Archive

Monthly Archives: June 2013

To foster productivity and innovation, government agencies in Singapore have been providing several assistance schemes to small medium enterprises (SMEs) to adopt new technology and achieve that ultimate objective. One of those schemes are the Productivity and Innovation Credit Scheme, that lets small businesses receive up to 400% tax benefits/deduction or receive up to 60% cash payout in the YA year, 2012 – 2015.

The 2013 budget that was introduced back in February gave opportunities for small businesses in Singapore to increase their productivity and efficiency with the use of technologies as well as to deal with small number of foreign workforce. So how can small and medium businesses make the most of all these schemes that are available for them?

Well, we got few tips from expert consultants on how three types of SMEs will benefit from PIC schemes.

Just take an example of a manufacturing firm like Rotating Offshore Solutions. The company is specializing in marine engineering and build customized modules particularly for clients that are involved in the oil and gas industry.

The firm was launched in 2004 and is one of the fastest developing companies in Singapore with revenue more than $35 million each year and its profits are around $5 million per year. In 2010, Rotating Offshore Solutions won an Enterprise 50 award. Like so many companies in Singapore operating in manufacturing sector, most of the firm’s workers are foreigners.

About half the firm’s hundred strong work force are foreign workers. This is mostly because of the fact that the company could not find enough Singaporeans to work for them.

“For now, we are focusing their efforts on increasing its market share as well as driving its business sales,” says Chia Kuan Wee, the executive director of Rotating Offshore, “Because of this, we don’t expend much on research and development activities in Singapore, but send our engineers to foreign countries for regular training.”

Mr. Chia says that sending their engineers overseas cost their company almost 5 percent of their total revenue. But for now, the company wants to expand their local operations but don’t have any immediate plans to enlarge their business overseas.

No matter what their plan is, most consultants agree that manufacturing companies like Rotating Offshore will greatly benefit from the Productivity and Innovation Credit, or PIC scheme.

The PIC scheme is specially aimed to encourage small and medium companies to be more innovating and productive by giving them up to 400% tax benefits/deductions and annual funding up to $400,000 on each of the six qualifying activities.

Harvey Koenig, a tax partner at KPMG, thinks that the Rotating Offshore need explore the PIC scheme because their main business of designing customized modules may be regarded as the R&D activity under the scheme.

Given the fact that the company annually spends $1.75 million each year for sending their engineers for overseas training, Mr. Koenig also thinks that Rotating Offshore can claim the tax benefits/deductions available through PIC for training.

If the company goes for the cash payout option, that could mean at least maximum $60,000 fund under the new improved scheme.

And if the firm also decide to replace its foreign workers by hiring older Singaporeans, Yong Jiunn Run, the CIMB head of commercial banking, says that the company could also save on salary costs, too. This could mean the company will save at least $14,400 in wage for every five foreigners it replaces because the government gives at least 8 percent wage subsidy.

Additionally, if the company decides to train their staff in-house, it can claim the training costs of almost $10,000 under the PIC training staff activity, which also equates to tax deductions worth up to $40,000.

Here’s the reaction from Mr. Chia!

Mr. Chia now agrees that this awesome PIC scheme could be useful boost for his company, however, also notices that the cash payout option really doesn’t help his company.

“Recently, we have applied for the PIC scheme and found it useful for the income tax deductions, which is more beneficial than the other option – the cash payout option,” says Mr. Chia.

He concludes that the overall budget program was neutral to them and their company were not quite affected by lowering the dependency ratio. Although he thinks it’s not great, but he still considers it’s a  good option for many other small businesses out there, particularly to those one who are starting out.

Advertisements

If you have already set up a business but want to take it to the next step, then you may be thinking about what to do to help grow your business to the next level, right? Well, there are several ways to do this, and some of them are laid out for you, below.

There are several government grants available for your business to grow and choosing the proper one depends upon the type of your business, what available resources you use, and how much time, money, and resources are you willing to put out to invest all over again.

Small and medium business owners can always use a little money to get started. That’s why Government has created several grant programs to help small business like you to take it to the next level.

Successful businesses know the importance of having a strong Information Technology (IT) system that will help support their business processes. But for many, the cost involved in the implementing such system is always an issue. It is probably because of tight budgets some company has as compared with their larger counterparts and this ultimately limits their adoption of IT.

