Breaking down sole proprietorship in Taiwan: registration, taxes, invoicing, and compliance.
The East Asian country of Taiwan has some great night markets, delicious dumplings, and is a leader in technology development, making it a great place to visit and live in. A great option for making a living in Taiwan is the business structure known as a sole proprietorship, which allows you to work as a self-employed person. The independence and freedom granted by this business structure will allow you to set your hours and be your own boss. Here we break down the basics of a sole proprietorship, preparing you for your journey into self-employment. The information here should not be used in place of legal counsel.
What is a sole proprietor?
Taiwan has a few different legal entities for doing business, but here we will focus on sole proprietorship, the simplest and cheapest structure. As the owner of a sole proprietorship, you do not need to have a working permit. As a sole proprietor, you will be accountable for all of your business’s debts, and you will not be able to hire foreign employees.
The Registration Process
To set up your business, you will have to apply to register your company name. Then you will have to apply for labor health insurance coverage, work regulation approval, and potentially other business certifications. It can sound daunting at first, but it’s not so bad if you break it down into easy steps.
First things first, you have to get your company name registered. You’ll need to have your business name approved by the Department of Commerce. The name you choose to register will have to be in Chinese since you can’t register English/Latin characters. However, your business’s name in practice does not have to be the same as the registered one, meaning your company can have an English or Chinese name.
The pre-registration process can be completed online, and when you go to the SAMR office, you will submit a form that contains naming options, your scope of business, registered capital, and registered address.
You will also have to get labor health insurance coverage, supply a lease contract, and apply to get internal work regulation approval. All of this can be done with the Department of Commerce, which has both online and in-person options. You may also want to check if your particular business needs additional certifications or licenses.
Taxes and Invoicing
As a sole proprietor, you are responsible for your own taxes. You can do your tax registration via Taiwan’s eTax Portal. The income from your business will be taxable in your name and must be reported in your tax returns, becoming subject to your personal income tax rates. As a sole proprietor, you must file business income tax returns in May, but you do not pay income tax on your sole proprietorship.
Businesses need to register for Value Added Tax (VAT) to start business operations. The VAT standard rate is 5% and is relevant for imported goods and supplying goods and services. For exportation and international services, VAT is zero. VAT returns must be submitted at the end of each accounting period.
When you create VAT invoices, you should be sure to include the following information:
Your name, trading name, and the address of both the supplier and customer
The VAT number of the supplier and the customer
Date of invoice
Description of the supplies (including the quantity, weight, etc.)
Taxable amount, VAT added, gross amount
The exchange rate (if it is a foreign currency invoice)
Receiving Payments in France via Liquid
Liquid supports payments to France and 175+ countries worldwide in USD as well as select foreign currencies. Payments arrive in 2-5 business days via wire transfer, whether the invoice was sent to an existing Client using Liquid or a Client who is new to Liquid.
Invoices in Liquid are in USD by default but can also be sent in Euros and other select foreign currencies, allowing Vendors to receive payment in their local currencies instead of USD. In addition, Work orders / Project Proposals can also be agreed to in Euros and other select foreign currencies in Liquid.
Liquid charges Clients who initiate payments $3 per US invoice paid and $8 per international invoice paid.
Liquid never charges Vendors to receive payments, even when Vendors are requesting payments from Clients who are not current users of Liquid.
Go Ahead and Get Started
That’s all you need to get started on sole proprietorship in Taiwan. This information, plus the proper research and planning, will ensure that you have a successful independent small business in no time! The process of becoming a sole proprietor is not so challenging or costly. Don’t be afraid to dive into self-employment in Taiwan!
Ready to invoice your United States-based clients? Try Liquid today.