When should your startup consider crowdfunding?

October 3, 2017

Achieving a series of successful fundraising rounds has become a key marker of startup success. A simple Google search will throw up multiple articles about the various funding rounds such as seed round and Series B round. Startups seek fundraising not only to acquire the capital to achieve their goals, but also to obtain resources to improve the quality of their product and/or service and compete with other businesses on the global stage.

Related reading: Angel investors vs venture capitalists

However, fundraising via the traditional method of courting venture capitalists isn’t for everyone. Venture capitalists typically desire a high return and will only invest in startups that offer sufficiently high returns commensurate to the level of risk associated with investing, and usually wield power in influencing business decisions. A startup might simply not be a good fit for VC investment for a number of reasons:

  • The startup lacks rapid, immense growth in the near future necessary for high returns;
  • You as a business owner are not willing to cede any control over how the business should be run;
  • If your startup is still in its infancy and has yet to establish a name for itself, it may be hard to convince VCs that you are the ‘unicorn’ they are looking for.

If the VC route isn’t for me right now, what other options do I have?

Other than grants, another popular method of raising funds from external parties is crowdfunding. Crowdfunding and VC funding are sometimes thought of as polar opposites. While VC funding consists of large amounts of funding from a small pool of sources, crowdfunding consists of small amounts of funding from a large pool of people. Online crowdfunding platforms allow people all over the world to make contributions to financially support numerous causes, ventures, and ideas.

Several top companies and products have managed to raise significant funds through these crowdfunding platforms. Virtual reality startup Oculus VR raised $2.4 million on crowdfunding platform Kickstarter for its Oculus Rift headset and was bought by Facebook a year and a half later for $2 billion. Similarly, the makers of the Pebble Time smartwatch managed to raise $20.3 million in Kickstarter crowdfunding, making it the most funded project ever on Kickstarter.

If you are were to advertise your product or service on a crowdfunding platform, you’ll find yourself in good company. However, it is important to first answer the question of whether crowdfunding is for you. Just because your startup isn’t suitable for VC funding doesn’t necessarily mean that crowdfunding should be your default strategy. Here we have compiled a list of pros and cons to help you decide whether or not crowdfunding is for you:

The pros of crowdfunding

1. Comparative ease of use and low barriers to entry

Registering on and advertising your product or service on a crowdfunding platform is marginally easier compared to organising and preparing for a meeting with VCs or applying for a grant or a loan. There are a range of reliable fundraising sites that are relatively straightforward to use.

Source: Kickstarter

Kickstarter, touted as the hottest crowdfunding site on the Internet, accepts all kinds of creative projects in a whole host of categories ranging from Art and Design to Technology. The application process involves registering for an account and filling out your project details, which will then be reviewed by Kickstarter staff. Kickstarter charges a small fee for every successful project, in addition to credit card processing fee.

Other crowdfunding platforms worth checking out include Indiegogo, which focuses on tech products, and GoFundMe, which focuses on causes and is great for social impact focused startups.

2. It’s an excellent marketing tool

Putting your product on a crowdfunding platform has the potential to provide you with far-reaching online exposure on a global scale. Crowdfunding platforms thus lend themselves well to viral marketing and can help you identify key opinion leaders that can lead to further opportunities to increase your online presence.

Source: Indiegogo

Seen in this light, crowdfunding is not just a means of fundraising, but is by itself also a platform for market research. You will be able to access data on how the market will react to your service or product before you take the plunge in investing the resources to produce it. The worst that could happen is that the campaign fails to reach its fundraising goal before the fundraiser expires and the money raised is returned to your backers.

3. Retain control over business decisions as a startup founder

Unlike fundraising via courting VCs, you don’t have to cede power or rights over how to run your business. Given that your potential pool of funders is so much larger, there is no expectation for you to cater to the whims of a backer that paid $50 to your campaign.

