How to Register as a Self-Employed Person in Singapore
You'll need to declare your Net Trade Income to either IRAS or the CPF Board. Here's how.
Before you can run a self-employed business in Singapore, you’ll need to be registered with the Singapore government as a self-employed person.
There are 2 methods of doing so:
According to IRAS, your Net Trade Income is:
“Your gross trade income minus all allowable business expenses, capital allowances and trade losses”.
You’ll need to do either of the 2 methods above to “officially” be considered by the government as a self-employed person. Just registering a sole proprietorship or company with ACRA (if you’ve done so) isn’t good enough!
So in this post, I’ll walk you through both methods, step by step.
Let’s do this!
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1. Declare Net Trade Income to IRAS
During March to April of every year, you’ll need to file your personal income taxes with IRAS (Inland Revenue Authority of Singapore, which is Singapore’s tax collector).
While doing so, you’ll need to declare your Net Trade Income to IRAS—and in the process, this will help get you registered as a self-employed person.
Here’s how to declare your Net Trade Income to IRAS:
a) Start filing your personal income taxes during March or April of each year
First, log into the IRAS myTax Portal. Hover over the “Individuals” option, then click on “File Income Tax Return”.
When filing your personal income taxes, there will be a section that you can fill in for income you’ve earned through your “Trade, Business, Profession or Vocation”. Click on that section.
The next step is to submit one of the following:
- A 2-line statement (if you earned S$200,000 or less during your last accounting period); OR
- A 4-line statement (if you earned more than S$200,000 during your last accounting period).
What is an accounting period?
An accounting period is usually the 12-month period that you’ll calculate your profits or losses for. You can choose any date to be the last date of your accounting period, but for convenience you might want to set your accounting period as 1 January to 31 December.
Your accounting period can also be shorter than 1 year. This is especially for your first year of business, where you started your business on some date that is not 1 January.
For example, if you started your business on 6 June 2019, your first accounting period can be 6 June 2019 to 31 December 2019—no problem.
b) Prepare your 2-line or 4-line statements
With accounting periods out of the way, let’s move on to the 2-line and 4-line statements!
As mentioned, you’ll need to prep a 2-line statement if you had earned S$200,000 or less during your last accounting period.
On the other hand, you’ll need to prep a 4-line statement if you had earned more than S$200,000 during your last accounting period.
Heads-up: For both the 2-line and 4-line statements, you’ll need to be able to provide the following figures for your last accounting period:
- Total amount of revenue earned
- Total amount of expenses incurred
Ideally, you should have kept proper records for all these over time so you don’t have to dig through all your past transactions now.
(In fact, IRAS actually requires you to keep full and accurate records of all your business transactions, supportable by documentary evidence. If you haven’t been doing so, there’s no time like the present to get started!)
Click on the applicable tab below to learn how to prepare the correct statement when declaring your Net Trade Income.
The 2-line statement will consist of your:
- Adjusted profit
Your revenue will be the total amount of income that you’ve made as a self-employed person over the last accounting period.
You can get your adjusted profit by subtracting your business expenses from your revenue.
Adjusted Profit = Revenue − Business Expenses
Fill both of these numbers into your 2-line statement. Your Net Trade Income will be the amount of adjusted profit you have declared as part of your 2-line statement.
The 4-line statement consists of your:
- Gross profit
- Allowable business expenses
- Adjusted profit
Your revenue will be the total amount of money that you’ve made as a self-employed person over the last accounting period.
To get your gross profit, subtract from your revenue the cost of goods you have sold over the last accounting period.
Gross Profit = Revenue − Cost Of Goods Sold
(If you run a service-based business e.g. you’re a freelancer and you don’t sell any goods, then your cost of goods sold will be zero.)
Your allowable business expenses are expenses that you’ve incurred solely for business purposes. Personal expenses are not counted. Check this IRAS webpage for more information on what will and will not be considered allowable business expenses.
As for your adjusted profit, subtract your allowable business expenses from your gross profit.
Adjusted Profit = Gross Profit − Allowable Business Expenses
Fill all 4 of these numbers into your 4-line statement. Your Net Trade Income will be the amount of adjusted profit that you have declared as part of your 4-line statement.
c) Submit your personal income tax form
After you’ve filled in your 2-line or 4-line statement—and provided your Net Trade Income in the form of your adjusted profit—go on to fill in the rest of your personal income tax form (e.g. deductions and personal reliefs, and rebates), then submit it.
