Podcast — 26 min
Singapore — 10 min
If you’ve decided to give up the 9-to-5 grind and go it alone, Singapore is an ideal location to set up as an independent contractor.
This small Asian city state consistently ranks highly in the Ease of Doing Business index, and is already home to around 190,000 likeminded contractors — around 9% of the country’s total workforce.
Before you can join them, though, you’ll need to know how to:
Register your business in Singapore
Avoid misclassification as an employee
Create compliant contracts that protect you
Invoice and collect payments from around the world
In this article, we’ll cover all these things, and help you navigate your tax responsibilities as a self-employed worker. We’ll also discuss some of the other risks and liabilities you should be aware of.
First, it’s important to clarify how Singapore defines independent contractors.
Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to employees, and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.
See also: Why businesses hire contractors vs. international employees
In Singapore, the Employment Act distinguishes between contracts OF service, and contracts FOR service. Based on these definitions, you are generally considered to be a contractor if you:
Determine your own work schedule and working hours
Perform work for other companies
Set your own rates and scope of work
Provide your own tools or equipment
Are not integrated into one specific company and its operations (i.e. you don’t have an internal email address)
Are able to delegate or subcontract work
Work without direction or supervision
When you work with clients, it’s important to be correctly classified to avoid penalties and fines, and to ensure that you are paying the right taxes.
Before you can begin working as an independent contractor in Singapore, you’ll first need to choose a formal structure for your business.
The most popular model for sole owners is the sole proprietorship structure, as it’s quick and easy to set up and maintain. In this structure, you have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.
If you want more legal protection, you’re working with other partners, or you anticipate generating a large amount of revenue, you can also incorporate a formal company or enter into a partnership. If you’re unsure which structure is most suitable for your business, it’s a good idea to speak with a registered solicitor or accountant.
If you do opt for the sole proprietor model, you will need to register your business with the Accounting and Corporate Regulatory Authority (ACRA). Note that, before you can do this, you will need to choose and register a name for your business, in line with the ACRA’s guidelines. You will also need to specify your business activity.
You can complete the registration process online, using the BizFile portal. Depending on your business activity, it can take as little as 15 minutes to be approved and receive your Unique Entity Number (UEN).
If your business activity is regulated (i.e. you practice a protected profession such as medicine or law, or you’re handling food), you may also need to acquire the relevant business permits or licenses from your local issuing authority.
As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.
Some of the most common ways to collect payments include:
Digital transfer services like PayPal and Wise
These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Singapore, the payment collection process can be even more complicated.
Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in Singapore dollars — and with no hidden fees. Learn more about how our platform can help.
As an independent contractor, you’re responsible for filing and paying your own taxes and social security contributions.
The good news is that, as a sole proprietor, you pay personal income tax on your business profits (using your personal tax number). This means that you do not have to fill out extra returns or pay additional corporate taxes.
Like most countries, Singapore has a progressive income tax rate system. You can expect to pay anywhere between 0% and 22% (24% from 2024), depending on your level of income.
If your annual profit exceeds S$6,000 (around $4,500), you must also make monthly health insurance contributions of between 6% and 8% (capped at S$5,760). Other social insurance contributions are voluntary. On the plus side, you may be eligible to receive tax relief on these payments.
You can also claim tax deductions on multiple business expenses, as long as they are incurred “wholly and exclusively in the production of your business income.”
You must file your tax return by April 15 (or April 18 if you file online). Once your return has been assessed, you will have one month to settle your tax bill.
Note that, according to PwC, the tax returns of self-employed people are currently under increased scrutiny in Singapore. In particular, the Inland Revenue Authority of Singapore (IRAS) is focusing on:
Returns being filed on time
Wrongful claims of business purchases and expenses
Potential instances of tax avoidance
With this in mind, it’s advisable to consult with a qualified accountant or tax specialist when filing your return.
In Singapore, VAT is known as goods and services tax (GST).
As a sole proprietor, you must register for — and charge your clients — GST if your annual taxable income exceeds S$1 million (around $740,000). You can do this online through the IRAS website.
The standard GST rate in Singapore is 8%, although this will increase to 9% in 2024.
As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.
It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Singaporean and international clients.
Unlike most countries, sole proprietors in Singapore must prepare annual financial statements (namely a Profit & Loss Account, and a Balance Sheet). The IRAS provides a thorough guide on how to do this.
With this in mind, it’s mandatory to keep organized, accurate records of all your income and expenditure (including client invoices, purchase orders, bank statements, and receipts).
It’s highly recommended to consult with a qualified accountant when preparing financial statements.
As we’ve mentioned, independent contractors are classified differently to employees in Singapore. Many of the protections and benefits employees enjoy do not typically apply to contractors.
As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.
As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.
If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.
Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.
You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Singaporean law.
As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:
Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.
Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Singapore dollars (or other currencies), without any hidden fees.
When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Singaporean laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.
With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.
Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.
Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.
By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:
Avoid intermediary fees and delays with international client payments
Draft compliant contracts for Singaporean and foreign clients
Enhance your invoice management and avoid manual processes
Comply with local labor laws regarding work practices
Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.
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