How to start an online business in Singapore

Are you ready to jump on the e-commerce bandwagon? As much as it sounds exciting, it’s as important to pay attention to the basics that can make or break the experience of your business online. An online strategy that fails to work out means you lose the opportunity to leverage the potential of e-commerce. This is often due to several gaps in planning, such as inadequate research, limited infrastructure and, most importantly, inefficient delivery methods.

Understandably, there are lots to consider as an online entrepreneur, with the Internet being extremely vast. Our guide covers all the necessary, so you’ll know what you need to do to turn your e-commerce business from a small home startup into a lucrative one.

1. Conduct comprehensive research

Setting up a brick-and-mortar store means you’ll primarily be competing against other businesses in the vicinity. However, in the online space, your competition multiplies enormously. Your customers have the luxury to search and select the best product they’re after. Businesses that stand out the most take the winning spot, both in terms of branding and their website’s performance on search engines.

Therefore, before you begin anything, you must study the market and find the gap which you can fill. First, narrow down the area of e-commerce you want to jump into. In other words, decide what you want to sell. Then, ask yourself the following questions:

• What products are already in the market?

• Who are the best customers for my products?

• What are my customers’ pain and passion points?

• What pain points of my customers have not been met?

• Which market do you intend to target?

Once you have a clearer picture of your direction, outlining your user selling points becomes much easier. 

Since an online business transcends geographical boundaries, you will be able to sell your products to customers on a global scale. This means you can target more than one market. Now, here's a caveat: shipping overseas entails more than just packaging and the cost of delivering one item from one place to another. When shipping overseas, you’ll need to pay export taxes when exporting from Singapore and import duties to clear customs at the destination country. Making preliminary calculations of the finances to invest against projected profits can help you decide whether targeting a specific market will be cost-effective for your business. Don’t be discouraged when learning about high duties and taxes, though. Singapore has signed plenty of Free Trade Agreements with countries around the world, which means you can benefit from reduced or eliminated tariffs.

Apart from the aforementioned costs, it’ll be helpful to map out the finances for the following: 

• Income tax: This is payable to the Government of Singapore

• Loans and funding: You’ll need financial backing to set up your business, including but not limited to setting up your website infrastructure, production of goods and marketing. Your source of funds can come from banks, the government and even private investors.

2. Incorporate your business

We have already outlined the steps needed to incorporate your business in our guide here, which includes the various types of business structures you can consider. But what’s specific to online businesses? We cover them in the questions below. 

Do I need to register my online business in Singapore?

Yes, you will need to register your online business in Singapore. In the legal sense, before operating your e-commerce store in Singapore, you must register your business with the Accounting and Corporate Regulatory Authority (ACRA).

You can register as a web-based business.

Why should I register my online business?

It’s true that anybody can start their online business, but if you’re serious about e-commerce and want to take your business to the next level, registering your business offer important benefits:

• Lowered tax: As a registered business, you only pay 17% of corporate tax, compared to personal income tax that can go up to 22%.

• Liability protection: Establishing your company as a separate entity means you detach your personal assets from that of the company, meaning any debts incurred won’t impact your individual estate.

• Improved legal backing: With an ACRA registration, you can apply for other relevant licences via the GoBusiness Licensing portal to provide legal grounds for all your operations. 

• Domain name variety: An ACRA registration also means you enjoy up to five local business domains conferred by the Singapore Network Information Center (SGNIC). These will be suffixed with .sg or .com.sg, providing you with greater credibility for your business on a global scale.

All e-commerce activities are governed under the Singapore Broadcasting Act (SBA) as well – your accreditation by ACRA will offer you legal support should you be subject to additional regulations. Apart from the SBA, you’ll also need to comply with other laws, such as those prescribed by the Electronics Transactions Act, Sale of Goods Act and Computers Misuse Act.