The cons of crowdfunding

1. Ease of access and low barriers to entry

That’s right, ease of access is a double-edged sword. The homework that all startups have to do when courting VCs – developing a coherent business plan, five-year forecasts, SWOT and Cost-Benefit analyses, and ROIs (all backed by solid numbers) – are not required when it comes to crowdfunding.

As such, many crowdfunding campaigns are launched by passionate people who lack both a million dollar idea and substantial business experience. If you forgo doing the homework that you would have done for a VC, you may find that you are way in over your head when you go about delivering on your promises to your backers. Many crowdfunding campaigns that raised their target goal have subsequently failed to deliver because they underestimated the cost and complexity of doing business and distributing a product or service.

Looking for tips on how to prepare and deliver an executive summary to potential investors? Download our free eBook Make Your Pitch:

Download your free eBook

2. The marketing costs can add up

Marketing is a major factor in the success of a crowdfunding campaign. Backers of any crowdfunding campaign typically donate for the following reasons: the rewards that come with backing the project, an attractive and catchy product and service concept, and/or a mission statement that people can identify with. To be an attractive proposition to potential backers, you may have to invest in marketing efforts such as professionally produced videos and graphics to create a visually stimulating campaign. Adding on the fact that you have to set aside funds to deliver on your promised rewards to your funders, these marketing costs can certainly add up.

3. It only works if your product has mass appeal


Source: Oculus VR

While your idea may be worth a million dollars, it may not be a ‘sexy’ million dollar idea. Products like the Oculus Rift and the Pebble Watch successfully obtained funding because they are sexy ideas that captivated the attention of backers. If your product doesn’t captivate people in the same way, but still has the potential to realize high returns, it may be better for you to focus your energy on more traditional methods of fundraising.

Do you have any tips on how to go about a crowdfunding campaign?

Share with us in the comments below!

Optimise your hiring process: A guide for small businesses

As a small business owner, the process of selecting and hiring new recruits can be both exhilarating and stressful. Every hiring decision that you make incurs time and resources, and you will only be able to see a return on your investment further down the line. The challenges that small business owners face in the hiring process include a lack of in-house human resources (HR) expertise as well as difficulty in identifying and communicating the uniqueness of your business and gaining access to top talent. Here, we give top tips for optimising your hiring process in order to maximise your ability to select the right talent despite limited resources.

1. Determine whether you need an employee or a freelancer  

Whenever you need to recruit someone to fulfil a set of tasks and responsibilities, first think about whether you really require a full-time employee to fill the role. It may be the case that hiring an independent contractor (otherwise known as a freelancer) may offer greater flexibility and better meet the needs of your business, for instance by providing an independent opinion or giving you access to a wider network and cheaper resources. There is also the option of converting a freelancer to a full-time hire if you like the work produced. Here are some factors to consider when determining whether to hire a full-timer or engage a freelancer:

  • Cost. Given that freelancers may not be entitled to certain statutory benefits (e.g. insurance), engaging a freelancer for a fixed-term project may help you save on costs (e.g. office space).
  • Risk. Engaging freelancers may reduce your risk as an employee since they may not have the right to statutory benefits and are easier to terminate and replace if the engagement is not working out.
  • Quality. As freelancers do projects for a range of clients, they typically come with more experience and strive to put in their best work in order to maintain the relationship.
  • Global Reach. If the work can be done remotely, engaging a freelancer gives you access to more options, especially if you want someone with a specific skillset, background or prior experience.
  • Availability. Compared to freelancers who may be working for a range of clients at any given point in time, employees are committed to be available on your schedule and you can manage their workload accordingly.
  • Relationship Building. If the nature of the role is one that involves building and maintaining a client base, having someone who knows your company inside out and can leverage that knowledge to your advantage is beneficial.
  • Training and Supervision. If the role is one that has long lead time for training and requires oversight, it might be better to recruit a full-time employee whose progress you will be able to monitor on a day-to-day basis.
  • Commitment. A full-time employee is more likely to feel a greater degree of commitment to your company and therefore be more motivated to add to the bottom line.