The Singapore government has started several schemes, like SEEDS, iSPRINT, YES! Startups, TECS, and other to help small business accelerate their growth.

Under each of these grants, a business operating in Singapore can receive up to 40% to 70% qualifying expenditure in training, hiring IT equipment, acquiring and leasing of trademark and patent rights, design projects, among others. There are several types of projects that each new company operating in Singapore can qualify for, and there are pre-requisites to consider before even applying for those grants.

What types of projects your business will qualify to receive Grants?

1. Packaged Solutions

Package solution cover all the basic business functions such as accounting, finance, payroll, software-as-a-server, and point-of-sales with respect to the cost of software, subscription, and consultancy services, and training that falls into this category.

2. Customized Solutions

These solutions comprise of enterprise resource planning and customer relationship management solutions. Businesses can apply for the grant so that they can cover the cost related with training and consultancy service fees of this software.

Other customized solutions would include those solutions that are needed for business re-engineering and development efforts. This section includes cost incurred during supply chain management solutions. Small and medium companies can tap on to these types of solutions to cover manpower, consultancy, hardware, software, and training related costs.

Important Step to Take to Qualify For These Grants

  1. Your business must be incorporated or registered in Singapore
  2. At minimum, 30% of shareholders must be local citizens
  3. The annual sales turnover of your company’s group must be less than S$100 million OR
  4. The number of employees in your company should be less than 200

For customized solutions, the development must be carried out in Singapore, the development for the first time automation of different business functions, and the project must be started only after the grant is approved.

Here are Six Significant Tips to Know before proceeding to apply for Grant!

  1. If your business isn’t in a hurry to implement IT solutions, then you can apply for a grant approval from iDA, which usually takes about 2 to 6 months to obtain. But if your business require immediately use IT solutions, and you have plenty of IT funds, then you may want to skip applying for grants at first until the next project. The grant is available until March 31, 2016
  2. Business registered in Singapore has to fill and submit a 6-page business proposal to apply for government grants
  3. Businesses also have to present their quotations from 3 IT solution suppliers along with their application to iDA
  4. In addition to business proposal and quotation, businesses also have to submit their as well as the appointed IT solution providers’ latest ACRA business profile
  5. Business applying for the government grants also have to submit their financial statement of past two years

Many people consider Singapore the best place to set up their businesses. There are many reasons why more and more people choose Singapore over other countries. These reasons include the strategic location of Singapore in Asia, the talented workforce, the blend of all cultures, etc. As in any country there are always rules to follow before registering a business, if you wish to set up your own business in Singapore you must also observe certain rules.

What does the law say?

According to the business law in Singapore written in section 5 of its Business Registration Act, in general, registering all types of businesses with ACRA (Accounting and Corporate Regulatory Authority) is required in Singapore. It does not matter whether you are planning of setting up a limited partnership, a limited liability partnership, a company, a partnership or a sole-proprietorship, you are required by law to register your business since generally registration of business in Singapore applies to all business types such as these.

What are the exemptions?

However, there is always an exception to the rule. Thus, Singapore law exempts certain entities from registering with ACRA. These entities include licensed hawkers, pond keepers or farmers, trishaw riders, taxi drivers and craftsmen. The licensed hawkers mentioned refer to those who register with NEA instead of ACRA.  Taxi drivers are required to register instead with the taxi companies. There are actually categories for craftsmen and the craftsmen mentioned refer to those who work and produce their goods privately in the confinements of their own abodes or domestic premises. The goods produced by these craftsmen are not displayed in public and the services to make such goods must not be rendered by employees who are not a member of the family.

In addition to this, registration of business in Singapore with ACRA does not include certain charitable organizations and societies although certain governmental organs may require these organizations and societies to register with them instead.

Do blogshops need to be registered?

Now that the popularity of blogshops is increasing and more and more people are setting up their own blogshops, many ask if they still need to register if they have one. The answer is YES. Due to the increasing number of these new online businesses now there is still a possibility for some to remain unregistered. ACRA however states that the rule in registration of business in Singapore does not exempt blogshops. Not only that but also since these blogshops are content providers online, they are all the more required to register and follow certain rules.

What if the blogshops are unregistered?

