How to set up a presence or office in Singapore. Don’t set up a legal entity! Use PEO

Looking to expand into Singapore? Stop! Don’t set up that Singapore company – you are about to waste a ton of time and cash! Contrary to popular belief, the easiest, most flexible and cost-effective way to enter the Singapore market is NOT by setting up a legal entity in Singapore. The easiest and most cost-effective way to enter the Singapore market is by using PEO employment or hiring staff under a Professional Employment Organisation (PEO) arrangement.

In short, PEO employment is a perfect solution for companies expanding into Singapore and who:

  • do not have a legal entity set up in Singapore to hire staff in Singapore; or
  • want to test the Singapore market without making a significant investment; or
  • do not have the headcount to hire people in Singapore.

Employment under a PEO service provider is becoming increasingly popular in Singapore (and throughout Asia) as companies look for more cost-effective and flexible ways to set up an office in Singapore.

What is PEO employment

A Singapore PEO service provider legally employs staff in Singapore on your behalf.

PEO essentially involves a Singapore PEO service provider legally employing staff in Singapore on your behalf and seconding them back to you under a services agreement (i.e. the PEO provider becomes your employer of record in Singapore). This arrangement massively simplifies your expansion – enabling you to effectively hire staff immediately to perform your sales activities, market research, set-up activities without the need for the various costs, times and commitment associated with setting up an entity.

Why do companies use PEO employment when setting up a presence in Singapore?

Here’s why companies entering the Singapore market use a PEO arrangement to hire staff when setting up an office in Singapore:

PEO essentially involves a Singapore PEO service provider legally employing staff in Singapore on your behalf and seconding them back to you under a services agreement (i.e. the PEO provider becomes your employer of record in Singapore). This arrangement massively simplifies your expansion – enabling you to effectively hire staff immediately to perform your sales activities, market research, set-up activities without the need for the various costs, times and commitment associated with setting up an entity.

Why do companies use PEO employment when setting up a presence in Singapore?

Here’s why companies entering the Singapore market use a PEO arrangement to hire staff when setting up an office in Singapore:

  • Cost and time savings
    As a guideline, hiring under a PEO arrangement is at least 50% cheaper than setting up a legal entity in Singapore. If we compare the costs of setting up a legal entity in Singapore and using PEO employment in Singapore:
Cost comparison between setting up a legal entity and using Links PEO in Singapore.

The cost savings are driven by PEO employment, removing the need for the administrative costs of maintaining a legal entity. Most importantly, a good Singapore PEO service provider will save you time by enabling you to hire immediately and remove any HR administrationvisa applications, employee insurances, pension and tax payments that prevent you from focusing on your Singapore business growth

Flexibility and reduced complexity

Hiring staff in Singapore under a PEO service provider gives you a massively higher level of flexibility than if you were to set up a company. Not sure about whether the Singapore market is right for you? PEO employment ensures that you can quickly scale up and down before taking the plunge. Six months in and want to put operations in Singapore on hold and focus on another market? Simply cease the Singapore PEO employment and turn it back on again once you are ready. Try to do this with a legal entity and you are still going to be bearing the ongoing administration costs, any other wind down costs and the inevitable questions from management associated with you putting the expansion on hold!

Speed to market

Obtaining approval from HQ for the set-up of a legal entity, obtaining the relevant documentation, arranging signatories and completing set-up of a legal entity in Singapore can be a slow and lengthy process. PEO employment fast tracks your time to market by skipping all of these issues through removing the need to set up a legal entity – enabling you to go to market in as small a timeframe as a single day.

Services covered under PEO employment

Standard services that a good Singapore PEO company will provide include:

  • Arranging an employment contract and onboarding of the employee
  • Arranging any employee insurances, e.g. employee compensation
  • Singapore visa processing in the event that your employee is a foreigner who needs an employment visa in Singapore
  • Singapore salary and payroll processing, including CPF, tax and any other required statutory submissions
  • Maintenance of annual leave and sick leave records
  • Service delivered from an HR Portal, where seconded staff can access their HR records, pay slips and apply for leave online
  • Recruitment services, in the event that you need help to find the right person in Singapore and go to market quickly
  • HR support and advice on Singapore employment law and any employment risks

Employment under a PEO service provider is becoming increasingly popular in Singapore (and throughout Asia) as companies look for more cost effective and flexible ways to set up an office in Singapore without having to commit to a legal entity in Singapore.