Most start-ups and even SMEs struggle with making enough dough for the first few years of operation.
Why is it so?
Consider the following costs for starting up and maintaining operations:
- Company Incorporation
- Opening a Bank Account
- Monthly Office Rental and Three-month Security Deposit
- Electricity Bills
- Telephone & Internet Bills
- Equipment (such as PCs, laptops, Desks, Chairs, Stationeries, and all the miscellaneous things)
- Client Servicing Costs (Transport Claims, Meal Claims etc)
- Employee Training
- Employee Salaries
- Employee Bonuses
and the list can actually go on, depending on the nature of business you are in.
Employees help you keep your business operating as usual, servicing clients, getting work done and delivered, and helping you expand your business. Paying your employee fair wages for the amount of value they are adding to your business is only fair.
Sometimes Money Just Ain’t Enough
Yes you would have to give your valued employees a raise but you are already struggling to keep the business afloat with any monthly “spare cash”. How else can you squeeze an extra $200 for an increment? And note that this extra $200 you add to each employee monthly will result in an extra $2400 per headcount annually. Don’t forget about their 13th month bonus and performance bonus.
Yet if you don’t keep wages competitive, your valued employee may just say goodbye and be gone after serving a month’s notice. And you have to begin training a new employee all over again, adding on to more training costs. Sadly even employees with experience will cost more and require training as well.
IRAS’ Wage Credit Scheme to Your Rescue
If you are thinking about incorporating a company in Singapore, but having doubts and concerns because of employment costs, don’t despair.
The government acknowledges and understands that businesses are struggling with labour costs in today’s competitive labour market where wages are rising, and have to rise, because of inflation and the growing economy.
To help businesses cope with this, the Wage Credit Scheme was introduced. Businesses can receive funding from the government for wages.
According to the IRAS webpage for the Wage Credit Scheme, “The Government will co-fund 40% of wage increases given to Singaporean employees earning a gross monthly wage of up to $4,000 during the three-year period (2013-2015).”
The website also states that “Employers do not need to apply for Wage Credit. They will receive their yearly payout automatically via direct credit to their GIRO bank account for income tax/GST, or by cheque. The three yearly payouts will be made by the end of March 2014, 2015 and 2016.”
If your business is in operation and you wonder if you qualify for the scheme or have yet to receive any payout, you can contact IRAS at firstname.lastname@example.org or call 1800-3524727 (8 am to 5 pm from Mondays to Fridays).
To have a better understanding of what the Wage Credit Scheme is about, visit this link to find out more.
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