If the above mentioned blogshops fail to register, their owners may be fined or even imprisoned.  Additionally, if a certain blogshop business is unregistered the owner cannot avail of any contractual right against his client who failed to pay for the products he delivered to him. This means the unregistered blogshop owner cannot have the legal remedies for reclaiming payment. There are however certain meritorious cases where the unregistered owner may go to court to be given special relief.

What is the process for registering a business in Singapore?

Registration of business in Singapore is actually easy and fast which could only take as short as 15 minutes. As long as you have all the necessary requirements for the registration which include following the provisions on the appointment of a local manager for your company, your company name, the SSIC code for your business, your business address, Medisave accounts applicable to citizens and permanent residents only, license requirements, your business Memorandum and Articles of Association, and some documents for the incorporation of companies, the possibility of your business being approved is strong. With all these requirements and documents ready, all you have to do is check out the website of ACRA and follow the instructions for registering your business. Charges may vary for every business entity. Obscene and offensive business names are considered inappropriate and are not accepted in the registration of business in Singapore. Moreover, ACRA does not accept business names that resemble the names of the existing brands. For those who own a start-up business, if they want know the upsides and downsides of every business entity, they can always check out the website of ACRA.

The idea of outsourcing the company secretary service role is now increasing in popularity not only in Singapore but also all over the world.  Outsourcing of company secretarial role is already sought after by all types of companies such as private and listed companies, small and large companies alike as well as medium and small-sized enterprises and even start-ups. Although outsourcing is actually accompanied with many good reasons, before only a few companies accepted the idea since they were more comfortable dealing with an in-house corporate secretary. They especially considered  that hiring a corporate secretary this way would give them more chances of controlling the position and not only that but also they wanted an accessible, accountable and reliable company secretary, and the answer to this would be for them to hire an in-house secretary.

Today, there have been changes and outsourcing the company secretary service is highly-sought after by many companies now. This has been the result of the outstanding benefits the companies can obtain from outsourcing. Also, the number of reputable outsourcing companies is increasing and this has created a competition among such companies, thus resulting in competitive pricing. Outsourcing was once considered as costly by many companies but that was at the time when they did not see its benefits over hiring a corporate secretary in-house. However, now that the advantages of outsourcing are seen by these companies and because of the competitive pricing attached to outsourcing, such companies are now convinced of taking advantage of it. They are now willing to entrust the significant company secretarial role to what is considered as the third-party company and beginning to see that outsourcing also ensures company compliance.

The advantages of outsourcing the company secretary service position are never underestimated in the sense that:

  • Such advantages can greatly contribute to the effectiveness and efficiency of the daily operations of the company and would lead to the company’s growth as a whole.
  • The company saves in areas concerning life, disability insurance and health as well as in matters regarding office space and equipment such as fax machines, copiers, computers, etc. since the outsourcing company already provides these.
  • The company can use the amount of money saved on improving the business development and infrastructure.
  • The company can benefit from the extensive experience and knowledge of skilled individuals who possess a high level of training in company secretary service.
  • The company is saved from the costs of training since the screening of the qualified team is part of the outsourcing company’s responsibilities.
  • The company is assured that all the secretarial functions and company requirements are performed on time as well as submitted to the appropriate authorities.
  • Based on its specific requirements, the company may also avail of the other services tailored for it and offered by the outsourcing company.

Based on the advantages mentioned above, the beauty in outsourcing the company secretary service lies in the fact that it will give you a much greater opportunity and more time to focus strongly on what’s more important and what needs more attention in your company, thus resulting in more progress and further expansion of your company.

Opposite to what was thought of by many companies before, outsourcing the secretarial position can actually place your company on a better and more progressive stance. Most outsourcing companies are committed to performing the duties of the company secretary solely, thus they are able to perform such duties effectively, efficiently and in a timely manner, and this gives security and assurance on the part of the companies hiring their services. This also gives the company more assurance since they are given the idea that the outsourcing companies can always address their needs.

The duties and responsibilities of a company secretary are very crucial to the company’s existence. He is especially expected to perform all secretarial functions well from record keeping to acting as an executive assistant and communications officer. Only a highly skilled and exceptional company secretary can perform all important tasks with efficiency, thus the presence of this position in every registered company is especially required by the law in Singapore. Hence, the benefits of outsourcing the company secretarial role far outweigh the benefits of hiring a company secretary in-house that the demand for it has been increasing and is expected to rise further in the future.