Singapore Expats

Hi there,

I'm running a sole proprietorship here. I do consulting services for ad agencies. I have a simple question: is it better for me to keep my revenue within the company account, or transfer it immediately to my personal account as salary? In terms of taxes, which makes more sense?

If it's a sole proprietorship it doesn't make one iota of difference as it's all taxed together on your personal tax return.

A sole proprietorship is not independently taxable... it all ends up on your personal income tax form as income/loss. So, your question I think is answered by saying, "it is a wash". You must report both business and personal income on your tax return.

If you declare income paid as salary, it goes to your income line on your tax return, and your business income is reduced by your salary as an expense. So, if you earned $100,000 in your business and paid a $100,000 salary, you'd record $100K as personal income and $0 as business income.

If you hold back and don't pay a salary, then you had $100K as business income... still taxable at the same rates.

Got it. No loopholes for me!

mmmmdave wrote:Got it. No loopholes for me!

Correct. You need a private limited for more creative accounting. Seriously, within the law you have a great deal more flexibility concerning directors fees, dividends, deferred compensation, and the like.

Where I can see taxes for Sole Proprietor? Or it is all the same, some fixed percent?

Taxes are the same for Sole Prop as they are for wage earners. All taxed together on the same form and the same rates of taxes.

hi pablito

U can check the tax rates here.

http://www.iras.gov.sg/irasHome/page04.aspx?id=1190

For sole prop, refer to the resident individuals tax rates.

Pablito wrote:Where I can see taxes for Sole Proprietor? Or it is all the same, some fixed percent?