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How to Start a Business Via a Dependant’s Pass in Singapore

Last updated on August 2, 2021

two businessmen looking at laptop

Having finally settled down in Singapore, are you, as a Dependant’s Pass (DP) holder, looking to run a business in Singapore?

Running your own business can be really exciting, but there are some things you will have to take note of before you get started.

This article will guide you through the processes of registering your business and applying for a Letter of Consent (LOC), which will be required for you to run a business in Singapore. It will cover:

Determining Your Business Structure

Before you register your business with the Accounting and Corporate Regulatory Authority (ACRA), you will first need to determine your business structure. Here is a brief summary of the different business structures that you are eligible to operate as a DP holder:

Sole proprietorship

A sole proprietorship is a type of business that is owned and controlled by one individual. If you will be the sole owner of your business, you may consider registering it as a sole proprietorship.

Among the various business structures, a sole proprietorship is the easiest and least costly to set up. Sole proprietorships also have fewer compliance requirements compared to companies. As a sole proprietor, you will have absolute say in the business and all profits generated will go directly to you.

In a sole proprietorship, you will be taxed at personal income tax rates, rather than corporate tax rates. However, because you and your business will be considered a single legal entity, you will have unlimited liability. This means that you will be personally liable if your business incurs any debt or if legal actions are taken against it. Your personal assets may thus be at risk.

You may wish to refer to our guide on forming a sole proprietorship for more information.

Partnership

If your business will be owned by a few partners (including yourself), you may register it as a partnership. A partnership is a business owned by at least 2, but less than 20, partners.

A partnership is largely similar to a sole proprietorship, in that:

  • You will face fewer compliance requirements compared to registering a company
  • A partnership and all its partners will be regarded as a single legal entity. As a result, the partners will have unlimited liability for not just their own actions and the debts of the partnership, but also the actions of the other partners in the business
  • You will be taxed based on personal income tax rates rather than corporate tax rates

You may wish to refer to our guide on forming a partnership for more information.

Company

A company is a separate legal entity from its owners, who are known as shareholders. Under the Companies Act, a partnership with more than 20 partners, except for professional partnerships, must incorporate as a company. In Singapore, a private company is the most common and preferred type of business structure.

A private company can be further classified as a non-exempt private company limited by shares or an Exempt Private Company (EPC). A private company limited by shares has a maximum of 50 shareholders. An EPC, however, has a maximum of 20 shareholders. No corporations can also hold shares in an EPC, unlike in a non-exempt private company.

Unlike in sole proprietorships and partnerships, shareholders of a company have limited liability. This is because a company is a separate legal entity from its owners. Therefore, shareholders will not be personally liable for any debts incurred by the company or any legal action taken against it.

However, companies also have more compliance requirements to adhere to compared to sole proprietorships, such as having to file annual returns and hold annual general meetings. Failure to comply may result in disciplinary action from ACRA.

Should you, as a DP holder, choose to register your business as a company, it must be noted that to be eligible for an LOC, you must be a director of the company with at least 30% shareholding.

A company director is the person in charge of managing company affairs. He/she makes decisions in the best interests of the company and ensures that all compliance requirements are met. A director can be an employee of the company, but does not necessarily have to be one.

You may wish to refer to our guide on Singapore company registration for more information.

Registering Your Business

After you have decided on your business structure and business name, you can go ahead to register your business. You will have to do so by logging into ACRA’s BizFile+ website using your identification number and SingPass.

If you do not have SingPass, you may also engage the services of a registered filing agent, such as a law firm, accounting firm or corporate services firm, which will complete the registration on your behalf.

For sole proprietorships and partnerships, the registration fees for a 1-year registration is $115 while that for a 3-year registration is $175. For companies, the standard incorporation fee is $315.

Registration for sole proprietorships and partnerships will have to be renewed while company registrations do not expire.

What is a Letter of Consent?

An LOC is a certificate issued by the Ministry of Manpower (MOM) authorising DP holders to operate their business in Singapore.

For first-time candidates, the LOC is valid for 1 year from the date of issue, or up to the expiry date of the DP, whichever is shorter. The LOC can be renewed subsequently, and it will remain valid until the expiry date of the DP.

However, there are certain eligibility requirements that DP holders have to meet in order to renew the LOC, which will be discussed later on in this article.

If you already have an LOC

If you were working as an employee in Singapore before 1 May 2021, you may have already obtained an LOC. If you already have such an LOC and are currently operating a business in Singapore, you may continue to do so until the LOC expires.

You may also choose to apply for a one-off renewal of that LOC until 30 April 2022. Thereafter, you will have to meet the eligibility requirements for the renewal of the LOC to continue operating your business.

