How do I calculate my business income?
You can calculate your taxable business income by using the following formula:
Revenue XX
Less: Cost of Goods Sold (XX)
Gross Profit XX
Less Allowable Business Deduction (XX)
Adjusted Profit / Loss XX
Revenue
This is the total receipts of our business which may be:
- sales proceeds from goods sold
- payments or fees received for services provided
- bills paid or unpaid sent to customers
- the selling price of goods or materials used - but not for business purposes (for example, goods are taken from your stock fo your own use, or for family or friends)
Revenue excludes Jobs Credit payout as the Jobs Credit payout is not taxable.
Gross Profit / Loss
Gross profit is the revenue figure less the cost of goods sold. If you have a service business, your gross profit will be the same as your revenue.
Allowable Business Deductions
These are expenses that you incur in the day-to-day running of your business. You may claim for business-related expenses incurred solely for the generation of your business income. Personal, private and capital expenses are not deductible expenses.
Adjusted Profit / Loss
This is the amount arrived at after deducting allowable business expenses from gross profit / loss.
How will my business income be taxed?
Business income from your sole-proprietorship business is taxable in your own name.
During tax filing period, you have to report the business income in your individual tax return. The adjusted profit from your business will be added to your other personal income and the total income, less your personal reliefs and rebates, will be taxed at individual income tax rates.
How do I report my income in the Income Tax Return?
If you are a sole-proprietor or self-employed person, how much detail you report will depend on your business revenue.
Depending on whether your annual revenue is more than or less than $100,000, you have to either report a 4-line statement or a 2-line statement in your income tax return.
A 4-line statement is a summary that you extract from your statement of accounts as follows:
Revenue
Gross Profit
Allowable Business Expenses
Adjusted Profit/Loss
A 2-line statement consists of the Revenue amount and the Adjusted Profit amount.
Please refer to the table below.
|
Report 2-line statement |
Report 4-line statement |
Submit certified statement of accounts and
Computation of Adjusted Profit / Loss
together with your Income Tax Return |
Revenue less than $100,000
|
Yes
|
|
|
| Revenue more than $100,000 but less than $500,000 |
|
Yes
|
|
| Revenue $500,000 or more |
|
Yes
|
Yes
|
Please note that:
- If the total taxable revenue of all your sole-proprietorship businesses exceeded $1 million in the last 12 months, or is expected to exceed $1 million in the next 12 months, you should register yourself for GST.
- Statement of Accounts' comprises:
- Trading and Profit and Loss Account; and
- Balance Sheet
- If you e-file your Income Tax Return, please send in your statement of accounts either:
- by post to Inland Revenue Authority of Singapore, 55 Newton Road, Singapore 307987, or
- by fax to 6351 4358