Adapted from Recruiterbox

It is also important to be aware of the different rights and obligations your business has depending on whether you hire an employee or an independent contractor. The Employment Contract you sign with your employee establishes an employment relationship and creates a legal duty that your business has towards the employee.

In contrast, you will sign a Consultancy Agreement when engaging a freelancer, and this should make clear that there is no employment relationship created.

2. Tap into job portals to find potential candidates

Job portals that allow business owners to advertise their positions allow you to reach a wide audience and help you shortlist applicants for the next stage of the hiring process. In Singapore, apart from Jobs Bank, which is a free government-run platform managed by the Workforce Development Agency, there are a whole host of other job portals that you can check out. In Hong Kong, there is Jobs DB and Career Times.

Related reading: 4 platforms to source freelancers in Australia & New Zealand

Source: Upwork

There are also a number of online platforms for freelancers with the increasing popularity of freelancing among millennials. As a small business owner, you can capitalise on this trend by leveraging portals such as Freelancer and Upwork. These allow you to link up with freelancers with the relevant skills and affordable rates, and evaluate them over a number of assignments.

3. Build a compelling case for your company

Whether or not it is an employer’s market, your potential recruits are evaluating you just as much as you are evaluating them throughout the recruitment process. It is thus essential to clearly set up and articulate the requirements of the role and why your company is an attractive proposition. The key component of this is job descriptions. According to a Wall Street Journal article, job descriptions that read like laundry lists of requirements and qualifications may alienate jobseekers. Apart from setting out what your company expects from the candidate, including also what your company can do for potential employees may help you attract higher quality candidates. Insert statements such as “We seek to provide employees with constructive feedback to foster their career growth,” and “You will have many opportunities to collaborate with talented people” when advertising the opportunity.

Additionally, keep in mind that job seekers are scrolling through a ton of job opportunities. It is therefore necessary for you to showcase what is unique about your company in order to be memorable for applicants. You can do so by sharing examples of recent media coverage or stating upfront your benefits package. If you don’t want to benefits packages to be the focus, emphasise your unique company culture, whether this is the collaborative work environment or opportunity to gain exposure to a range of tasks.

Related reading: 5 Ways to Incentivise Employees Without Burning a Hole In Your Pocket

Many potential applicants will also head over to your website to learn more about what your company does and what the role entails, so make sure that you have a website that is accessible, presentable and easy to navigate. Give potential applicants an idea of what it would be like to work at your company, for instance by including a Careers section or putting up profiles of team members they might work with.

4. Build a rigorous screening process  

Having shortlisted applicants and reviewed their CVs, the next step is to put them through a rigorous screening process that enables you to sift out the candidates with the right skills who are a good fit for your company. While some elements such as the face-to-face interview are staples of the hiring process, many companies still have some way to go in maximising the value of the hiring process. When conducting interviews, ensure that you focus on soft skills as much as technical competence, as other factors – coachability, emotional intelligence, temperament and motivation – are equally important for employee success.

Apart from interviews, it is key to establish other steps in the screening process to ensure that you have investigated every candidate thoroughly. Here are some tips for how to develop a more effective screening process:

  1. Review a candidate’s CV critically. For instance, look out for gaps in employment, and ask your candidate about this. This could be an opportunity to learn more about your candidate’s priorities and assess whether he is a good fit for your company.
  2. Check with references. If possible, do a reference check across different levels, including direct reports, peers and managers, as each person will give a different view of the candidate’s work ethic and work product.
  3. Evaluate personal portfolios. Ask candidates for a portfolio of highlights, and see whether they are able to articulate their success and how they achieved it with quantifiable information.

Adapted from Entrepreneur

As mentioned previously, candidates are assessing you as much as they are assessing them. Give prospective employees a chance to ask you questions, as this will allow them to determine whether your company is a right fit. It is crucial to give a realistic picture of the work environment in your company, as a mismatch in expectations may cause your employee disappointment later on if you choose to recruit him or her. In short, be generous with information and make the hiring process an experience and not just a process.

