Starting a Home-Based Business in Singapore: What Every Entrepreneur Should Know

Vance Lim
Jul 23
3 min read

More Singaporeans are turning their passions into businesses from the comfort of their homes. From home bakeries and specialty coffee to handmade crafts, online retail and consulting services, a home-based business offers an affordable way to test an idea before investing in a commercial space.

But before you start accepting orders, it's important to understand the rules and responsibilities that come with operating a business from home.

Here's what you need to know.

1. Is It Legal to Run a Business from Home?

Yes. In Singapore, many small businesses can legally operate under the Home-Based Business Scheme, provided they continue to maintain the residential nature of the property.

The scheme is designed to encourage entrepreneurship while ensuring that residential neighbourhoods remain pleasant places to live.

2. Register Your Business

Even if you're operating from your home, you may still need to register your business with ACRA if you're carrying on a business for profit.

Depending on your business goals, you can register as:

Sole Proprietorship
Partnership
Limited Liability Partnership (LLP)
Private Limited Company (Pte. Ltd.)

A Private Limited Company is often preferred by entrepreneurs looking to build credibility, protect personal assets and grow their business.

3. Understand the Rules for Home Based Business in Singapore

Running a business from home doesn't mean you can operate like a commercial shop.

Some important principles include:

✅ The property must remain primarily a residence.

✅ Your business should not create excessive noise, smoke, strong odours or other disturbances.

✅ Customer traffic should be kept to a minimum.

✅ Large-scale storage of inventory should be avoided.

✅ Business activities should not inconvenience neighbours.

Following these guidelines helps maintain harmony within the community.

4. Food Businesses Have Additional Requirements

Home-based F&B businesses have become increasingly popular, but selling food comes with additional responsibilities.

Depending on the nature of your business, you may need to comply with food safety requirements and obtain the necessary approvals before selling certain food products.

If your business grows significantly, operating from a licensed commercial kitchen may become more appropriate.

Always check the latest regulatory requirements before launching your food business.

5. Keep Proper Accounting Records

One of the biggest mistakes new business owners make is mixing personal and business expenses.

Good practices include:

Opening a separate business bank account
Keeping invoices and receipts
Recording all income and expenses
Tracking profits regularly
Using accounting software like Xero to simplify bookkeeping

Proper financial records make tax filing much easier and help you understand whether your business is truly profitable.

6. Understand Your Tax Obligations

Starting a business also means understanding your tax responsibilities.

Depending on your business structure, you may need to file:

Individual income tax
Corporate income tax
Annual Returns
Financial Statements

If your business grows, GST registration may also become applicable once you meet the registration requirements.

Planning ahead helps avoid unnecessary penalties.

7. Protect Your Business

As your business grows, consider protecting what you've built.

This may include:

Business insurance
Trademark registration
Proper customer terms and conditions
Supplier agreements
Employment contracts when hiring staff

These may seem unnecessary in the early stages but can save significant costs later.

8. Know When It's Time to Upgrade

In fact, many successful businesses started from home.

However, as demand increases, there may come a point where you should consider moving into a commercial space.

Signs include:

Daily customer visits
Hiring multiple employees
Large inventory requirements
Commercial food production
Equipment exceeding residential limits

Growing at the right time allows your business to scale safely and sustainably.

Common Mistakes to Avoid

Many first-time entrepreneurs make these mistakes:

❌ Starting without understanding the regulations for home based business in Singapore

❌ Mixing personal and business finances

❌ Not registering the business when required

❌ Ignoring accounting and tax obligations

❌ Waiting until problems arise before seeking professional advice

Avoiding these mistakes can save both time and money.

Final Thoughts

A home-based business is one of the best ways to start your entrepreneurial journey with relatively low costs and minimal risk. Many well-known brands began from someone's home before expanding into successful companies.

The key is to start the right way—understand the regulations, maintain proper records, comply with your legal obligations and build your business on a strong foundation.

With the right planning, your home-based business today could become tomorrow's thriving enterprise.

Need Help Starting Your Business?

Whether you're setting up your first business or planning to incorporate a Private Limited Company, Account-Ink can help you every step of the way.

Our services include: