Home Business Schemes in Singapore
The rise of gig economy and the sprouting of home businesses in Singapore have once again put the existing home business schemes in the spotlight. Currently, there are two types of home office schemes available in Singapore.
1. Home Based Small Scale Business Scheme
As the name implies, this Home-Based Small Scale Business Scheme is meant for those who want to generate side incomes via small-scale business, for example baking, beauty services, sewing services, and tutor services. While a business licence for a Home-Based Small Scale Business is not a requirement for business owners, they need to follow the HDB guidelines.
The rule of thumb is the home based business cannot cause any adverse changes to your residing neighbourhood (here refers to the HDB flat).
- Business owners cannot commercialise their FDB flats, which means you cannot turn your home into a physical shop or commercial unit at HDB flat. In relation to this, business owners cannot use HDB address as their business address; they cannot put up commercial signboard/advertisement (both offline and online) for their business at HDB flat; and they cannot use heavy machinery.
- The business must not cause any nuisance/disturbance to the neighbourhood. This rule spells out prohibitions that a home based business cannot cause any noise, odor, smoke, chemical waste, dust and litter to the neighbourhood.
- The business cannot bring in excessive foot traffic to HDB flats. The purpose behind such prohibition is to make sure the HDB flat remains as a quiet and peaceful residential area, not a buzzing commercial property. This requirement has spelt an end to the possibility of turning HDB flat into a tuition centre (though tutor services are allowed but only limited to three students at a time)
- Business owners cannot hire any staff for their home based business. This rule is clear – employment of any staff or workers who are non-residents are prohibited. Business owners can always involve their family members to run their business.
- Allowed Businesses for Residents
- Small-scaled baking business
- Home based hairdressing, beauty, manicure, or pedicure services
- Simple factory work based on a work rate basis
- Private tutor service (for a maximum of 3 students at a time)
- Sewing services
- Work as a freelancer, e.g. journalist, photographer, or writer
2. The Home Office Scheme
The Home Office Scheme allows business owners to have their HDB addresses as their company’s registered addresses. As the name suggests, the Home Office Scheme is meant for those who want to run an approved business or run the administrative functions of their business from the comfort of their home. The said businesses actually include a wide range of home based business, from design and advertising services to insurance and financial planning services.
While the guidelines share many similarities as in the Home Based Small Scale Business Scheme, there a few things that distinguish this scheme from the former.
a. Basic requirements
- The business owner must 18 years of age
- The business owner must be the owner or any other authorised person approved (e.g. tenant) by HDB ( for non-owner applicants, they must obtain owners’ written consent prior to the application)
- He or she is required to continue using the flat as his or her residential unit.
- Register with ACRA (unless the business has been exempted from registration under the Business Registration Act) as either a Sole-proprietorship, or a Partnership, or a Limited Liability Partnership, or a Company Registration (Private Limited).
b. Online Business Licensing Service (OBLS)
- Log in to Online Business Licensing Service (OBLS) and register with your SingPass.
- Apply with URA if you are staying at private homes or HDB executive condominiums.
- Apply with HDB if you are staying at HDB flats.
- Pay a non-refundable S$20 administration fee via the payment mode of direct debit or using credit card.
c. Staff employment
Business owner can hire up to two non-residents or engage up to two partners and directors in the business.
d. Safety requirements
- The scheme has stipulated that all necessary safety precautions must be taken.
- The consumption of electricity and structural load cannot surpass the normal (residential) load.
- Business owners cannot store and use any of the hazardous substances.
- Must meet the fire safety requirements as imposed by the Fire Safety and Shelter Department:
- Install a 1 x 2kg ABC Dry Chemical Powder fire extinguisher.
- Install a single-station smoke detector.
e. Allowed Businesses
The permitted businesses are as follows:
- Accountancy services,
- Financial planning,
- Real estate,
- Trading office, and
- Technology-based and knowledge-intensive businesses.