Comparative Study of business starting up in India, US, Singapore

Looking to start your own Company? The top destinations that comes to our mind are Singapore, USA & India. All these three economies are unique and have tremendous growth potential which need to be unlocked.

Company Registration, US, India

Introduction – Economics & Start up Scenario:

Singapore has a highly developed trade-oriented market economy. Singapore’s economy has been ranked as the most open in the world, 7th least corrupt, most pro-business, with low tax rates with the third highest per-capita GDP in the world. “The Global Entrepreneurship Monitor 2013 Singapore” report indicates that Singapore is among the Top 3 countries globally with the highest percentage of people showing intentions to start a business. 

Whereas the economy of USA does not need an introduction . Some Economist has rightly said that “When the United States sneezes, the rest of the world catches a cold.” In respect to Start up The White House initiative of ‘Start Up America” celebrates and accelerates high-growth entrepreneurship across the country.

As far as India is concerned in recent years, the Indian start up ecosystem has really taken off and come into its own—driven by factors such as massive funding, consolidation activities, evolving technology and an burgeoning domestic market. The numbers are telling—from 3,100 startups in 2014 to a projection of more than 11,500 by 2020, this is certainly not a passing trend. It’s a revolution. In regards to the economy of India it is the sixth-largest economy in the world measured by nominal GDP   with an average growth rate of approximately 7% over the last two decades. 

 

After going through the power of this three distinct economy leads us to a question:

How to Incorporate a Company in this three nations ???

The followings are the basic point of difference for the same.

Points

India

Singapore

USA

Choice of Organisation

There are three popular types of Companies :

  • Public limited Company
  • Private limited Company.
  • One Person Company

There are three popular types of Companies:

  • A Limited Liability Company (LLC) is more often not limited by shares.
  • Private Limited Company (Pte. Ltd.): This type of LLC is a preference for a lot of business entities in Singapore.
  • Public Limited Company: This type of LLC is different from a Pte Ltd.  The shares of a company are often available to the general public

The two Most common type of Business Organisations

  • Corporations
  • Limited Liability Corporations

Name Approval post selection of the type of Company

  • The promoters of the proposed company first draft the main objects of the business.
  • The promoters provide six names. Based on the availability of Names, the Ministry approves the same.

The name must be approved before the incorporation must occur.

Every incorporation in USA requires a EIN number however It is not mandatory to have an EIN when you register the company,But you will need an EIN in order to fill in your tax declaration for the IRS, and it is also mandatory for opening US bank accounts etc..

Directors

  • Directors should be individual only.
  • No Body corporate/ HUF or Partnership Firm can be appointed as Directors.
  • There should be at least two directors (except one person corporation)
  • Minimum of one resident director is mandatory. However there is no limit on the number of additional local or foreign directors
  • Directors must be at least 18 years of age and must not be bankrupt or convicted for any malpractice in the past.
  • Only one Director is required for a Delaware Company. Moreover the same person can have several titles (e.g. President, Vice-President, Secretary and Treasurer).

Shareholding pattern

  • There must be a minimum of two shareholders (also described as `members’ or `subscribers’). A private company can have up to Two hundred shareholders.
  • There is no limit on the number of Share holder in case of Private Limited Company.
  • In Case of OPC company only one person will be shareholder.
  • A Singapore private limited company can have a minimum of 1 and maximum of 50 shareholders.
  • 100% local or foreign shareholding is allowed.
  • New shares can be issued or existing shares can be transferred to another person anytime after the Singapore company has gone through the incorporation process.

If any of the owners of the company (called “Shareholders” for Corporations and “Members” for LLC’s) are not US Citizens, then you have the option of either forming a Corporation (also called a “C-Corporation” or “Regular Corporation”) or an LLC.

Paid Up Capital

Small Company

 No such requirement

 

Other than small company

Private limited company

paid up capital minimum Rs.1,00,000/-

 

Public Limited Company

 

Paid Up capital minimum Rs.5,00,000/-

  • Minimum paid-up capital for registration of a Singapore company is S$1.
  • There is no concept of Authorized Capital for Singapore companies.

Legal Capital rules vary from state to state.

Registered Office

As per section 12(1) and rule 25 of Chapter II- Company shall have a place as its registered office in the State stated in the Memorandum on and from the 15th Day of its Incorporation. (Practically from the date of incorporation).

  • In order to register a Singapore company, you must provide a local Singapore address as the registered address of the company.

State laws require corporations and LLCs to maintain a registered agent in any state that a company does business.

Taxation & other benefits

SBA will commit $1 billion to those funds that invest growth capital in companies located in underserved communities. This will include investing in economically distressed areas as well as those companies in emerging sectors such as clean energy.  SBA will provide up to a 2:1 match to private capital raised by these funds, partnering with private investors to target “impact” investments.

  • Singapore registered companies enjoy very attractive tax exemptions and incentives.
  • There are no capital gains or dividend taxes on Singapore companies.

Excellent tax benefits and business reputation of Singapore are the key reasons why entrepreneurs from around the world prefer to form a company in Singapore.

  • Startups in their initial years  struggle with cash flows from setting up the business and turning it into commercially viable units.
  • So start up India Action plan has announced a three year income tax exemptions for Start ups . The startup income tax exemption is subject to the non-distribution of dividend by start ups.


Conclusion:

The above discussions clearly distinct the incorporation process in these three promising economies of the world. Every nation is now encouraging the young entrepreneur to take the challenges of starting up. The three promising economies  are also providing ease of doing business for the budding entrepreneur and encouraging them, the “Start-Up India ” initiative by the Government of India bear testimony to this.

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Want to know more about this? Simply write to us at Taxmantra – Start Your Business.

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