Freelance vs Incorporation

What if you have a versatile of professional skills in the gig economy – portfolio of skillsets with various source of earned income – taxable individual.

Do you incorporate a company or stay self-employed?

Advantages of incorporation

• Improved credibility with clients and partners
• If freelancing has increased substantially and grow to scale, advisable to incorporate to take advantage of business operation schemes, licence, grants , tax incentives etc.
• Hire people
• Government grants and incentives (eg. EDG, EFS etc)

Disadvantages of incorporation

• High compliance costs – annual returns, statutory reports, accounting records, adhere to Company Act (like passing formal resolutions)
• Set up and ongoing cost – registration fee with ACRA, annual filing fee, professional service fee like company secretary, accountant, book keeping
• Regulatory requirement and cost – Adhere to strict corporate governance rules and regulations, – appoint company director, hold AGM, file audited FS if revenue exceeds certain threshold.
• Public disclosure – certain company information is available on ACRA – like your financials and director and shareholders.
• Economic substance – expectation to be having real business activities, not just for avoiding tax (for eg. corporate tax of 17% plus other start-up tax incentives vs progressive personal tax of up to 24%) – ie. local management, business records, office presence, or hiring of staff