Thinking about giving up on the rat race and giving into your dream of being the proprietor of a start-up? Great idea, especially because Indian start-ups seem to be going places these days! But amidst all the enthusiasm and excitement, you seem to have forgotten one major factor – the registration of your start-up.
Registering your start-up compels you to think about several questions that should be at the grassroots level of your business strategy. Very often, proprietors consider registering their company to be just another bureaucratic process to get out of the way. In this way, many important standpoints, such as deriving a name, selecting a business structure and securing the necessary permits, are brushed under the carpet.
Unfortunately, if ignored, these are issues that might rear their ugly head when you least expect it. Having said that, the laws in India aren’t as start-up-friendly as most entrepreneurs would have liked them to be. As the business owner of a start-up that you would like to register, where does that leave you? It leaves you with exploring other options like the United States and Singapore. Here is what you need to know about registering your startup in the US or in Singapore from India.
Registering your start-up in Singapore
Singapore is said to be one of the most politically stable economies in the world. Its high ease of operations is due to its almost negligent rate of corruption. Its strategic location too, makes it the perfect hub to gain access to the South East Asian markets. Without a setup in Singapore, it would be impossible to break into markets such as Indonesia, Vietnam, Malaysia, and the Philippines, as language and cultural bridges are crossed.
Government aid in Singapore
There are many government entities that lend their support to start-ups in Singapore, such as the Economic Development Board, SPRING – an agency under the Ministry of Trade and Industry, and the Accounting and Corporate Regulatory Authority.
The way forward
A branch office, subsidiary or a representative office may be set up by a foreign entity in Singapore. For an individual residing in India, and wanting to set up a new company in Singapore, the road is pretty straight forward.
- Applying for a visa
Procuring a visa is one of the very first steps for a foreigner who wishes to work in Singapore. The Singapore Government launched the EntrePass scheme in 2004 for the facilitation of the entry of entrepreneurs who were considering starting up and operating a company in Singapore. This multiple entry visa is issued when a sound business proposal is submitted. It has an initial validity period of up to two years and is renewable.
- Setting up a branch, company, or representative office
In Singapore, 100% foreign ownership of the locally incorporated companies is permitted. Here are a few nuances to bear in mind while setting up an office in Singapore.
· The registration process, legal liabilities and activities permitted vary depending on whether the entity is a branch office, a company, or a representative office.
· Every new business that operates in Singapore must be registered with ACRA. ACRA offers business and regulatory guides for startups that are available for sale.
· A Singaporean subsidiary of a foreign company is taxed as a Singapore entity as it is treated as a separate legal entity.
· Since a branch of a foreign entity is treated as an extension of that foreign entity, the income generated isn’t eligible for incentives or tax exemptions.
· A representative office is only feasible for liaison work on behalf of the parent entity or for market research. It is only a temporary setup without a legal persona. It does not have the capacity to engage in any business or trading activity.
Registering your start-up in the US
The United States is a great place to register a start-up. For instance, one of the easiest states to register a start-up is Delaware. Your cost to company might be as little as $350 and might just take a day to set everything up. The laws in the US are different from state to state. While the same registration system does not apply to the rest of the United States, the state of Delaware is particularly start-up-friendly.
There are three main ways that one can register:
- Incorporate a US subsidiary
This is a great option that is easy to set up and operate. It works best if the purpose of the U.S company is limited such as marketing and managing US customers of the India-based company.
- Reincorporate the Indian company as a US parent company
This might be a viable option if the investors, strategic customers, or partners are located in the United States. In this strategy, special attention needs to be paid to tax issues, shareholding, boards, structure management and the valuation of the shares of the Indian company. The IP can be licensed either directly to the Indian customers through the website, or to the Indian company for sale in India.
- Incorporate an Independent US company
While this strategy is also easy to set up and operate, it isn’t a good option there is any restructuring needs for US licensing, financing or potential exit.
Entrepreneurs may start up believing that since their market is India their location will be the same. But fast-forward a couple of years, and they might be thinking of expanding. That is when the roadblocks start to pop up. You have a better chance of success if you structure the front-end of your start-up in such a manner, that though it is set up in India, its registration will be in places that are more start-up friendly.
What You Need To Know About Registering Your Indian Start-up In the Us Or ...
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