Basic Guide for Self-Employed Persons

Basic checklist on keeping accounts, preparing statements and filing income tax for sole-proprietors and self-employed persons including freelancers, commission agents, taxi drivers and hawkers.

1. Know Your Tax Obligations

All self-employed persons must report the income earned from their business operations as business income, not salary. The business income is part of the total personal income which is taxed at individual income tax rates.

You are a self-employed person when you earn a living by carrying on a trade, business, profession or vocation. Generally, sole-proprietors and partners registered with the Accounting and Corporate Regulatory Authority (ACRA) are self-employed.

To check whether you are a self-employed person, please refer to Am I an Employee or a Self-Employed.

2. Decide on the Accounting Period

Every year, you declare your business income for a specific accounting period. The accounting period is usually a 12-month 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 Dec each year. You may choose an accounting period that ends on any date.

Example 1: Accounting Period that Ends on 31 Dec

 Accounting PeriodYA
1st Accounting Period01 Apr 2013 to 31 Dec 2013YA 2014
2nd Accounting Period01 Jan 2014 to 31 Dec 2014YA 2015
3rd Accounting Period01 Jan 2015 to 31 Dec 2015YA 2016
4th Accounting Period01 Jan 2016 to 31 Dec 2016YA 2017 

Example 2: Accounting Period other than 31 Dec

Your business starts on 1 April 2012 and you choose to end your accounting period on 31 Mar. The relevant accounting periods and the respective YAs are:

 Accounting PeriodYA
1st Accounting Period01 Apr 2012 to 31 Mar 2013YA 2014
2nd Accounting Period01 Apr 2013 to 31 Mar 2014YA 2015
3rd Accounting Period01 Apr 2014 to 31 Mar 2015YA 2016
4th Accounting Period 01 Apr 2015 to 31 Mar 2016 YA 2017 

3. Keep Proper Records and Accounts

You are required to keep full and accurate records and accounts of your business transactions from the start. These records and accounts must be supported with invoices, receipts, vouchers, and other documents.

IRAS will not accept estimate and improper records. For details,please refer to Keep Proper Records & Accounts .

4. Prepare Statement of Accounts

At the end of every accounting period, you must prepare the statement of accounts comprising:

  • Trading and Profit and Loss Accounts
  • Balance Sheet

You can download and use the Sample Format of Balance Sheet for Sole-Proprietorship (PDF, 49KB).

5. Prepare a 4-Line Statement

From your statement of accounts, you have to extract the relevant figures and prepare a 4-line statement  for filing your Income Tax Return.

The figures that you need are:

First lineRevenue
Second lineGross Profit
Third lineAllowable Business Expenses
Fourth lineAdjusted Profit

For details, please refer to Calculating and Reporting Business Income .

6. File Income Tax

At the beginning of the year and usually by 15 Mar, IRAS will send you an individual income tax return (Form B or B1) or notification to report your income from business as well as your income from all other sources.

If you do not receive the income tax return/notification from IRAS, please check your filing requirements (.XLS 47KB).

For details, please refer to How to File your Tax Return.

7. Downloadable Guides

For more information on filing matters, you may download the following guides for more comprehensive information on:

  • filing income tax return;
  • keeping proper records and accounts;
  • tax obligations of self-employed persons;
  • offences and penalties for filing late / non-filing; and
  • Medisave contributions.

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)

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)

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)

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)

8. Pay Withholding Tax

Withholding tax applies to partnerships. For details, please refer to Section 45 withholding tax apply to partnerships.
  • If I am doing freelance work from home, am I considered a self-employed person?

    Yes. You are considered a self-employed    person if you get paid for doing freelance work from home, and the money that    you receive is considered your income from a trade.
  • Should I inform IRAS that I have registered a sole-proprietorship or become self-employed?

    You do not have to inform IRAS immediately after you registered or started your business. Usually before 15 Mar, IRAS will send a notice to file your income which could be a:

    1. Letter of invitation to file
    2. Income tax return (Form B or B1)
    3. SMS message informing you to file

    If you do not receive any letter, income tax return or SMS by 15 Mar, you can check your filing requirements or contact our Taxpayer Services Officer on 1800-356-8300 for assistance.

  • When will my income be taxed?

    Your income will be taxed in the year following the year the income is earned. For example, income earned in 2016 will be taxed in 2017.

    2016 is known as the basis year and 2017 is known as the Year of Assessment.

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