If you decide to do business in Singapore, you have two main options: register a new legal entity or buy an existing one.
Many people find it easier to buy a ready-made company than to register a new one. Tempted by the speed and the possibility of having your own business in Singapore tomorrow. For some people it is also important that the company has a "history".
Today I will honestly tell you what the pros and cons of buying a ready-made company compared to registering a new one.
Many people find it easier to buy a ready-made company than to register a new one. Tempted by the speed and the possibility of having your own business in Singapore tomorrow. For some people it is also important that the company has a "history".
Today I will honestly tell you what the pros and cons of buying a ready-made company compared to registering a new one.
Registering a new company
Pros:
Cons:
Buying a turnkey company
Let's start by determining that there are 3 basic types of ready-made companies for sale:
I won't touch on buying a really working business today, as this is a vast topic in itself with a lot of nuances related to the size and value of the business, the number and types of assets on the balance sheet, the ownership structure, the industry and other important aspects.
We will talk about the most common scenarios, namely the purchase of "shelf" companies that were originally set up for sale and for which there was no activity and the purchase of companies from real owners, that is, companies that someone originally registered for themselves to run a personal business, and then for some reason decided to sell.
The pros of both options:
Shelf company:
It's not easy to find a company that's perfect for you by name, business activities and date of incorporation
The company from the real owner
Recently, it is perhaps even a popular case when the owner of the company, who registered it for himself decides to sell it. What are the disadvantages of this option? Oddly enough, there are even more than when you buy a shelf company:
Pros:
- The time to register a new company in Singapore is 1-3 business days from submission of required documents.
- You can create a company according to all your requirements - names, business activities, registration address, director, etc. You can even choose the time and date of registration.
- The cost of registering a company from scratch will cost you from $400 - the full cost will depend on the set of services required and average is $3 - $5,000 for the full set of services.
- If you are outside of Singapore, you can open an online payment system account within 1-2 weeks after company registration
- If you have a long term visa to Singapore or you are registering a fully nominee company (with nominee director and shareholder) you can open a bank account in Singapore within 1-3 weeks
Cons:
- The company will be newborn, meaning if you need to "dust your eyes" that the business has been in existence for a long time, this is not ideal
Buying a turnkey company
Let's start by determining that there are 3 basic types of ready-made companies for sale:
- Shelf or shelf companies
- Legal entities from real owners
- Real working businesses.
I won't touch on buying a really working business today, as this is a vast topic in itself with a lot of nuances related to the size and value of the business, the number and types of assets on the balance sheet, the ownership structure, the industry and other important aspects.
We will talk about the most common scenarios, namely the purchase of "shelf" companies that were originally set up for sale and for which there was no activity and the purchase of companies from real owners, that is, companies that someone originally registered for themselves to run a personal business, and then for some reason decided to sell.
The pros of both options:
- Your company was registered some amount of time ago, which can give your customers more confidence in the reliability of your company
- The company (probably) already has an open bank account
- Quick re-registration procedure (for shelf companies only)
- If we're talking about buying a legal entity (shell) rather than a really working business (with customers, processes, and a well-established business), this is probably the end of the pluses.
- Now let's break down the disadvantages of each option:
Shelf company:
It's not easy to find a company that's perfect for you by name, business activities and date of incorporation
- You are buying a company with an existing name, business activities, director and shareholder structure, corporate secretary and incorporation address. If you want to replace any items, all changes to the company will be available and visible in the registrar's ACRA system, and it will incur additional costs to prepare the necessary resolutions and make all changes.
- If the company does not have an open bank account and the company was registered several years ago, chances are high that it will be very difficult or even impossible to open a bank account
- You fully or partially lose the benefits of tax vacations in Singapore for companies under 3 years
- The cost of buying a ready-made company is usually several times higher than the cost of registering a company from scratch
The company from the real owner
Recently, it is perhaps even a popular case when the owner of the company, who registered it for himself decides to sell it. What are the disadvantages of this option? Oddly enough, there are even more than when you buy a shelf company:
- You are buying a company with an existing name, business assets, director and shareholder structure, corporate secretary and incorporation address. When you transfer ownership from one owner to another, from 50% to 99% of the company information will have to change in the main registrar of Singapore ACRA, which can be compared to buying a house, demolish to the foundation and build again with all the changes in the company will be available and visible in the registrar ACRA (which will not add you points in the eyes of potential customers) and will also entail additional costs for making all changes
- You lose all or part of the benefits of tax vacations in Singapore for companies under 3 years old
- In most cases you sell unnecessary companies with irregularities in annual reporting, companies, or companies for which you could not open a bank account.
And now the most important disadvantages:
What to choose in the end - a new company or an existing one - the choice is yours.
If you need help in registering a new company or buying ready-made companies, we will be glad to offer our services.
- If the company does not have an open bank account and the company was registered several years ago, chances are high that it will be very difficult or even impossible to open a bank account
- In case the company has a bank account in Singapore, it will be necessary to inform the bank about all the changes when purchasing the company and replacing directors and shareholders. Changing the bank account signatory will also require a personal interview at the bank with the new directors and shareholders. At the same time the bank may decide to close the bank account (which often happens).
- Timing of re-registration of the ready-made company is about the same as the registration of a new company
- The cost of buying a ready-made company, as a rule, several times higher than the cost of registering a company from scratch. The cost of ready-made company varies greatly depending on many factors - year of incorporation, presence of bank accounts, company turnover, business activity, price of the seller. On the average price of buying a ready-made company varies from 10 000 to 40 000 USD if we're talking about a legal entity and can be measured in hundreds of thousands and millions of dollars if we're talking about a really working business.
What to choose in the end - a new company or an existing one - the choice is yours.
If you need help in registering a new company or buying ready-made companies, we will be glad to offer our services.