5. Leverage on digital trends & social media

According to a survey by MIT and Deloitte, people want to work for digitally enabled organisations. Businesses have to stay ahead of the curve in order to retain employees and attract new hires. Make sure that your career site is mobile-friendly, as many individuals use their smartphone in some way for their job search, whether this is browsing job listings, filling out online job applications and creating a resume or cover letter.

Source: JobsDB

Just as the Internet is a platform for potential applicants to access job opportunities and learn more about your company’s track record, use the Internet as a resource for your company to find out more about your potential hires as well. Do a quick background check to see what comes up about that person online and on social media platforms. If the candidate has posted professional blog posts or a portfolio online, this could serve as an additional avenue of skills assessment.

6. Leverage on software solutions to keep up with employment regulations

Throughout the hiring process, make sure that you are aware of the evolving regulatory requirements in order to ensure that your business remains compliant. For instance, amendments to the Employment Act in Singapore last year imposed additional requirements on employers, including issuing key employment terms (KETs) and itemised payslips and maintaining detailed employment records. Changes to employment laws in New Zealand made earlier this year also modified the requirements for trial periods in Individual Employment Agreements (IEAs), among other changes.

Want the lowdown on what legislation you have to comply with when hiring employees? Download our free eBook on Employment:

Singapore version      Hong Kong version

With employment legislation constantly evolving, it can be a challenge to stay up to date. Using online legal software such as Dragon Law would simplify the process as you will be able to select from a library of legal contracts, policies and forms that cover the different HR processes, generate contracts that are legally compliant and send them to your employees for signing and online storage. This allows you to:-

  • Protect your business by laying out clear expectations and legal obligations between employer and employee;
  • Speed up your HR processes by gaining access to a host of contracts, policies and forms that you can tailor to your needs; and
  • Stay up to date with legal changes in the HR field as our employment contracts, policies and forms are reviewed and approved by qualified lawyers.

Claim your free trial. Start drafting legal documents with Dragon Law today.

How to Use the Best Cloud Database for Your Business

September 28, 2017

The importance of a database to run your online business platform cannot be gainsaid. There is a big difference between websites that are run on reliable databases and those that are not. From high bounce rates to poor conversion, it easy to tell if your choice of database is costing you valuable business.

The right database choice gives you a competitive edge in your niche by making it possible to leverage the data you are accumulating through analytics.  Your site will also enjoy better server response, which is something users are looking for when browsing. There are many other benefits of using a high-performance database.

Benefits of a Cloud Based Database

To harness the full power of a database, it is highly advisable to go for a cloud based database. You can choose between:

  • Traditional cloud model: In this model, the cloud database is run on your company’s infrastructure. If there are any problems, your staff will shoulder the blame.
  • Database-as-a-service (DBaaS): This model of cloud database runs on the service provider’s infrastructure. The service provider is responsible for any technical issues that arise.

Choosing between the two models and more importantly the service provider to use is tricky for businesses. This is where the input of remote DBA expert services comes in handy by helping you to evaluate your database management needs and helping with ongoing administration.

Related reading: 4 tips for saving time on small business administration

There are several advantages of choosing a cloud database over any other model in the market. These include:

  1. Cost savings: You will not have any need for physical infrastructure as the service provider is in control of everything. This saves you a lot of money, which is crucial in these tough economic times.
  2. Scalability: When starting a business, your objective is to grow and the database you choose should allow for this. Cloud storage is scalable depending on your growing business demands. Cloud-hosted databases can now be scaled quickly without breaking the bank.
  3. Minimizing administrative burden: It is easy to manage your cloud-based database and while self-managed databases still require a DBA, there are many features which are eliminated and they make the work of a DBA easier. These databases allow you to outsource a remote DBA and minimize costs of operations.
  4. New technologies: Your database will benefit from the latest technologies and you will not even have to worry about it. The service provider is responsible for all upgrades to the database infrastructure.
  5. Enhanced security: This is one advantage that runs across all cloud-based services. The cloud company provides the latest security updates to guarantee your business data is safe.

