First things first...
Freelancers are considered to be independent contractors who offer their services for a fee to multiple clients at a time.
Compared to full-time employees, they are:
Their formal relationship with their clients are usually ongoing or contractual, depending on the agreement established.
There is no singular industry to categorise freelancers in as they can be working in various different sectors. For instance, their work can range from content writing, management consultancy, photography, designing, and even real estate.
Most freelancers struggle with figuring out when the right time is to register as a company. If you are still new to the gig economy and have only been freelancing for a few months or years, you might still need some time to grow your services. However, if your business has grown at a much larger scale over the years, it may be a good time to incorporate.
If you’ve finally come to the decision to incorporate as a freelancer, the best business entity to incorporate as is certainly a Private Limited Company. Here are some of the benefits that you will enjoy.
Limiting your liabilities is one of the biggest advantages of a private limited company. What this means is that your liability is only limited to the amount of money you contributed to the business—this keeps your personal assets protected.
For the case of freelancers and sole proprietors, you will be personally liable for any business debts and losses, and can even be at risk of getting sued by other companies. Registering as a private limited company will eliminate this risk and secure your personal assets at the same time.
Yet another advantage of incorporating a private limited company is enjoying multiple tax benefits, which includes not having to pay for personal income tax. Instead, the profits earned by the company will be taxed at corporate tax rates.
Furthermore, newly incorporated companies only need to pay their normal chargeable income for the first three years of incorporation under the Start-Up Tax Exemption (SUTE) scheme, which was introduced to support local enterprises and encourage entrepreneurship in Singapore.
As long as you register as a Limited Liability Company, regardless of whether it’s a Public or Private Limited Company, you will immediately gain better credibility in the eyes of potential clients and investors. This shows that you are serious in the business and are looking to grow your company.
Besides these shareholders, banks and suppliers will also begin taking your business more seriously.
Now that you’ve discovered the benefits of shifting from a freelance business to a private limited company, you’re probably wondering how to go about registering. First, ensure that you have the key requirements needed to register a private limited company. You will need to have:
Afterwards, you will need to register your company with ACRA and choose a company name, which will still be subjected to ACRA’s approval. All of this can be done on your own but if you need assistance in the incorporation process, we can help you with that.
Through our partnership with Osome, our incorporation packages allow freelancers and aspiring business owners to kickstart your business by helping you incorporate your company and open a business account in Singapore all in the same day. With packages starting from S$280, you can let us handle all your routine tasks from company incorporation, accounting, taxation, payroll, and even corporate secretarial work.
Learn more about our incorporation packages here.