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Open a Sole Proprietorship on a DP and getting the LoC

Discuss about getting a well paid job or career advancement. Ask about salaries, expat packages, CPF & taxes for expatriate.

colio
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Postby colio » Mon, 01 Apr 2013 10:23 am

Just wanted to report that my wife has her DPLOC successfully approved today. It took less than 2 days to get it approved from the time of submission through our accountant who also does Employment Visas etc.

Just to summarise how we chose to do it, we have created a company (PTE LTD) with me as the owner. I have an Employment Pass & this is OK as long as I don't actually work for the company or derive any sort of income from the company, which I won't be doing. I simply own the company & all revenue will be paid out to employees or expended on company expenses. This is a preferable way for us as it has many tax benefits. My wife is a management consultant for some companies back in Australia (& she will also be providing consulting services to some Singapore companies once she is set up properly). We can use the company structure to save on income tax.

So she is the sole employee of this company. We submitted the MOM DPLOC form as well as a page that summarised her job duties on company letterhead.

Cost for our accountant for formation of the company is $S850. Then it's an optional $800p.a for the accountant to be the company secretary & do all the required books. We opted for this.

Then there was the normal DPLOC fees to MOM.

We are very happy with the outcome especially as we were able to get it all in before the April 1st deadline as, according to my accountant, MOM is changing policies so that local companies also have to employ at least one local person.. I've not seen any official statements from MoM about this (then again, I have not looked at their website either) but the accountant seems to know what she is talking about.

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Postby Strong Eagle » Tue, 02 Apr 2013 12:26 am

Thanks for the report, colio. Once again, it seems to support the theory that by supplying sufficient information and demonstrating suitable qualifications, the LOC will be granted. Also interesting to see how quick it happened with a pte ltd.

colio
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Postby colio » Fri, 05 Apr 2013 9:44 am

Strong Eagle wrote:Thanks for the report, colio. Once again, it seems to support the theory that by supplying sufficient information and demonstrating suitable qualifications, the LOC will be granted. Also interesting to see how quick it happened with a pte ltd.


No probs although I am pretty sure the speed of the whole process was not based on the fact that we used a pte ltd but rather that the application was submitted online through my accountant's EPOL (Employment Pass On Line). She says that is standard turnaround time if you have an EPOL.

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Postby goldenarms » Tue, 09 Apr 2013 8:39 pm

Has anyone heard any news about the new hiring policies from MOM slated to start on April 1st? I am on my way to Singapore soon and was hoping to try this process to gain my own LOC.

Thanks.!

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Postby Strong Eagle » Wed, 10 Apr 2013 12:46 am

goldenarms wrote:Has anyone heard any news about the new hiring policies from MOM slated to start on April 1st? I am on my way to Singapore soon and was hoping to try this process to gain my own LOC.

Thanks.!


MOM's LOC webpages look identical to the pre April 1 pages to me.

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Thanks Colio! Which accountant?

Postby Seymour » Thu, 18 Apr 2013 12:57 am

Hi Colio, this is extremely helpful as I find myself in the same situation (relocating in a few weeks and spouse management consultant DP holder). Can I ask you what specific accountant you used? It sounds like a find given the success and the reasonable rates. I would like to approach them to get their support too. Thanks in advance.

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Postby MrsMagnum » Wed, 08 May 2013 6:15 pm

Good news, Colio.

Just out of interest, since you've set up a Pte Ltd, could your wife not now get her own EP to work for that company? Seems a bit more secure than being a DP with LoC. I'm assuming she could also then become the Director, so you wouldn't need to be?

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New forms and documentation requirements since 1st April?

Postby Selebration » Tue, 28 May 2013 7:47 pm

First of all, great thread, thanks to all contributors! I'm also trying to negotiate this minefield, about to apply for the LOC but good to know some tips and possible pitfalls... thanks for posting.

One thing I'm confused about is where you get the list of docs required from - the LOC application form I downloaded includes a much simpler list of supporting docs, most of which do not apply to me (as a sole trader consultant working directly with companies), mainly re food licence or specific professional bodies, nor any questions about Entrepass...

I'm wondering whether this is due to the supposed "change in the rules" from 1st April that nobody seems able to verify, and I can find no ref on the MOM website. Can anyone offer any recent experiences?

:?

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Postby MrsMagnum » Tue, 28 May 2013 9:32 pm

Hi Selebration

The list of documents in this thread is really just a package of things you need to put together yourself. Don't worry about food licence/professional body certificates if they don't apply for the industry you'll be working in.

Basically, the LOC form is standard and isn't geared towards people who will be working for themselves. So if you just filled it in and sent it off, there would be a lot of gaps and it would most probably be declined. You want to pre-empt any questions they have by providing the answers in your application.

Each of the 'documents' detailed above could be no more than a couple of sentences on a page of a Word doc. I put my logo on every page and clearly labelled each one so the person reviewing it could see its purpose. I also included a covering letter that re-iterated my experience and why I was applying.

Hope that helps, and good luck!

MrsM

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Postby MrsMagnum » Tue, 28 May 2013 9:36 pm

Sorry, one more thing, the list of docs was suggested by others who had already gone down this route.

There is no mention of EntrePass because that's an entirely separate work pass.

