Common Pitfalls to Avoid When Registering Your Company in Singapore: Lessons Learned from Real-Life Experiences

Singapore has long been a popular destination for entrepreneurs looking to start a business in Asia. The city-state offers a supportive business environment, attractive tax incentives, and a well-educated workforce. However, company registration in Singapore can be a complicated process, especially for first-time entrepreneurs. 

In this article, we’ll discuss common pitfalls to avoid when registering your company in Singapore, drawing from real-life experiences of entrepreneurs who have gone through the process.

Pitfall #1: Choosing the Wrong Business Entity

One of the most common pitfalls when registering a company in Singapore is choosing the wrong business entity. There are various options to choose from, including a sole proprietorship, partnership, limited liability partnership, and private limited company (PLC). 

Each entity has its own advantages and disadvantages, and it’s important to choose the one that best suits your business needs. For example, a PLC provides limited liability protection and is a popular choice for startups looking to raise funds from investors. On the other hand, a sole proprietorship is easy to set up and manage but provides no liability protection.

Real-life Experience: A Singapore-based entrepreneur chose to register his company as a sole proprietorship, thinking it would be the simplest and most cost-effective option. However, he soon realized that he had no protection from business liabilities, which put his personal assets at risk. He eventually had to close down his business due to mounting debts.

Pitfall #2: Not Having a Local Director

Singapore law requires that every company registered in the country must have at least one local director. This director must be a Singaporean citizen, permanent resident, or a holder of an Employment Pass or Dependent Pass. Not having a local director can result in your application being rejected, and even if your application is approved, you may encounter difficulties in managing your business from abroad.

Real-life Experience: A foreign entrepreneur who had successfully registered his company in Singapore found it difficult to manage his business from abroad due to not having a local director. He eventually had to relocate to Singapore and hire a local director to comply with the local regulations.

Pitfall #3: Not Understanding the Licensing Requirements

Depending on your business activities, you may need to obtain additional licenses or permits to operate in Singapore. These licenses and permits are issued by various government agencies, including the Accounting and Corporate Regulatory Authority (ACRA), the Ministry of Manpower (MOM), and the Urban Redevelopment Authority (URA). Not obtaining the necessary licenses can result in fines and legal repercussions.

Real-life Experience: A startup that offered home-based childcare services failed to obtain the necessary licenses from the Early Childhood Development Agency (ECDA) and was fined for operating without a license. The company had to stop its operations and reapply for the necessary licenses, which delayed its business operations and caused financial losses.

Pitfall #4: Not Understanding the Tax System

Singapore has a relatively low tax rate, which is one of the reasons it’s an attractive destination for entrepreneurs. However, it’s important to understand the tax system and comply with the tax regulations. This includes registering for Goods and Services Tax (GST) if your business has an annual turnover of more than SGD 1 million, and filing your corporate tax returns on time.

Real-life Experience: A foreign entrepreneur failed to register for GST and was fined for non-compliance. The entrepreneur had to pay the fine and backdate the GST registration, which resulted in additional costs and administrative work.

Pitfall #5: Not Complying with Employment Regulations

If you plan to hire employees in Singapore, you must comply with the employment regulations set by the MOM. This includes obtaining the necessary work permits and passes for your foreign employees, as well as complying with the Employment Act, which outlines the minimum requirements for terms and conditions of employment. Failure to comply with these regulations can result in fines, legal penalties, and damage to your company’s reputation.

Real-life Experience: A startup that hired foreign employees without obtaining the necessary work permits and passes was fined by the MOM and had to pay a penalty. The company’s reputation was also damaged, making it difficult to attract new talent and clients.

Pitfall #6: Not Having Proper Documentation

When registering your company in Singapore, you’ll need to provide various documents, including a business plan, financial statements, and identification documents for the directors and shareholders. It’s important to ensure that all your documents are complete and accurate, as any discrepancies or errors can result in your application being rejected.

Real-life Experience: A startup that submitted incomplete financial statements with its registration application had its application rejected. The company had to resubmit the application with the necessary documentation, which delayed its registration process.

Pitfall #7: Not Seeking Professional Advice

Registering a company in Singapore can be a complex process, and it’s important to seek professional advice from a lawyer or accountant who is familiar with the local regulations. They can help you choose the right business entity, obtain the necessary licenses and permits, comply with the tax and employment regulations, and ensure that all your documentation is complete and accurate.

Real-life Experience: An entrepreneur who tried to register his company on his own without seeking professional advice encountered various issues with the application process. He eventually sought the help of a lawyer, who helped him navigate the regulations and successfully register his company.


Registering a company in Singapore can be a rewarding experience, but it’s important to avoid common pitfalls that can delay your registration process or result in legal and financial penalties. By choosing the right business entity, having a local director, understanding the licensing and tax requirements, complying with the employment regulations, having proper documentation, and seeking professional advice, you can ensure a smooth and successful registration process.