Outstanding Cloud Databases

When choosing cloud database services, you will come across a large number of options. Among the most outstanding cloud database services you will find are:

  • Amazon Web Services (AWS)
  • Microsoft Azure DocumentDB
  • Microsoft Azure SQL Database
  • Cloud SQL by Google
  • Oracle Database as a Service
  • Garantia Data
  • EnterpriseDB
  • Xeround

These cloud databases offer different capabilities including flexibility, high-level security encryption, Big Query analysis tool, high-performance solid-state drives, limitless scalability, in-memory caching service and much more. Your DBA will help you analyze your business needs before choosing the best cloud database service.

Author Bio

This is a guest post submitted by Sujain Thomas, and edited by Dragon Law.

The views expressed here are of the author’s, and Dragon Law may not necessarily subscribe to them. You, too, are invited to share your point of view. Learn more about guest blogging for Dragon Law here.

Sujain Thomas is a diehard cloud computing evangelist. She is currently offers remote DBA expert services in New York. Jacob is also a renowned IT writer. To learn more about database administration, visit this website.

Key Takeaways From The Recent CPF Arrears Report

September 22, 2017

Based on the recent article from Channel NewsAsia, it reported that a record of SGD635.1 million in Central Provident Fund (CPF) arrears was recovered in 2016 from employers who had underpaid, did not pay or made late payments of CPF contributions.

The CPF is a compulsory comprehensive savings plan for working Singaporeans and Permanent Residents. This compulsory savings plan is primarily used to fund retirement, healthcare and housing needs. Contributions to this mandatory savings scheme is funded from both employers and employees.

Related reading: What are my CPF contribution obligations as an employer in Singapore?

From the article, the recovered amount was owed to more than 380,000 employees. About SGD19.7 million worth of CPF arrears recovered was due to underpayment or non-payment by 1,608 companies. The remaining SGD615.4 million recovered was due to employers being late in making CPF contributions. Additionally, this late CPF contributions arose from an average of about 5,440 employers each month in 2016.

Underpayment or non-payment of CPF to your employees can incur hefty fines and potentially imprisonment for recurring offenders. Here are some key takeaways from this CPF arrears report.

Who is entitled to CPF contributions

The article mentioned that the CPF board was alerted of a case whereby a restaurant was not paying CPF for their part-time employees. After a field visit, the employer claimed that he was not aware that part-time employers were also eligible for CPF contributions.

Essentially, CPF contributions are payable when there is an employer-employee relationship. Moreover, employers are required to pay both the employer and employee’s share of CPF contributions every month. CPF contributions are payable for Singapore citizens and Singapore permanent residents who are working in Singapore under a contract of services as well as employee under a permanent, part-time or casual basis.

CPF contributions rate

The CPF contribution rates is dependent on the citizenship, age as well as the wages of the employees. A detailed breakdown of the contribution rates can be found on the CPF website here. Do note that there are two different classifications for your employee wages – Ordinary Wages (OW) and Additional Wages (AW). It is crucial to understand the correct classification because there are different ceilings for both OW and AW, which will in turn affect the amount of CPF contribution payable.

The OW are typically wages granted wholly and exclusively in respect of an employee’s employment in that month. One such example is the monthly salary. The OW ceiling limits the amount of OW that is eligible for CPF contributions. Currently, the OW ceiling is capped at SGD6,000. For instance, if your employee’s OW for a calendar month is SGD7,000, his CPF contribution would be computed based on an OW of SGD6,000. CPF contribution is not required for the remaining SGD1,000.

AW are wages which are not granted wholly and exclusively for the month. It could also be wages paid at intervals of more than a month. Examples of AW are annual bonus and leave pay. The AW ceiling is computed based on total wages received by the employee – total OW subjected to CPF for the year.