And that’s it!
(Well of course later on you’ll receive your Notice of Assessment and be asked to pay your personal income taxes.
But for the purposes of declaring your Net Trade Income to IRAS, this is all you need to do.)
2. Declare Net Trade Income to the CPF Board
Personal income tax filing season happens only once a year, and lasts for only a certain period of time. If you miss it, does it mean you can’t register as a self-employed person in Singapore until the following year?
Of course not.
Instead of declaring your Net Trade Income to IRAS, you can also get yourself registered as a self-employed person by declaring your Net Trade Income to the CPF Board.
Before you can declare your Net Trade Income to the CPF Board, you’ll need to register as a self-employed person with the CPF Board.
(Assuming you aren’t already registered as one, that is. If you have, you can skip this step.)
Yes, I know this sounds really confusing—like, you need to register yourself as a self-employed person so you can declare your Net Trade Income to the CPF Board, so you can get yourself registered as a self-employed person? Whaaaat?
Just bear with me for a sec. Let’s get into this!
a) Register as a self-employed person with the CPF Board
First, log into the CPF Board’s my cpf online services portal and click “Tools and services” in the header menu.
Click the “Start now” button under the e-Cashier section of the “Tools and services” page. After that, click:
- “My requests” in the left menu, followed by the
- “Self-Employed Matters” section, and finally the
- “Register as Self-Employed” option.
Fill in and submit the “Registration for CPF/Medisave Contributions by the Self-Employed” online application form that appears on the next screen.
Then, sit tight.
After your application has been processed (within 2 working days), the CPF Board will notify you through email (in a few days) and post (in a few weeks) to confirm your successful registration as a self-employed person with it.
b) Declare your Net Trade Income to the CPF Board
Once you are registered as a self-employed person with the CPF Board, you can go ahead to declare your Net Trade Income to it.
To do so, log back into my cpf online services and follow the steps listed above to get to the “My requests” page.
On the “My Requests” page, click on the “Self-Employed Matters” section followed by “Declare my income as a Self-Employed Person for computation of CPF Medisave liability”.
You’ll be brought to the “Income Declaration By Self-Employed Person for Computation of CPF Medisave Liability” online form. This form is also known as the Form IRAS 144.
Then, key in the Net Trade Income that you want to declare for the relevant work year.
If you don’t know what your Net Trade Income is, prepare a 2-line or 4-line statement as per what you’d need to do in order to declare your Net Trade Income to IRAS. Click here for more information on this!
Finally, submit the form and you’re done!
Note: After you do this step, you’ll have to start contributing to your MediSave account as a self-employed person. Check out this separate guide to CPF contributions for more info on this.
Time to Get Registered!
To recap, if you want to get yourself registered as a self-employed person in Singapore, then you’ll need to declare your Net Trade Income to either IRAS or the CPF Board.
This is even if you’ve already registered a sole proprietorship or a company with ACRA.
Also, whichever method you use to get yourself registered as a self-employed person, you’ll realise that you’ll eventually need to do both.
In other words, you’ll eventually have to declare your Net Trade Income to both IRAS and the CPF Board.
- You’ll need to declare your Net Trade Income to IRAS when tax season comes around.
- Also, as a self-employed person, you are legally required to contribute to your MediSave account. The CPF Board will ask you to declare your Net Trade Income so it can calculate your MediSave contribution amount.
(But if you’ve already declared your Net Trade Income to IRAS, you won’t need to declare it a second time to the CPF Board. The CPF Board will use the Net Trade Income you declared to IRAS to calculate your MediSave contribution amount.)
I hope this guide has been helpful for you. If you want a copy of these instructions, just leave me your email address below and I’ll send it (and other useful tips!) to you:
One last thing—if you’re a self-employed freelancer (i.e. you provide services to others for a living), do consider joining our Facebook group where you can connect and get support from other like-minded freelancers in Singapore.
While you’ll need to “register” for the Facebook group by making a request to join, the process is much easier than declaring your Net Trade Income—I promise!
Hope to see you there!