Sole Proprietorship vs Pte Ltd vs a Contracting Partner: Best Setup for Side Income in Singapore

Once your side project earns real money, one question comes up fast: do I need a company?

In Singapore, most people choose between three setups. Each one has a different cost, risk and amount of paperwork.

The three options in one sentence each

• Sole proprietorship: you run the business in your own name, registered with ACRA. You and the business are the same person.
• Private limited company (Pte Ltd): a separate legal entity that you own and run.
• Contracting partner: an existing company signs with your client and pays you under a service contract. You do not run a company at all.

Sole proprietorship

A sole proprietorship is the simplest registered business in Singapore.

How it works

• You register through ACRA's Bizfile portal and pay a small fee.
• Registration must be renewed.
• The profit is your personal income, declared on your tax return.

Pros

• Cheap and fast to set up.
• Light ongoing paperwork.
• You can trade under a business name.

Cons

• Unlimited liability. If the business owes money, your personal assets are at risk.
• Some larger clients still prefer to contract with a company.
• If your net trade income passes a threshold, you must make MediSave contributions as a self-employed person.
• Eligibility rules apply for foreigners. Check with ACRA and MOM.

Private limited company (Pte Ltd)

A Pte Ltd is the standard company form in Singapore.

How it works

• You incorporate through Bizfile. The ACRA name and incorporation fees total a few hundred dollars.
• You need at least one locally resident director.
• You must appoint a company secretary within six months.
• Each year, you file an annual return with ACRA and a corporate tax return with IRAS, and keep proper accounts.

Pros

• Limited liability. Your personal assets are separate from the company's debts, in most cases.
• Looks credible to clients, app stores and banks.
• Corporate tax rates and exemptions can be efficient once profits grow.

Cons

• Ongoing cost: company secretary, accounting, tax filing, sometimes a nominee director.
• A corporate bank account can take weeks to open.
• More admin, every year, even if the company earns little.
• Being a director of another company may need disclosure or approval from your employer.

Contracting partner

A contracting partner is an established company that takes the client-facing role for you.

How it works

1. The partner signs a contract with your client.
2. The partner sends invoices and collects payment.
3. The partner keeps an agreed fee and pays you under a written service contract.

Pros

• No company to open or maintain.
• The client deals with a registered company, with a company invoice.
• One clean monthly payment and a clear record for your taxes.
• Easy to start, easy to stop.

Cons

• You pay a share of revenue instead of fixed company costs.
• You still need to follow your employment contract and work pass rules.
• You still declare your income to IRAS.

This is the model Giinger uses. See the pricing.

Comparison table

	Sole proprietorship	Pte Ltd	Contracting partner
Setup time	Days	Days to weeks	Days, after review
Setup cost	Low	Medium	None
Yearly fixed costs	Low	Medium to high	None
Liability	Unlimited, personal	Limited	Defined by contract
Client sees	Your business name	Your company	Partner company
Admin each year	Low	High	Very low
Tax on profit	Personal rates	Corporate tax + personal tax on what you take out	Personal rates on what you receive
Best for	Small, simple freelance	Growing business with plans to scale	Earning side project, no time for admin

How to choose

Ask yourself three questions.

1. How big is it, really? If the side project earns a few hundred dollars a month, a company is usually overkill. If it earns enough to hire, a Pte Ltd starts to make sense.

2. What do your clients need? If clients need a company to sign with, a sole proprietorship may not be enough. A Pte Ltd or a contracting partner solves that.

3. How much time do you have? If you have a full-time job, every hour of admin is an hour you do not spend on the product. That is the main reason people choose a partner.

Before you pick any option

• Read your employment contract. See can you have a side business while employed in Singapore.
• Check your work pass rules if you are a foreigner.
• Plan your tax. See how to declare side income in Singapore.

The bottom line

A sole proprietorship is simple but personal. A Pte Ltd is powerful but heavy. A contracting partner gives you a company face with almost no admin.

If you want to try the third option, tell us about your project.