What about the LOC for LTVP/LTVP+ and PLOC holders?

The LOC for DP holders is not to be confused with the LOC for holders of the Long-Term Visit Pass (LTVP or LTVP+) issued by the Immigrations and Checkpoints Authority (ICA).

The LOC for LTVP/LTVP+ holders allows such individuals to work in Singapore, and it is their employer who applies for the LOC. On the other hand, the LOC for you, a DP holder, allows you to operate your own business. You will also have to apply for the LOC on your own.

Should you, as a DP holder, want to work in Singapore as an employee instead of operating your own business, then you will need to secure a work permit, S Pass or Employment Pass instead of an LOC.

The LOC for DP holders is also separate from the Pre-approved LOC (PLOC) for LTVP/LTVP+ holders. The holder of the PLOC is pre-approved to work in Singapore and can apply for a PLOC only when applying for or renewing their LTVP/LTVP+. As a DP holder, you will not be required to apply for a PLOC.

Applying for a Letter of Consent as a DP holder in Singapore

Applying for an LOC is free of charge, and the whole process will generally take around 4 weeks. However, before you apply, do check that your DP is valid for at least 3 months. If not, you will have to first renew your DP.

To apply for an LOC, submit an online request via this form. The outcome of your request will be made known to you within 1 week.

If your request is approved, you may proceed to apply for the LOC using the eService EP Online. You may check your application status after 3 weeks, though your application may take longer to process if more information is required.

Once your application has been approved, you may print your LOC from EP Online.

Take note that you can start operating your business only after you have received your LOC.

How to Renew the Letter of Consent

You can renew your LOC when you renew your DP, but not earlier than 6 months before your LOC expires.

Renewing your LOC is also free of charge and can be completed within 3 weeks in most cases. Just like before you apply for a new LOC, you should check that your DP is valid for at least 3 months before applying to renew your LOC.

You will also have to meet certain eligibility requirements to renew your LOC. Namely, you will have to hire at least 1 Singaporean or Permanent Resident who is being paid $1,400 per month or more. He/she must also have received CPF contributions for at least 3 months.

You may log into EP Online to renew your LOC.

What If Your Business is No Longer Active?

If your business is no longer active, you will have to cancel your LOC.

You will need to cancel your LOC within a week after your business’ last day of operation, though you may submit a cancellation request up to 14 days ahead of your intended date of cancellation.

You should also settle all other outstanding issues relating to the closure of your business, if any.

To cancel your LOC, you may log into the MOM Portal. The cancellation will take place with immediate effect.

What Happens If Your Dependant’s Pass Expires?

When your DP expires, the LOC will become invalid. This means that you will have to cease running your business.

In other words, to ensure that your business does not have to wrap up abruptly, you should apply to renew your DP before it expires. You may do so up to 6 months before it expires at a fee of $225. If you miss the deadline to renew, you will have to apply for a new pass, which will cost $105 for the application itself and $225 for each pass issued.

You may wish to refer to MOM’s website to learn how to renew your DP.

What Should You Do If You Lose Your Letter of Consent?

If you have lost your LOC, you will need to report the loss and request for a replacement.

If You are Not a DP holder but Wish to Run a Business in Singapore

If you are an Employment Pass or Work Permit holder, you are not entitled to set up sole proprietorships and partnerships in Singapore. You may still set up and own shares in a company, provided you do not register yourself as director of that company. However, should you own shares in a particular company, you will be unable to apply to work in that company.

If you are an LTVP/LTVP+ holder, you may register a company and list a person who is ordinarily resident in Singapore (such as a Singapore citizen or Permanent Resident) as its director. You should not be a director or shareholder at the time of registration. You may also work for that company if the company applies for an LOC on your behalf. This LOC for LTVP/LTVP+ holders is not to be confused with that for DP holders.

Alternatively, if you are an EntrePass holder, you will have the most flexibility in starting a business in Singapore. You are entitled to set up a business with the legal structure of your choice, be it a sole proprietorship, partnership or company.

You may wish to refer to our guide on how foreigners can set up businesses in Singapore for more information.

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Starting your own business in Singapore can be challenging, but also exciting and empowering. Before you embark on the journey ahead however, you must remember to apply for an LOC if you are a DP holder.

While the processes for registering your business and applying for an LOC have been described above, you may still have some questions on starting a business in Singapore or on meeting the necessary compliance requirements. This is especially if you are intending to register and run your business as a company, where you will have to be prepared to meet more extensive regulatory and compliance requirements.

For assistance with these matters, engaging a corporate services firm can help ensure the smooth running of your business. If you require any assistance setting up your business or any corporate services, you may get in touch with us.