Singapore start up- worth the effort?

[David-asia]

A quick background.
I'm an American currently living in Japan, officially teaching english. However, I also do work online and have done well this year. I'm mainly doing internet software installs, and online consulting- worldwide.
Next year I think will be even better and am concerned about uncle same looking for his pound of flesh once I go over the $87k exemption.

After searching and reading the forums I think setting up a company in singapore may be a good idea.

I've read many great posts and the government info sites as well as the links recommended by the members here.

I can write a competent and convincing business plan- my business is already successful.

So my questions are:

1) Do you think it makes sense for me to start a Corp. in singapore.

2) Do you think my type of business would require a license?

3) I see on the links there are two companies suggested, a--b-z and ri--in. Do you have any feedback on using either- pricing looks about the same. What are the ongoing yearly expenses? these aren't clear.

4) Do you suggest I use one of the above services? I can fly to singapore pretty easily.

5) I get $ from paypal, in US $. Do you know if paypal singaport will transfer dollars to a singapore bank? from what I've seen it gets converted to singapore $.

6) Have you heard of any blowback from the US for using this type of setup?

7) Whats the going salary for a mid level techy in Singapore? If things continue to pick up I may be interested in hiring local talent.

8) Does it make sense for me to try to get an entrepass?

9) Do you guys ever get together for an event? Maybe if I need to come over I'll time it to one of these


Thanks!!

[Plavt]

Given the current economic crisis and the amount of locals trained in IT, you may be a little over optimistic.

As regards the Entrepass see;


http://www.singaporeexpats.com/forum/ftopic38927.html

.....Strong Eagle who I am sure will give you more concise information.

[David-asia]

As regards the Entrepass see;
http://www.singaporeexpats.com/forum/ftopic38927.html

Read, but will print and reread.

Given the current economic crisis and the amount of locals trained in IT, you may be a little over optimistic.

In any period you have businesses going up and coming down- I believe I am on the way up from my positioning of my service in the niche and connections I've made.

Because of the numbers of locals trained, who may be soon out of work, I think I could benefit the country by providing some of them good professional jobs. (if i go that route)

I appreciate the feedback though- always good to challenge your assumptions.

[Plavt]

always good to challenge your assumptions.

I haven't made any assumptions, I don't know your business which is why I referred you to the link besides your own question is, is it worth the effort?. However, it would be interesting to know just who you think is going to need software installs (if that's what you intend doing) in a recession?

There are doubtless consultants already there who are probably having a hard time and as for business plans there is nothing to say they will accept it. However, there is nothing to stop you trying if you think you will succeed, good luck.

[Strong Eagle]

A quick background.
I'm an American currently living in Japan, officially teaching english. However, I also do work online and have done well this year. I'm mainly doing internet software installs, and online consulting- worldwide.
Next year I think will be even better and am concerned about uncle same looking for his pound of flesh once I go over the $87k exemption.

There is nothing you can do to avoid busting the earned income exemption except not make enough money. Just because you start your own company doesn't mean you are exempted.

a) Your salary and director's fees are included as earned income, so if you pay yourself more than US$ 87K, you'll pay US income tax.

b) Taking it as dividends doesn't work because now all the money is taxable as unearned income.

After searching and reading the forums I think setting up a company in singapore may be a good idea.

I've read many great posts and the government info sites as well as the links recommended by the members here.

I can write a competent and convincing business plan- my business is already successful.

So my questions are:

1) Do you think it makes sense for me to start a Corp. in singapore.

It is one of the easiest places in the world to start a business and it is cheap. Nearly anyone can do it. A private limited is one way to do it but there are tax consequences, unless all your earnings are taken as salary and director fees.

2) Do you think my type of business would require a license?

No.

3) I see on the links there are two companies suggested, a--b-z and ri--in. Do you have any feedback on using either- pricing looks about the same. What are the ongoing yearly expenses? these aren't clear.

I know nothing of the companies. It is easy to set up a business. You can do it online yourself (if you are qualified). A CPA can set it up as well. You may need a nominee director, depending upon how you do this. You do need secretarial services to insure that all documents and resolutions are properly filed and recorded. I think most CPA's will do this for about $1500 plus fees for incorporation. So, to answer 4) as well, as long as you get a registered office address, and the services I mentioned it doesn't matter who you use.

4) Do you suggest I use one of the above services? I can fly to singapore pretty easily.

5) I get $ from paypal, in US $. Do you know if paypal singaport will transfer dollars to a singapore bank? from what I've seen it gets converted to singapore $.

Paypal works fine in Singapore. You will probably have a couple of options. Open a US dollar denominated account or a Sing $ account and pay Paypal's exchange rates.

6) Have you heard of any blowback from the US for using this type of setup?

If you are trying to do this to avoid US personal income tax above US$ 87K, you can't do it. If you fail to report, you might be harder to catch since Singapore is pretty stingy about revealing information.

In addition to your 1040 you will also have to file a form covering your ownership in a foreign company, and will have to supply P&L and balance sheet, as well as payments to directors and shareholders.

So no blowback... but you are not avoiding any tax by going this route.

7) Whats the going salary for a mid level techy in Singapore? If things continue to pick up I may be interested in hiring local talent.

$2K and up depending on what you are looking for.

8) Does it make sense for me to try to get an entrepass?

You'll have to get an Entrepass if you want to set up and run your own company in Singapore.

9) Do you guys ever get together for an event? Maybe if I need to come over I'll time it to one of these


Thanks!!

Check the entertainment forums... several 'clubs'.

