LeapIN (Estonia) or Osome (Singapore): Which one for my online business?

Update: LeapIn has rebranded as Xolo. Xolo offers a new plan called “Go” which is a pay-as-you-go plan. I am considering Xolo Go for my business.

Update 2020/05/28:
Please note that pricing has changed since the writing of this article. Also, Xolo now offers new plans “Leap Pro” and “Growth” which includes Stripe, Paypal and Transferwise integration.

Starting a business is easier than ever for entrepreneurs thanks to solutions like LeapIN, Stripe Atlas and Osome to name a few. You can have a business registered in the EU(Estonia), the United States or Singapore from anywhere in the world. Incorporation is done completely online and once setup accounting and admin is taken care of. As I’m based in South Africa, Stipe Atlas is not yet available and running an online business here would cost me many hours of admin. Having decided I would like to proceed with a completely online business service registered in the EU or Singapore that would not exceed the threshold for VAT/GST for many years I’m going to compare and decide on the best solution for my needs.

TLDR: I will apply for an e-residency as soon as I know I’ll be close to a pick-up location but not yet ready to register a company. The cost of Osome might not make my business lean enough.

EU-based online business

An EU based online business requires you to be part of the Estonian e-residency program(not to be mistaken with the actual Estonian residency). Having an Estonian based business has many benefits: Being part of the EU business community, simple and fair tax system, paperless administration and the e-residency is an initiative backed by the government of Estonia which I feel offers better security in terms of regulation.

Because of this, registration requires a two-step process:
1. Apply for e-residency and await approval.
2. Register and set up the online business with a chosen service provider (LeapIN in my case)

The first step, to become an e-resident will cost you €100 but could be more costly depending on your location. As I live in South Africa I’ll have to travel to the nearest pick-up location to collect my digital ID (which in my case would be Turkey). Therefore, either I’ll have to plan a vacation close to a pick-up location or do without an EU based business until a pickup location near me becomes available. Adding to that, you’ll need to renew your digital ID every 5 years for €100.

The second step should be pretty straightforward. Once you’re an e-resident you can choose from a number of service providers to help you set up your business. I will use LeapIN as an example as it is geared towards freelancers which I plan to operate as(but feel free to recommend any other service provider). Also, you’ll need to pay a state fee of €190 for registering a company and need a minimum share capital of €2,500 (which can be deferred but also it’s not really a loss).

The cheapest plan on LeapIN costs €59/month (at the time of writing there is a promotion for €49/month) which grants you the following:
- Private limited company (OÜ)
- Bank account & payment card
- Accounting, taxes & compliance handled by LeapIN
- LeapIN online self-service

The Professional plan and SaaS provider plan adds extras such as advanced invoicing and a VAT number which is not my focus now but it’s possible to upgrade at any time.

For banking, you could open a bank count in Estonia or use a Transferwise borderless account which has zero monthly fees and free to open remotely. I will opt for the Transferwise borderless account.

This all sounded great, but then I found a limitation and that is payment gateways. LeapIN is limited to using PayPal and Paddle, for my needs I will need Stripe. Unfortunately, Stripe is not an option for any of the service providers as far as I’m aware (at the time of writing there is currently a beta test of Stripe in Estonia which is good news!).

So for now, I will have to postpone any plans to start an online business in the EU and look to Singapore. Although, I still plan to become an e-resident as it shows great promise.

Singapore-based online business

Osome is a Singapore based business administration company. It’s fairly recent, started in 2018 by Victor Lysenko and boasts 1000+ clients so far. Opening a company in Singapore has many benefits: low taxes, a foreigner can own 100% of a Singapore company and if you qualify you can move to Singapore(unlike the e-residency which does not qualify as a visa) using the Employment Pass visa. This makes the prospect of owning a Singapore company compelling.

The steps to start and run a Singapore based company as a foreigner using Osome are as follows:
1. Choose the bonanza package (which includes company incorporation + nominee director, unlimited corporate secretary and registered address for 1 year) for S$2 550.

2. If you plan on opening a bank account you’ll need to be present in Singapore and it costs S$200 + initial deposit S$500 or more(in my case plus a plane ticket flying from South Africa). Also, there are monthly and yearly fees to consider.

3. Choosing an accounting plan. Now, there are monthly and yearly plans but I would opt for a yearly plan at S$600/year (for 50 transactions, 150 receipts) and I might need to add Multicurrency Xero for +S$25/month. What’s nice is that I can change my plan at any time.

Registering a company can be done within 3 hours, which is amazing! And as Stripe is available in Singapore this is looking really good, although, more costly which prevents me from running a lean freelance business.

Estimated costs analysis

I will be converting the prices to US dollars based on the exchange rate at the time of writing. The estimated costs would be for the first year of registering a business. Income and taxes are not part of the estimation.

LeapIN + e-residency
E-residency application + digital ID: $114
Company registration: $216
LeapIN costs for a year (including accounting): $672
Total: $1 002

Extras:
Minimum share capital: $2 800
Cost of an Airline ticket + hotel for 4 days to collect Digital ID in Turkey: ± $1 150

Osome
Bonanza package: $1 884
Bank account: $517
Yearly Accounting & Taxation: $443
Total: $2 844

Extras:
Cost of an Airline ticket + hotel for 5 days to open a bank account in Singapore: ± $1 350

Osome would be the best solution for my current needs as I need to accept Stripe payments, but the start-up costs seem too steep to run a lean business. In the meantime, I plan on applying for my e-residency in anticipation for Stripe payments to be accepted with a service provider like LeapIN.

Hopefully, this was helpful to you? There are many other things to consider depending on your situation such as taxes, double taxation, ongoing costs, restrictions such as which countries are allowed to use these services and types of businesses. Feedback would be appreciated so please leave a comment if you have a service provider to recommended or experience with any of these services.