I assume if you're applying for a Letter of Consent then you are a Dependant's Pass holder? As a DP holder an LoC is all you need to work and it's the employer that fills in the form and submits it. In this case you're applying to work for yourself by setting up a Sole Proprietorship first and then filling in the LoC form as the employer.

MrsM

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Great, think I'm all set then...

Postby Selebration » Wed, 29 May 2013 8:41 am

Thanks, Mrs Magnum, for your clear and prompt reply about why to include more info than they ask for. I had thought the form itself was a little vague and wouldn't present a very strong case on its own, so it makes sense.

Yes, I set up my SP through ACRA (end of April/early May, with myself listed as both Owner and Manager - it went through fine, despite rumours that we now have to appoint a local manager). I've just got confirmation that my DP has been renewed for two more years (husband on EP).

Now for the LOC application... getting quite good at jumping through hoops, fingers crossed for these next ones. As its a brand-new business that may take a while to get off the ground I don't anticipate regular income in the short-term, but it only takes one contract! Not quite sure whether to make up a figure (and whether to pitch it high or low) or be totally honest about uncertainty - any advice?

I'd also been hoping to supplement lack of progress with supply teaching (interested to know which school mentioned above was intransigent), and so am a little dismayed to hear that might be difficult. I guess it helps concentrate the mind on what I really want to do...

Good luck with your new business. I'll keep this thread posted on my progress...
:)

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Postby MrsMagnum » Wed, 29 May 2013 11:43 am

Happy to help. Good for you that you have a DP for two years. My other half's EP didn't have much left to run so I will be going through this whole process again soon...

If you want to do supply teaching as well as the main work your LoC describes, make sure you add this to your LoC application in terms of the job duties. I assume your consultancy stuff is education-based so this shouldn't be a problem.

I would just be as clear and up front as possible. You're not trying to pull the wool over anyone's eyes and don't want it to look like you are.

I think what people were saying earlier is that if a school applies for the LoC on your behalf, then you can only hold two and therefore only work for two different schools. Once you are self employed then the schools are engaging your sole proprietorship, which you have an LoC to work for, so you can work for as many schools as you like. What earlier posters were saying is that you can't have one LoC directly with a school and then a self-employed one as well. Hope that makes sense.

I put that I had zero turnover and estimated a monthly salary based on a day rate that I stated in my covering letter. Be aware that if you are accepted then IRAS will ask for a letter of guarantee for your tax liability for that monthly amount x 12 – regardless of the fact you will only be working for half the year.

You will need a local company to write a letter of guarantee that they will pay your tax bill if you default on it. However, I checked with IRAS and if your tax bill turns out to be less then you will only need to pay the correct, lower amount. If you can't get a letter of guarantee then unfortunately you will need to pay the estimated amount of tax up front.

MrsM

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Jill of all trades...

Postby Selebration » Wed, 29 May 2013 12:15 pm

Thanks Mrs Magnum,

Yes, it made sense to renew DP first as I was into the final few months of the current one (you can renew EP and associated DPs any time within the last 6 months and they will extend it to two years beyond the original expiry date - or at least they have done for us.) It will be interesting to see whether I get the LOC for the full 27 months I'm now planning to ask for (the duration of the new DP).

The SP is a new business based on a hunch/gap in the market, but no, it's not in education... that's based on another skill set that I would hope to use as a backstop or possible alternative plan if this doesn't work out... I'm really a bit of a multi-skilled generalist, so was hoping to keep a few balls in the air while I see which proves the best avenue for future development, from both a work and family point of view... My SP doesn't mention education at all...

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MOM crackdown...

Postby Selebration » Wed, 29 May 2013 5:34 pm

btw, heard a playground rumour today of police cracking down on someone working without an LOC... luckily for her she was out, but I'd be afraid to go home if I was her...?

anyone else heard anything similar?

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Final question about salary statement for new business

Postby Selebration » Tue, 04 Jun 2013 10:11 am

MrsMagnum wrote:I would just be as clear and up front as possible. You're not trying to pull the wool over anyone's eyes and don't want it to look like you are.

...
I put that I had zero turnover and estimated a monthly salary based on a day rate that I stated in my covering letter. Be aware that if you are accepted then IRAS will ask for a letter of guarantee for your tax liability for that monthly amount x 12 – regardless of the fact you will only be working for half the year.

You will need a local company to write a letter of guarantee that they will pay your tax bill if you default on it. However, I checked with IRAS and if your tax bill turns out to be less then you will only need to pay the correct, lower amount. If you can't get a letter of guarantee then unfortunately you will need to pay the estimated amount of tax up front.

MrsM

Hi MrsM,

One last question re salary statement. I've stated zero capital, turnover, etc. as it's a brand-new start-up that may take days or months to get going and bring in any income...

As it might take a while to win the first business contract, I'd prefer to say I won't draw a salary initially but acknowledge that as SP all business profit will be assessable under my personal tax. Is this unwise? Would I do better to make up a figure?? I might win a huge contract next week or it could take me a year...!?
If a big contract (and that's a big if at this stage) then it sounds like it may be worth forming a limited company, so my plan would probably be to do that down the line if and when the business takes off...?

Hoping to send the application off today if poss, so responses ASAP appreciated!

Oh, and btw, if application is rejected, I presume it's too much to hope for any reasons/feedback from MOM?? Does anyone know?


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