Starting a Side Business While Employed in Singapore: Your Employment Contract, ACRA Registration and Tax

Short answer: A Singapore Citizen or Permanent Resident can usually run a side business while employed, but the employment contract decides what is allowed, so check it and get written consent where needed. Register the business with ACRA, declare its profit in the same personal tax return as your salary, and expect MediSave contributions once net trade income exceeds S$6,000.

Many people want to start a business while employed in Singapore: a design studio run in the evenings, an online shop, weekend tuition or consulting for a former client. No statute stops a Citizen or Permanent Resident from doing so, but three sets of rules apply at once: your employer’s contract, ACRA’s registration rules and IRAS and CPF Board’s treatment of self-employed income. This guide takes them in the order you will meet them.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

Can you run a side business while holding a full-time job in Singapore?

Yes, for most Citizens and Permanent Residents, provided your employment contract allows it. The limits come mainly from what you agreed with your employer, not from ACRA or IRAS.

ACRA will register a sole proprietorship or company for an employee in the same way as for anyone else, and IRAS simply taxes the extra income. The risk sits with your employer: a side business that breaches your contract can lead to disciplinary action or dismissal, and using your employer’s clients or confidential information can lead to a claim against you.

The position is different for foreigners on work passes. An Employment Pass is tied to one employer, and our guide on whether an EP holder can run a side business explains what Ministry of Manpower rules allow. This article covers Citizens and Permanent Residents only.

What should you check in your employment contract first?

Read the contract, the staff handbook and any code of conduct before you register anything. Look for clauses that restrict outside work, require disclosure of other interests, protect confidential information or give the employer ownership of work you create.

Even where the contract is silent, a business that competes with your employer or trades on its information is risky. If a clause is unclear or the business is in the same field, speak to a lawyer before you start.

Should the side business be a sole proprietorship or a company?

A sole proprietorship is cheaper and simpler to run, but you are personally liable for its debts. A private limited company limits your liability and keeps the business separate, at the cost of more filings.

For a small, low-risk activity, a sole proprietorship is often enough at the start. Our guide to choosing a business structure compares all five Singapore options, and when incorporating makes sense for side hustlers looks at the point where a company starts to pay for itself.

How do you start a business while employed in Singapore?

Settle the employment side first, then register, then set up the money side. The order below avoids the most common problems.

1. Review your contract and handbook, and obtain written consent from your employer if the contract requires it.
2. Decide on the structure: sole proprietorship, partnership or private limited company.
3. Reserve a business name on Bizfile. The S$15 fee is non-refundable if the name is unavailable, and once approved you have 120 days to register.
4. If you will run a small business from home, get approval under the Home Office Scheme from HDB or URA before you register your home as the business address.
5. Register the business on Bizfile with Singpass. A sole proprietorship is usually approved soon after payment; registrations referred to other authorities take longer.
6. Check with GoBusiness whether your activity needs a licence, such as for food, education or financial services.
7. Open a separate bank account and keep full records of sales and expenses from the first transaction.
8. Diarise the tax return, any MediSave notice and, for a sole proprietorship, the registration renewal.

ACRA sets out each screen in its sole proprietorship registration guide. Our free tools can help you plan the filing dates that follow.

How is side business income taxed when you also earn a salary?

For a sole proprietorship, the business profit is added to your salary and taxed together at personal resident rates, from 0% on the first S$20,000 of chargeable income up to 24% above S$1 million. You file one return, not two.

IRAS treats a sole proprietor as a self-employed individual, and says the income is declared under “Trade, Business, Profession or Vocation” in the individual return (Form B or B1). Key points from IRAS’s filing rules for self-employed individuals:

• You must file if, in the preceding year, your total income was more than S$22,000 or your self-employment profit exceeded S$6,000, or if IRAS has asked you to file.
• If revenue is S$200,000 or less, you complete a 2-line statement; above that, a 4-line statement.
• e-Filing runs from 1 March to 18 April.
• Records and accounts must be kept from the start and retained for at least 5 years.

Because the profit sits on top of your salary, it is taxed at your highest marginal rate. Our guide to how a sole proprietor is taxed covers expenses, capital allowances and losses.

If the side business is a company, its profit is taxed in the company. You then pay personal tax only on what the company pays you, such as director’s fees or salary.

Do you pay CPF MediSave on side business income?

Yes, if you are a Citizen or Permanent Resident and your annual net trade income exceeds S$6,000. The CPF Board says this applies in addition to the CPF already contributed on your salary.

Net trade income is gross trade income less allowable expenses, capital allowances and trade losses, as assessed by IRAS. After IRAS assesses your return, the CPF Board issues a notice of CPF contributions for self-employed persons. The amount depends on your age and net trade income, and is due 30 days from the date of the notice. You can ask for an instalment plan.

Two points matter for employees in particular:

• The CPF Board compares this to an employee with two jobs, who pays CPF on the wages from each. Your salary CPF does not cancel the MediSave obligation, but you can apply to limit the MediSave payable if your total income from employment and platform work (excluding additional wages such as bonuses) exceeds the maximum total annual income for the year. See the CPF Board’s answer for employees who are also self-employed.
• ACRA’s three-year sole proprietorship registration (S$160) is available only if conditions set by the CPF Board are met, so check your MediSave position before choosing the registration period.

Compulsory MediSave contributions qualify for full tax relief. Our guide to MediSave for self-employed persons explains the payment options.

When does a side business need to register for GST?

Only when it grows large. GST registration is compulsory when taxable turnover exceeds S$1 million at the end of a calendar year, or is expected to exceed S$1 million in the next 12 months.

Taxable turnover means taxable supplies made in the course of a business, so your salary is not part of it. Keep a running total of sales so that you notice early if the business approaches the threshold.

What mistakes do employees make when starting a side business?

Most problems come from mixing the two roles. The ones we see most often are:

• Starting without reading the contract, then having to choose between the job and the business when the employer finds out.
• Selling to the employer’s clients, or using its templates, contacts or code.
• Paying business costs from a personal account, which makes the tax return and any loss claim hard to support.
• Assuming that because tax is deducted or reported on the salary, nothing more needs to be declared.
• Ignoring the MediSave notice, which is due 30 days from the date it is issued.
• Setting up a company with no one to act as company secretary, forgetting that a sole director cannot also be the secretary.

Frequently asked questions

Do I have to tell my employer about my side business?

Only if your contract, handbook or a conflict-of-interest policy requires it, but most do in some form. Where disclosure or consent is required, get it in writing and describe the business accurately.

Can my employer dismiss me for running a side business?

It may be able to if the business breaches your contract, for example by competing with the employer, using its information or taking up working time. Where the contract permits outside work and the business does not conflict, the risk is much lower.

Can I register a sole proprietorship under my HDB flat address?

Yes, for a small-scale business, but you need approval under HDB’s Home Office Scheme before you register the address with ACRA. Private property owners apply to URA.

Do I pay MediSave if my side business made S$5,000 profit?

No. The self-employed MediSave obligation applies only when annual net trade income exceeds S$6,000. You still declare the income in your tax return if you meet IRAS’s filing criteria or receive a filing notice.

Is a company better than a sole proprietorship for a side business?

Not automatically. A company limits liability and keeps profits out of your personal tax bracket, but it has a higher registration fee and more filings. It tends to suit businesses with real liability exposure, staff or plans to bring in investors.

Last reviewed: 10 November 2026. The Editorial Team, Raffles Corporate Services.