[David-asia]

Thank you so much for the info. I think that ultimately I will need to talk to an accountant about the best way to structure this.

What I would like to do is avoid having to pay double taxation on what the company earns and I eventually pay out in salaries or other expenses.

The way the tax code in the US and Japan is set up, you are forced to reduce the companies net income as much as possible in a tax year in order to lower the corporate tax burden and not be double taxed. I would like to be able to have the company bank as much as possible for when I am ready to expand.

Singapore's 0% on 100k for 3 years is great for a startup who will need to bank cash before expanding.

[Strong Eagle]

Thank you so much for the info. I think that ultimately I will need to talk to an accountant about the best way to structure this.

What I would like to do is avoid having to pay double taxation on what the company earns and I eventually pay out in salaries or other expenses.

The way the tax code in the US and Japan is set up, you are forced to reduce the companies net income as much as possible in a tax year in order to lower the corporate tax burden and not be double taxed. I would like to be able to have the company bank as much as possible for when I am ready to expand.

Singapore's 0% on 100k for 3 years is great for a startup who will need to bank cash before expanding.

If the company is incorporated in Singapore there is no US taxation of corporate profits. Only personal income tax. Yes, you can leave the money in the company and pay only Sing corporate tax (subject to the exclusion you mentioned, and others after 3 years).

[David-asia]

I'm having trouble understanding the definition of "sourced in singapore" income, both personal and corporate.

"Singapore imposes tax on income of any person (which is defined in the Singapore Income Tax Act to include a company incorporated or registered in Singapore or elsewhere, individual, Hindu joint family, trustee, executor, club, and association):
· accruing in Singapore;
· derived from Singapore; and
· received in Singapore from outside Singapore.

A Singapore resident company is liable to Singapore tax on its Singapore-sourced income and on its foreign-sourced income, but only to the extent that such foreign-sourced income is remitted to Singapore."

So does that mean income earned outside of singapore, by work done in singapore is taxed only if it is brought back into singapore? So if you had payments made to a Hong Kong bank and not remitted to singapore there would be no tax on that income?

--
How and would you include this on the entrepass business plan?


edit: just found this
If the business operations are carried out in Singapore, then income derived from those operations is usually said to be sourced in Singapore and thus liable to tax here. Whether business operations are carried out in Singapore is largely a question of fact and degree.
Income tax on ecommerce

[Strong Eagle]

A Singapore resident company is liable to Singapore tax on its Singapore-sourced income and on its foreign-sourced income, but only to the extent that such foreign-sourced income is remitted to Singapore."

So does that mean income earned outside of singapore, by work done in singapore is taxed only if it is brought back into singapore? So if you had payments made to a Hong Kong bank and not remitted to singapore there would be no tax on that income?

edit: just found this
If the business operations are carried out in Singapore, then income derived from those operations is usually said to be sourced in Singapore and thus liable to tax here. Whether business operations are carried out in Singapore is largely a question of fact and degree.
Income tax on ecommerce

It is complicated, and here is how it works to the best of my knowledge.

If you invoice in Singapore from a Singapore entity (your company), all revenues are taxable... period. So, when I did work in Malaysia, with a PM in Malaysia but I billed by client from Singapore, all revenues were subject to corporate tax.

When my subsidiary in Thailand bills in Thai baht to a Thai customer, I pay Thai corporate tax. When I repatriate the profits to my Singapore company the proceeds are not taxable because I paid tax in Thailand (reciprocal tax treaty with many complications... this is a simple example).

If I had a company in Singapore that did business in Malaysia and invoiced from Singapore, but had the remittances made to a Hong Kong bank, then:

a) if I had a registered entity in Hong Kong and paid taxes in Hong Kong then I would owe no tax in Singapore (subject to the arcane provisions of the reciprocal tax treaty).

b) if I simply put the money in the bank in HK, I would be subject to Singapore corporate tax because an offshore bank does not reduce my tax liability.

Under the law you have to pay corporate tax somewhere. From my experience, with the exception of HK, paying taxes anywhere but Singapore is much more expensive. If you wanted the HK route you need to create a company there, pay taxes there. You need a decent CPA (and they are hard to find) to assess full tax consequences because of reciprocal treaties.

[jpatokal]

Just a question -- are you planning on physically moving over to Singapore, which means you need an EntrePass/EP for yourself, or will you stay in Japan and just run your billing thru Sg to reduce taxes, which means all you need for your company is a local director?

[David-asia]

Was thinking of moving to singapore- been here for a while and ready for a change.

David

[garyong]

perhaps you might want to consider buying a company if you have the bucks, check out this website some pretty interesting business for sale www.ebizsurf.com.sg

[jpatokal]

perhaps you might want to consider buying a company if you have the bucks, check out this website some pretty interesting business for sale www.ebizsurf.com.sg

That's not an easy option for the OP, because by law a Pte Ltd must have at least one PR or Singapore citizen as a director -- you'd need to leave one on board, and then go through the bureaucracy of getting that company to hire him on an EP, which get pretty complicated pretty fast.

[David-asia]

I've decided to go the entrepass to PTE LTD. route. Finishing up the business plan now, and getting my endorsement letter from a customer who is from singapore- figured that can't hurt.

How do you submit the entrepass application if you're not in singapore?

David

[sundaymorningstaple]

I've decided to go the entrepass to PTE LTD. route. Finishing up the business plan now, and getting my endorsement letter from a customer who is from singapore- figured that can't hurt.

How do you submit the entrepass application if you're not in singapore?

David

http://www.singaporeexpats.com/forum/ftopic38927.html