Late payment or failure to pay CPF

Late payment or non-payment of CPF contributions will result in interest on late payment as well as imposition of a composition amount. Given that interest on late payment is calculated daily at a rate of 1.5% per month, it is imperative to ensure timely and correct CPF contributions to avoid incurring these hefty penalties. For employers who do not comply with the CPF Act or Employment Act, this might result in hefty court fines as well as a minimum of 6 months’ imprisonment.

To find out if your workers are eligible for CPF contributions as well as the CPF contribution rates, do check out the CPF employer guide here.

This is a guest post from RenQun Huang at Gpayroll
Want to read more articles related to payroll, HR & technology? Visit us at Gpayroll

What are my CPF contribution obligations as an employer in Singapore?

In a country that is full of acronyms, another acronym that is frequently used in Singapore is “CPF”. Singapore’s Central Provident Fund (CPF) scheme has undergone many changes since its introduction, with the age at which citizens can withdraw their CPF raised over the years.

As an employer with obligations to contribute to your employee’s CPF account, it is crucial that you stay on top of changes to the CPF scheme. Here, we tell you what you need to know about your employer contribution obligations when it comes to the CPF.

What is the Central Provident Fund (CPF)?

The Central Provident Fund (CPF) is a mandatory social security savings scheme funded by contributions from both employers and employees. The CPF primarily goes towards meeting the retirement, housing and healthcare needs of Singaporeans.

Working Singaporeans and their employers are required to make monthly contributions to the CPF, which go into 3 accounts:

  1. Ordinary Account: Primarily for retirement and housing needs;
  2. Special Account: Primarily for retirement needs;
  3. Medisave Account: Primarily for healthcare needs.

In what situations am I required to pay CPF contributions for my employees?

If your employee earns more than SGD 50 per month, you are required to pay CPF contributions as an employer. If your employee earns more than SGD 500 per month, you are entitled to recover the employee’s share from the employee’s wages.

Several requirements must be met before an employer is liable to pay CPF contributions for his employee. The employee must be:

  • a Singapore Citizen (SC) or Singapore Permanent Resident (SPR);
  • working in Singapore under a contract of service; and
  • employed under a permanent, part-time or casual basis.  

CPF contributions for a SC or SPR working overseas is not mandatory.

A contract of service in this case essentially refers to an Employment Contract that defines the employer-employee relationship, including the terms and conditions of employment.

Learn more about the CPF contribution for employees.

Am I only required to pay CPF contributions for my employees’ base monthly salary?

CPF contributions are calculated based on an employee’s total wages. The total wages for a given calendar month is the sum of an employee’s Ordinary Wages (OW) for the month and the Additional Wages (AW) paid to him in that month.

There are different ceilings for OW and AW, which refers to the amount of OW or AW that would attract CPF contributions. It is important to classify the wages correctly as this will in turn affect the amount of CPF contribution payable.

Ordinary Wages (OW)

Ordinary Wages (OW) are:

  • wages due or granted wholly and exclusively in respect of an employee’s employment in that month; and
  • wages payable before the due date for payment of CPF contributions for that month.

An example of OW is the monthly salary.

The OW Ceiling is capped at $6,000 currently. For example, if an employee’s OW for a calendar month is $6,700, his CPF contribution would be computed based on an OW of $6,000; CPF contribution is not required on the remaining $700.

Additional Wages (AW)

​Additional Wages (AW) are:

  • wages which are not granted wholly and exclusively for the month; or
  • wages made at intervals of more than a month.

Apart from the monthly salary, there are other types of payments which you may make to your employees which may also attract CPF contributions, including:

  • Overtime pay (only applicable to workmen and employees with basic monthly salaries not exceeding $4,500 and $2,500 respectively);
  • Cash incentives (e.g. Good Service Awards);
  • Allowances (e.g. meal, transport, laundry);
  • Bonuses;
  • Commissions.

Source: CPF Board
The amount of CPF contributions payable on AW from 2016 onwards is capped at the yearly AW Ceiling of $102,000 with the total OW subject to CPF for the year deducted.

