Becoming self employed

[Primrose Hill]

My husband is thinking about becoming self employed. In the UK is pretty simple. I really don't know what is involved here. Do we have to inform IRAS of the changes? What about payment of income tax and CPF?
Do we have to set up a pte ltd? Do we have to invoice?
Help, advise, guidance, anything is welcome.

[taxico]

https://www.enterpriseone.gov.sg/ is a good place to start.

the business forum on here is also another good place to start poking around in - eagle has contributed many very good replies to many questions in there.

[Strong Eagle]

My husband is thinking about becoming self employed. In the UK is pretty simple. I really don't know what is involved here. Do we have to inform IRAS of the changes? What about payment of income tax and CPF?
Do we have to set up a pte ltd? Do we have to invoice?
Help, advise, guidance, anything is welcome.

Is your husband PR? If yes, very simple. Go do what you want to do. He'll need to set up a business, a limited liability company or a private limited in order to be legal. The choice depends on how much separation you want between your business and personal financials.

If not PR, it is much more complicated. Read the thread about the Entrepass in the Business forum. You'll see that the requirements to obtain and keep an Entrepass are so onerous, there is no way you can meet them unless you are considering a seriously funded, high tech startup.

This means the only way you can start a business is to create a company, obtain a resident nominee director, and then apply for an EP from that company. Search and read for threads on this in both the Business and Careers forums. Search also for working with a LOC as they are related.

Bottom line is that in order for this to work, there must be demonstrable skills, experience, and or customers/contracts and a business plan to convince the authorities that this is a legitimate endeavor. Far too many people have attempted to circumvent employment pass rules by creating a sham/scam company and then "working" for it. Note that PEP holders are specifically excluded from working for their own company... clearly, those that lots their jobs were abusing the PEP by creating their own company in order to stay in Singapore indefinitely.

[Primrose Hill]

We are PR, both of us. He is thinking about doing consultantcy work from home. So, does he need to set up a Pte ltd or llp or can he just do it under his own name? After all it is his name that's reputable. How will that affect his income tax & coffee?
Just self declaration & volunteer to pay CPF

[Strong Eagle]

We are PR, both of us. He is thinking about doing consultantcy work from home. So, does he need to set up a Pte ltd or llp or can he just do it under his own name? After all it is his name that's reputable. How will that affect his income tax & coffee?
Just self declaration & volunteer to pay CPF

You have to have a legal registered entity to do any kind of business in Singapore. The easiest is to form a sole proprietorship. With the SP, you report your business income and expenses on a form submitted with your personal return. Your net income/loss from your SP is reported on your personal return. As a SP you are only required to contribute to MediSave at a lesser rate than a full CPF contribution.

For any other legal entity, you create the company and file returns for it. You pay salaries/directors fees /dividends out of it to yourself. Since you are PR, you will also have to pay CPF if you go this route, except for directors fees.

Your personal tax for any entity you set up will be the same. Private limiteds get an automatic pass on corporate tax on the first $100,000 of profit for 3 years and it is generous afterwards. Of course, you can always never show a profit by paying it all out in salaries.

Just don't do something like a fellow I used to know did. He took advantage of the corporate tax relief and paid no corporate tax. He took no salary but instead took cash out of the company as dividends. Dividends are not personally taxable income in Singapore, so he paid zero tax for himself and his company. His REP renewal was also denied when it came due.

[Primrose Hill]

Thank you for that tip, Strong Eagle. We dont mind paying the taxes as well as Medisave and reduced CPF here.
And afterwards how easy is it to dismantle the SP? I supposed I can get him to set up an SP that's in his name, etc. Or do we have to allow the company to run its caused?

[Strong Eagle]

Thank you for that tip, Strong Eagle. We dont mind paying the taxes as well as Medisave and reduced CPF here.
And afterwards how easy is it to dismantle the SP? I supposed I can get him to set up an SP that's in his name, etc. Or do we have to allow the company to run its caused?

Both businesses and companies must follow a wind up process which ensures that creditors receive adequate notice in order to perfect any claims they may have against the business or company. Not complicated... just takes some time... my accountant wound up my pte ltd for $500.

For a SP you can choose any name you want so long as it is not already taken... you don't need the 'pte ltd'.

[Primrose Hill]

Thank you very much, Strong Eagle. Can I please bother you on last time on the name of your accountant?

Thank you so much

[Strong Eagle]

Thank you very much, Strong Eagle. Can I please bother you on last time on the name of your accountant?

Thank you so much

Sent via PM.

Check the ACRA website for more information. A SP is pretty painless and can be done online.

https://www.acra.gov.sg/how_To_Guides/