And because the cost of living in Singapore is so high, a lot of people are now starting to look for a side hustle. Students are starting to do freelance work just to have some extra income and freelancing as a web designer is an attractive option. But do freelance web designers have to report their income? Do they have to incorporate a legal entity?
The simple answer is yes, you must register a company. Singapore is one of the largest business hubs in Asia and is notorious for its strict laws and willingness to carry out indictments and punishments. Think about Oliver Fricker who was convicted of vandalism in Singapore and canned for his actions.
Everyone working in Singapore must declare their income. They must also pay CPF and follow other rules as laid out by MOH. But if you are operating as a freelancer in Singapore, you are actually required to incorporate a company and legal entity.
What is a sole proprietorship?
A sole proprietorship is a business that is owned by a single individual. Mom-and-pop shops are usually operated under a sole proprietorship due to the ease of setting up one and the lack of partners involved in the business.
A sole proprietorship is perfect for freelancers who want to abide by the rules and start freelancing as soon as possible. This is also perfect for those who don’t wish to spend too much time and resources on the company incorporation process and accounting and annual reports.
Is a sole proprietorship best for freelancers?
It’s difficult to compare business entities with one another. This really depends on yourself and the type of business that you’re looking to have. If you’re just planning on becoming and staying as a freelancer, a sole proprietorship may be exactly what you need. Why pay a company incorporation firm hundreds of dollars when all you need is a sole proprietorship without the additional fuss and hassle?
On the other hand, if you’re looking to expand and hire more web developers and start expanding your services to eCommerce website design, you may want to consider registering a private limited company. Majority of small businesses in Singapore are private limited companies. They don’t have to disclose their earnings publicly like public companies but do have to follow more regulations and rules such as adhering to annual general meetings and submitting their annual reports to ACRA.
But private limited companies can hire employees and you can expand by adding more partners. For instance, say that you’re the best at developing WordPress websites. In the future, you may want to have a partner who specialises in eCommerce website design using Typescript and a third partner who specialises in social media marketing to expand your company’s brand.
How to register a sole proprietorship or private limited company?
This process is different if you’re a foreigner. Foreigners can only start a business in Singapore through an incorporation firm and can’t do it yourself. You can also start a business yourself if you’re a Singaporean citizen or PR with a SingPass account.
Go to ACRA’s website.
Register your company name.
Your company name must be approved and not contain any prohibited words like “school”.
Register your new company as a sole proprietorship or private limited company. Have documents such as your NRIC and personal information on hand.
You should receive an approval or rejection letter from ACRA within four weeks.
Contact an incorporation firm to be aware of all the regulations and deadlines for submitting information such as annual reports at the end of each fiscal year.
Is freelancing really worth all this hassle?
Yes, it’s a hassle to engage a company incorporation firm and to submit your annual reports every year. It’s a hassle to have annual general meetings with all your partners. But if you want to have the freedom and opportunity to expand your company, you need to register a private limited company.
But if freelancing and staying small is your plan, a sole proprietorship is the way to go. It ultimately boils down to what you want and where you see your freelancing work leading you to.
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