Where should I register my office?
There are several statutory requirements that potential business owners will have to comply with in order to incorporate a company in Singapore.
One of the statutory requirements for setting up a company in Singapore is that it should have a registered office address, which will have to be input into the electronic application form for incorporation, which is submitted to the Accounting and Corporate Regulatory Authority (“ACRA”).
As it is part of the incorporation process, a company cannot be incorporated without first having a registered office address in Singapore, although they may elect to use a registered office address service.
What are the criteria to be fulfilled for a registered office address?
A registered office address should fulfil the following criteria:
- It is open for at least five hours during ordinary business hours on each business day
- It should be a physical office address located in Singapore
- It cannot be a P.O. Box
In addition, given that all government bodies and entities will be sending their correspondence to the company’s registered office address, the company should ensure that the incoming mail sent to its registered office address (or registered office address service) is checked regularly.
Examples of correspondence that a company may receive from government bodies and entities would include timely reminders to comply with annual requirements, new government incentives, changes to policy, etc. In addition, banks may also send the correspondence to the company’s registered address as well, unless advised otherwise. It’s self-evident that conscientiously corresponding from your registered office in SIngapore, or employing a responsible registered office address service, is not only an issue of regulatory compliance but of good business practice.
Physical Office vs Virtual Office
Generally speaking, companies can consider two options:
|Option 1:||To have a “live” and active office, with at least one administrative personnel to attend to and act accordingly to all official correspondence sent.|
|Option 2:||To opt for a virtual office service that provides mail notification and mail forwarding services.|
One of the primary key considerations that business owners have to take into account is cost. Given Singapore’s land scarcity, renting office premises is extremely expensive. However, for companies that have sufficient capital, Option 1 would be the preferred choice.
That said, there are situations where inexperienced administrative personnel may not know the importance of certain mails received. For example, the e-services Access Code sent by the Inland Revenue Authority of Singapore (“IRAS”) is often overlooked and misplaced, particularly since the company will not utilize it until it needs to file its Estimated Chargeable Income or Income Tax Returns.
Alternatively, foreign investors or entrepreneurs who wish to start with minimal overhead costs or do not foresee the need to invest in a physical office address in Singapore can go for Option 2. The benefit of a virtual registered office address service is that companies can choose from a variety of services that they wish to opt for. For example, Rikvin provides the following services at its virtual office:
- Registered office address
- Mail notification
- Mail forwarding
- Dedicated phone line
- Dedicated fax to email
In addition, as compared to physical offices, virtual offices can be set up in a far shorter time – Rikvin in particular, can set up your virtual registered office service within one hour. Hence, many companies find this to be far more convenient.
Some business owners may have the misconception that a virtual office will not be able to provide them with the facilities that they require to meet clients, prospective investors, etc.
However, while virtual office services such as Rikvin’s provide a registered office address in Singapore at a fraction of the cost of a physical one, it also provides the following facilities that companies can use, as and when required:
- Meeting room facilities to accommodate different groups from 4 pax to 14 pax
- Internet access
- Video conferencing facilities
Unlike the costs associated with leasing or renting your own office space, the costs associated with a virtual office service can be adjusted in tandem with your needs and budget. In the long-run, business owners can afford to invest more in their marketing, product development and business expansion plans.
What you need to know about Office Rentals in Singapore
As previously mentioned, Singapore is a small country and rental in the Central Business District (“CBD”) is extremely expensive. For companies that have chosen Option 1, obtaining office premises in the CBD will be a significant investment – average rentals typically range from:
- $9 to $15 per square foot per month for Grade A locations in the CBD *
- $4 to $7 per square foot per month for Grade B locations in the CBD
The above rates are expected to continue rising by five to seven per cent in 2015.
For areas outside the CBD, prices will typically range from $2 psf to $7 psf per month, but there may be certain restrictions. For example, for certain areas in the industrial parks, companies may be required to commit a certain amount of investment to developing the leased premises.
Business owners should therefore first estimate the cost of leasing their own office premises and consider the sustainability of doing so, particularly if they have a limited amount of funds. Other associated costs, such as renovation, installation of pipes and utilities, investment into technology and other equipment, can lead to additional cost burdens. Moreover, as the traditional lease for office space is three years, companies may have to absorb the cost of restoring the office to its original condition before returning it to the landlord.
One other key consideration is the ease of accessibility. While office spaces in industrial parks may be more affordable, they are often not easily accessible as they are situated quite far off from the city centre. This may be more problematic for your employees and may not be a practical place to hold meetings with investors and business partners.
In contrast, some virtual offices provide a prestigious CBD address at a fraction of the cost. Rikvin in particular, has three virtual offices in the heart of the CBD, complete with meeting facilities, internet access and video conferencing facilities. More importantly, the CBD is extremely accessible and most financial institutions such as commercial banks or investment houses will be willing to simply walk over to any location within the CBD; and last-minute meetings can be arranged within the hour.
Companies can also benefit from the prestige of being able to advertise their exclusive location in the CBD on their business cards, letterheads and corporate collateral; and can interact and hold meetings with their clients and business partners at the meeting rooms provided. Especially when it comes to dealing with local business partners, financial institutions and suppliers, knowing that one has a prestigious CBD address can be a powerful tool, as it implies that your business is established, has capital and is professional.
* Did you Know?
Rikvin is located in a prestigious “Grade A” building at the heart of Singapore’s Central Business District.
30 Cecil Street, #19-08 Prudential Tower, Singapore 049712
How about a HDB Home Office?
Some local entrepreneurs who wish to work from home consider having a HDB Home Office. However, certain things need to be considered before doing so:
- Loss of privacy – your home address will be publicly available information as members of the public can easily search a business’ registered office
- Minimum opening hours – as explained previously, a registered office needs to be open for at least five hours on every business day
- Restrictions on the business types and business activities
To apply for a home office, one would need to make an application to the Housing Development Board (“HDB”) and would need to meet all the relevant requirements.
For example, certain businesses such as food catering, sales and marketing, manufacturing, courier services, beauty services etc., are not permitted. Hence, business owners would need to do adequate research before applying, or risk forfeiting the administrative fees.
Given the few benefits of a HDB Home Office and the restrictions that it must comply with, most entrepreneurs do eventually opt to have a virtual office, even while they continue to run their business operations from home.
Freedom that Caters to Your Needs
With the portability of technology available today, a virtual office blends the comfort of home, with the professionalism of a corporate office. With a virtual office, employees can gain freedom from the negatives of a daily commute and will not be bound by restrictions such as quotas for leave and the need to constantly maintain a corporate image.
While the general perspective out there is that only small entrepreneurs and small enterprises can work with a virtual office, companies such as Automattic, the company behind the WordPress blogging software, have proven that even medium sized companies can reap the benefits of a virtual office. Chief executive Toni Schneider has implemented an unusual business philosophy that allows his 123 employees to work from anywhere – allowing him to effectively tap on talent from all over the world . By doing so, Automattic takes full advantage of the global economy and leverages off innovative software to hold meetings, such as Skype, Google+ Hangouts or P2, a blog built in-house that has specific pages for internal discussions.
For companies that are leveraging off Singapore’s strategic location in the Asia Pacific region to reach out to the growing economies of Southeast Asia, having a virtual office also provides one with the freedom to travel, and assurance that the office will remain open and fully functioning while overseas.
Particularly for those in the import and export business, or base their manufacturing operations overseas, frequent travel may be required as part of the business.
Certainly, when it comes to deciding between a virtual office and a physical office, business owners will need to take into account the nature of the business operations, the unique needs of their business, and the needs of their employees.