AW Ceiling = $102,000* – Total OW subject to CPF for the year

The AW Ceiling is applied on a per employer per year basis. Employers are required to monitor and limit the contributions on Additional Wages of their employees. This is to prevent refund of excess payment and avoid situations where refunds cannot be made due to insufficient funds in their employees’ CPF accounts.

To calculate the Additional Wage Ceiling for private sector employees, use the online calculator provided by the CPF Board.

What are my CPF contribution rates as an employer?

There are two key terms that you need to be familiar with as an employer:

  • Contribution rate: This refers to the total rate that employers and employees have to contribute to the employee’s CPF.
  • Allocation rate: This refers to the various rates that are allocated into the different CPF accounts (namely the Ordinary Account, Special Account, and Medisave Account).

As an employer, you are required to make CPF contributions at the monthly rates stated in the CPF Act. The CPF contribution and allocation rates vary depending on your employee’s citizenship, age group and total wages for the calendar month.

The CPF contribution rates that are applicable would depend on the category that employees fall into:

  1. Singapore Citizens & Singapore Permanent Residents (3rd Year Onwards)
  2. Singapore Permanent Residents (first 2 years of obtaining SPR status)

Category #1: Singapore Citizens & Singapore Permanent Residents (3rd Year Onwards)

These contribution rates apply to private sector and public sector non-pensionable employees who fall into one of the following categories:

  • Singapore Citizen;
  • SPR from the third year of obtaining SPR status; or
  • SPR during the first two years of obtaining SPR status but who has jointly applied with employer to contribute at full employer-full employee rates.

The current CPF contribution rates applicable to private sector and public sector non-pensionable employees are laid out in the following table:

Employee’s age (years)

Contribution Rates from 1 Jan 2016 (for monthly wages SGD 750)  

By Employer (% of wage) By Employee (% of wage)

Total (% of wage)

55 and below 17 20 37
Above 55 to 60 13 13 26
Above 60 to 65 9 7.5 16.5
Above 65 7.5 5 12.5


For the current CPF contribution rates applicable to public sector pensionable employees and a more detailed breakdown of the CPF contribution rates for this category of employees, refer to the CPF Contribution Rates Table available on the CPF Board website.

Category #2: Singapore Permanent Residents (first 2 years of obtaining SPR status)

Employers in Singapore are not required to pay CPF for their foreign employees. However, once your foreign employee successfully obtains SPR status, you will have to pay CPF contributions. CPF contributions are payable at lower rates (known as graduated employer-graduated employee contribution rates) during the first two years of obtaining SPR status. From the third year onwards, both you and your SPR employee will contribute to CPF at regular rates (i.e. those set out in Category #1 above).

For private sector and public sector non-pensionable employees who are in their first two years of obtaining SPR status, refer to the CPF Contribution Rates Table available on the CPF Board website.

This all seems very complicated. How do I calculate the CPF contributions payable for my employees?

In order to determine the CPF contribution rates applicable to you as an employer, log on to CPF e-Submit@web, the free web-based application developed by CPF Board that auto-computes the CPF contributions.

What are the consequences if I fail to pay CPF?

Frequent mistakes made by employers when determining CPF contributions include the following:

  • Non-payment of CPF contributions for employees under part-time/temporary and/or casual employment’  
  • Non-payment of CPF contributions for full time employees who have requested not to have CPF contributions so that they can have higher take-home pay;
  • Underpayment of CPF contributions when wages are not paid monthly.

Employers who do not comply with the CPF Act may be liable to:

  • Late payment interest charged at 18% per annum (1.5% per month), starting from the first day of the following month after the contributions are due. The minimum interest payable is $5 per month.
  • A fine of up to $5,000 and no less than $1,000 per offence and/or up to 6 months jail.
  • A fine of up to $10,000 and no less than $2,000 per offence and/or 12 months jail for repeat offenders.
  • Fine of up to $10,000, imprisonment of up to 7 years or both if you deduct your employee’s share of CPF contributions but fail to pay the contributions to CPF Board.

Claim your free trial. Start drafting legal documents with Dragon Law today.

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