How To Save On Taxes By Forming A Singapore Company By Rikvin

Singapore company formation is one of the best tax-efficient structures for conducting international business. If you are a foreign national or company seeking to begin or expand your business in Singapore, follow the rules and regulations of obtaining a valid Singapore work permit or nominating a company director.



Singapore Companies are taxed at a lower rate than personal income. To encourage local entrepreneurship, Singapore Government has declared a full tax exemption for newly incorporated companies.



Key points of Singapore income tax for individuals include:



• There is no capital gain or inheritance tax.



• Individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation barring few exceptions.



• Tax rules differ based on the tax residency of the individual.



• Tax filing due date for individuals is April 15 of each year. Income tax is assessed based on a preceding year basis.



Forming a company has many advantages to simply operating a business as yourself or as a sole proprietor. Some of these advantages include personal asset protection, brandability, credibility, deductible expenses, perpetual existence, access to capital and legal liability.



Depending on your actual business you may even be required to form a company. However another important element that is equally important is tax flexibility. In other words, by forming a company you can actually save thousands to hundreds of thousands of dollars in tax payments.



Here how it works If you are a business owner operating as Sole Proprietorship and make about $60,000 a year, you pay self employment tax and regular income tax. As a business expense, you can deduct half of that self employment tax.



This is a simple calculation. Profit as Sole Proprietorship: $60,000Total Gross Income: $60,000Half of self employment tax: -$4,500Adjusted Gross Income: $55,500Total self employment tax: $9,000Income Tax: $8,880Total Taxes paid: $17,880However if you convert your business to a company, you don't have to pay the self employment tax and instead you pay Social Security and Medicaid tax which is almost half the rate of self employment tax.



Here is the calculation of possible taxes. Profit as a company: $60,000Salary Paid to yourself: $25,000Profit left after salary paid: $35,000Total Gross Income: $60,000Social Security and Medicaid Tax: -$1,912.50Your Adjusted Gross Income: $58,087.50Total SS and Med. Tax: $3,825Income Tax: $9,294Total Taxes paid: $13,119TOTAL TAX SAVINGS: $4,761Of course as a business owner you would like to save taxes. Corporations and LLCs are both separate legal business entities that enjoy certain protections under the law and important benefits.



Incorporating, or forming a Limited Liability Company (LLC), allow you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability.



Author Box:

Rikvin is a leading corporate services firm that assists entrepreneurs and investors with the processes required to form a Singapore company, along with a range of other corporate services. Rikvin caters to the needs of foreign investments in terms of Singapore company registration, processing of work visas, and post-incorporation considerations including obtaining business license and permit and compliance matters.



"Our phones are answered during business hours by specialists and not by an answering machine. We appreciate the value of your time and understand that a person cannot be replaced by technology. This is especially true when it comes to making important business decisions." If you are interested in learning more about Rikvin’s Services kindly email us at info@rikvin.com or give us a call at +65 64838887