A Guide for Sole-proprietors / Self-employed persons

• Who is a Sole-proprietor / Self-employed person? 
• Deciding on the Accounting Period 
• Keep Proper Records and Accounts 
• Prepare Statement of Accounts 
• Prepare a 4-Line Statement 
• Starter Guide for the Sole-proprietor / Self-employed persons 
• File Income Tax 

Who is a Sole-proprietor / Self-employed person? 

A sole-proprietor is a person who owns a sole-proprietorship business that is registered with the Accounting and Corporate Regulatory Authority (ACRA). A self-employed person is a person who earns a living by carrying on a trade, business, profession or vocation.

If you are a sole-proprietor/self-employed person, you do not report to a boss, because you are your own boss. The income that you earn is considered your business profits, not your salary.

You are a self-employed person if you fall under any of the categories below:

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Deciding on the Accounting Period

The accounting period is the period of trade for which you calculate your profits or losses. You should decide on your accounting period when you first start your business.

Most businesses choose accounting periods that end on 31 December each year. You may also choose accounting periods that end on a date other than 31 December.

For example, if your business commences on 1 April 2010, and you choose your accounting period to end on 31 December every year, relevant accounting periods and the respective Years of Assessment will be:

However, if you choose to prepare your accounts to a date other than 31 December, for example, 31 March, then the relevant accounting periods and the respective Years of Assessment will be:

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Keep Proper Records and Accounts

As a self-employed person, you have to keep proper records and accounts of your business transactions. This is so that your income earned and business expenses claimed can be readily ascertained. You must be able to support your records and accounts with invoices, receipts, vouchers, and other supporting documents.

Estimates and improper records are not acceptable.

Records to verify income and claims for deduction include:

• For Sales: cash register tape, daily sales record book, invoices
• For expenses: receipts, daily purchases record book

However, you need not forward these records unless we ask for them.

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Prepare Statement of Accounts

The statement of accounts is made up of:

• Trading and Profit and Loss Accounts
• Balance Sheet

You have to prepare the statement of accounts of your business at the end of every accounting period.

Working Sheets

For your general reference, we have provided sample working sheets to prepare the statement of profit and loss. If you are a taxi driver  (23KB), commission agent(23KB), or you are engaged in general trade (23KB), you may use the working sheets as a guide.

For a guide on how a balance sheet may be presented, please refer to the sample format of balance sheet (49KB).

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Prepare a 4-line statement

From your statement of accounts, you have to extract the relevant figures and prepare a 4-line statement summary as follows:

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Starter Guide for the Sole-proprietor / Self-employed persons

If you need help in preparing the statement of accounts, you may refer to the following guide for a comprehensive write-up on what a self-employed person needs to know.

Starter Guide for the Self-Employed (English) (194KB)
For Appendix 1 to 6 of the guide, you may refer to the Schedules (English) (36KB)
For Appendix 7.1 to 7.4 of the guide, you may refer to the Statement of Accounts (English) (41KB)

Starter Guide for the Self-Employed (Chinese)  (296KB)
For Appendix 1 to 6 of the guide, you may refer to the Schedules (Chinese) (46KB)
For Appendix 7.1 to 7.4 of the guide, you may refer to the Statement of Accounts (Chinese) (46KB)

Starter Guide for the Self-Employed (Malay)  (200KB)
For Appendix 1 to 6 of the guide, you may refer to the Schedules (Malay) (106KB)
For Appendix 7.1 to 7.4 of the guide, you may refer to the Statement of Accounts (Malay) (97KB)

Starter Guide for the Self-Employed (Tamil)  (226KB)
For Appendix 1 to 6 of the guide, you may refer to the Schedules (Tamil)   (200KB)
For Appendix 7.1 to 7.4 of the guide, you may refer to the Statement of Accounts (Tamil) (254KB)

This guide covers the tax obligations of the self-employed, keeping proper records and accounts, filing of income tax returns, information on Medisave contributions and offences and penalties.

If you are a hawker, you may refer to the Tax Guide for Hawkers, which are available in 4 languages. 

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File Income Tax

An individual income tax return (Form B or B1) will be sent to you at the beginning of the next year, usually before 15 March, for you to report your income from business as well as your income from all other sources.

Find out more on how to file your tax return.

FAQs