Homing in on your own business
Find out how to run your own business from home.
Tue, Mar 16, 2010
my paper
By Koh Hui Theng
APPLE did it this way; so did homegrown cake-shop chain Bengawan Solo. They started out operating from home offices, paid zero rent and the rest is history.
As of the end of last year, 19,000 Housing Board flat owners were operating out of home offices. Most are information-technology and management consultancies, trading offices and design or advertising firms.
There's help available. The Home Office Scheme (HOS), created in 2003, allows budding entrepreneurs to conduct small-scale businesses from their homes.
Non-HDB residents who intend to hire staff or working partners need to register their businesses with the Urban Redevelopment Authority. They need to pay a non-refundable $20 administration fee for a licence, which is valid for five years.
A HDB spokesman told my paper: "Besides saving on office- space rental and enjoying lower start-up costs, HOS users also save on travelling time and expenses."
It was the cost savings that convinced Mr Paul Lim, 31, to open babywishes.com.sg in 2007. The baby-products online-store owner said: "I felt I had a good idea as the (e-shop) concept was still quite new in Singapore.
"It would have been tough maintaining the business as a brick-and-mortar model - the high overheads of having a physical shop space would have eaten into the profits but this (home business) is something that can make money."
All it took to set up shop was 10 minutes of his time - registering babywishes online as a partnership - and $10,000 of his savings.
"The entire process was quite easy. We (Mr Lim and a business partner) did some research and finished the necessary paperwork in 10 minutes," he said. The business has been in the black since day one, and he even got a bonus.
"I get to spend quality time with my son, Marc, now 2½ years old. I'm sure the Ministry of Community Development, Youth and Sports will be very happy with my fathering role," Mr Lim chuckled.
Mr Lim, however, cautioned that one still has to put in hard work when it comes to building contacts and sourcing for suppliers.
my paper did some research at HDB and Spring Singapore to help potential entrepreneurs.
What does a small-scale business mean and does it include any type of business?
Yes, as long as the business is done on a small scale. The level of business activity has to be kept low so the home remains mainly a place of residence.
For example, someone baking cakes for sale to friends cannot turn the home into a bakery.
Go to www.ura.gov.sg/dc/ dcu/HOflyer.pdf for a checklist of the types of businesses that are not allowed under HOS.
How do I go about getting my home office registered?
Owners, tenants, authorised occupiers and sub-tenants of HDB flats or private properties aged 21 years and above can apply under the HOS.
Register the company - as a sole proprietorship, private limited company or partnership - with the Accounting and Corporate Regulatory Authority. Go to the Online Business Licensing Service (OBLS) to obtain the required licence.
Log on to www.business.gov.sg/licences and follow the step-by-step guide to complete the online application.
Be prepared to pay the $20 administrative fee via eNETS or credit card. Upon successful registration, you will receive a letter of authorisation to start operations.
If you wish to continue using your residence as a home office after five years, re-register at OBLS.
Where can I find funding for my home business?
Home business owners below 26 years old can apply for funding under Spring Singapore's Young Entrepreneurs Scheme for Start-ups.
Launched in 2008 to develop young new entrepreneurs, it provides pre-seed funding.
The Media Development Authority has an iJam Microfunding scheme that gives up to $50,000 in grants to develop new ideas into an innovative product or service. Go to www.idm.sg/support/ijam/ for details.
For information on tax exemptions, visit the Inland Revenue Authority of Singapore website at www.iras.gov.sg/ irasHome/page04.aspx?id=414
THIS WEEK'S FOLIO: DOING BUSINESS FROM HOME
TO REGISTER your company, you first have to decide the type of business model you are helming.
SOLE PROPRIETORSHIP
Most small businesses are sole proprietorships since it is simple and inexpensive.
You can convert a sole proprietorship or partnership to a company or limited-liability partnership later if you wish, but not the other way around.
It costs $65 to register. This amount includes the nameapproval fee.
PARTNERSHIP
It is similar to a sole proprietorship and registration costs are the same.
There are two types - general partnership and limited liability partnership, which is a new vehicle for doing business in Singapore.
Like the sole proprietorship, the owners are taxed at the personal-income tax rate.
COMPANY
Registration costs $315. Profits are taxed at the corporate rate and audited accounts are required in the case of large companies.
Post Date: 16 Mar 10