4. I run a business on my own. Do I qualify as a self-employed person and what are my tax obligations?
Generally speaking, you are a self-employed person if you work for yourself and are not employed as an employee. Without any employment relationship, if your income comes from the buying and selling of goods, or from providing professional or personal services, you are considered as carrying on a trade, business or profession and a self-employed person.
A self-employed person may be a sole proprietor or a partner of a partnership business.
As a self-employed person, you are subject to Profits Tax on the assessable profits of your sole proprietorship or partnership business. In short, you need to:
- Keep sufficient business records for at least 7 years;
- Prepare accounts;
- Complete and submit a Tax Return;
- Notify the Inland Revenue Department in writing about your liability to tax, not later than 4 months after the end of the basis period for the year of assessment concerned, unless you have already received the Tax Return from the Department;
- Notify the Inland Revenue Department about the cessation of your business within 1 month of cessation;
- Notify the Inland Revenue Department about your change of address within 1 month of the change; and
- Pay Profits tax.
Depending on whether you are a sole-proprietor or partner of a partnership business, you should report the profits/loss of your business in Part 5 of your Tax Return - Individuals (B.I.R. 60) or Profits Tax Return - Persons Other Than Corporations (B.I.R. 52) accordingly.
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