of an LLP... there's not much savings in terms of costs or hassle.

Dropshipping is an entire subject in itself. I was part owner of a warehouse dedicated to drop shipping companies (and now bought by Amazon - yay!). You ship pallets of your merchandise to the drop shipper, who, for a fee, handles orders, returns, warranty, etc. Or, sometimes, manufacturers of product will also have drop shipping facilities that you can use for a fee. It all depends on the merchandise and the company.

The big question is: How to you make yourself known? How do you differentiate your product? What is your market? Have you created a business plan (if not, you are freak up)?

If I were to venture into the business, I'd start with Amazon... you shipt product to them... they fulfill your product... you're in their catalog... yes, you pay them lots of money for each sale... but you find out if you've got anything that someone wants to buy. Where else are you going to advertise and sell? From your own website? Good luck.

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