As a small business owner operating as a sole proprietor in Singapore, handling your income tax effectively is part of keeping your business financially sound. While the sole proprietorship model is straightforward, it still demands discipline in tracking income, categorising expenses, and keeping accurate records — all of which fall under solid accounting practices.
This guide explains how income tax works for sole proprietors in Singapore and how to approach it with clarity and confidence.
In a sole proprietorship, the business is legally and financially inseparable from the owner. That means any business profits are treated as personal income and taxed accordingly under Singapore’s individual income tax framework.
This structure simplifies compliance but also places full responsibility on you to maintain organised financial records and report earnings accurately.
Getting your tax calculations right begins with good accounting. Your chargeable income is based on your adjusted profit, which you determine through:
Include all earnings from services rendered or products sold.
Account for raw materials, production, or subcontracted services linked to your revenue.
Include expenses that are necessary for daily operations, such as:
What remains is your net business profit, which IRAS uses to compute your income tax. These figures should be tracked regularly and supported by documentation — not estimated at the last minute.
✅ Still doing accounting the old way? Your competitors aren’t. Counto’s AI handles the boring stuff while experienced accountants ensure everything’s perfect. See the future of accounting here.
Once your accounts are in order, your next step is to report your income to IRAS during the annual tax season.
Depending on your annual revenue, you’ll need to file one of two types of income summaries:
All submissions are made via Form B or B1 through IRAS’ myTax Portal, typically between 1 March and 18 April.
Staying compliant requires that your records are already clean and ready — not reconstructed in a rush.
Singapore’s tax system applies a progressive scale to individual income. For the Year of Assessment 2025:
Since your business profits are added to any other income you earn, managing your tax exposure comes down to good financial planning and detailed bookkeeping.
Knowing what expenses you can claim is essential to lowering your income tax burden. Sole proprietors are eligible for:
Every claim must be backed by proper documentation. Your accounting records should clearly categorise these items and reflect accurate values.
Good accounting habits do more than just help with tax — they allow you to run your business with clarity and confidence. Key practices include:
These habits make it easier to comply with regulations, prepare for tax season, and make informed business decisions.
Many sole proprietors handle their taxes independently in the early stages, but as revenue and responsibilities grow, so does the need for structure. If tax laws seem complex or your records are inconsistent, professional guidance can help ensure compliance while uncovering legitimate claims you may have overlooked.
Accounting isn’t just about paperwork — it’s your financial foundation.
If you’re a sole proprietor in Singapore, managing your income tax starts with sound accounting practices. From calculating your adjusted profit to reporting accurately and claiming valid deductions, your records should reflect the full picture of your business activity. With the right systems in place, you’ll not only meet your tax obligations — you’ll gain valuable insight into how your business is performing.
Tired of Teaching Every New Accountant About Your Business? Traditional accounting services mean repeatedly explaining your business to new staff. Modern companies need systems that learn and remember—exactly what most accounting firms can’t deliver.
Counto’s intelligent accounting service adapts to your business. Our AI learns your specific patterns and transactions, then handles your daily bookkeeping automatically. Expert accountants review everything for accuracy, and your dedicated Customer Success Manager is always just a message or call away. No more repeated explanations, no more basic questions—just accounting that understands your business.
Join small businesses saving hours monthly on financial management with our outsourced accounting solution. Plus, with our AI handling the routine work, you’ll get better insights at a fraction of the cost of a full-time bookkeeper. Ready to upgrade your accounting? Chat with us now, email [email protected] or use our contact form.
Here are some articles you might find helpful:
Is Singapore a Good Place to Start a Business? A 2025 Guide for Entrepreneurs
Top Selling Products in Singapore 2025: What SMEs and Online Sellers Need to Know
Is It Legal to Run a Home Café in Singapore? 2025 Guide for Small F&B Startups
Whatsapp 
Call