You will record your current structure choice and the conditions that would change it.
You have read three lessons on business structure. You know whether you need to register, how the two main structures compare, and which signals would make a company worth it. If none of that is written down, by next year it will be a vague memory and a half-remembered conversation. This exercise turns it into one page you keep with your annual review. It takes about twenty minutes.
Write your current structure in one line. You are either unregistered, a registered sole proprietor or a company. Add whether anything needs to change now, based on your work in lesson 5.1. If you found you should be registered and are not, that is the action for this week, through BizFile+. If a client needs a UEN, note that too.
Mei's line reads: "Unregistered freelancer. ACRA's guidance says I need to register as a sole proprietor, so I will register through BizFile+ this week. My new client needs a UEN, which registering gives me."
List the ways your work could leave you owing money, and how each is covered today. Coverage can come from a contract term, an insurance policy or, in a company, the structure itself. For each line, say which.
Mei's list, with amounts made up for the example, has three lines. A client could claim a design infringed someone's copyright, and her contract has a clause on who supplies which images, but she has no insurance for it. A client could refuse to pay for a S$6,000 project, which her deposit terms partly cover. She could miss a deadline on a campaign launch, which her contract handles with a clause that limits her liability to the fee for that job.
Be honest about the gaps. A line marked "nothing covers this" is not a failure. It is the most useful line on the page, and module 6 turns gaps like these into a plan.
Copy across your three signals from lesson 5.3. Make sure each one is specific enough that you would recognise it. "When I'm bigger" will not work. "When a single contract is worth more than three months of my income" will.
Under the signals, write the questions you would take to an accountant if one is reached. Start from the list in lesson 5.3 and adapt it. Mei adds one of her own: "If I incorporate, can my company take over my existing client contracts, or do I need to sign new ones?"
A structure decision that nobody looks at again is no decision at all. Choose a date to review it, ideally your annual review in module 8, and write it at the top of the page.
One page with four parts:
Current structure and any action needed now, with a date Liability exposure, with what covers each risk today Three change signals, each specific enough to check Questions for an accountant if a signal is reached, and the date of your next review
Here is how Mei's page reads in short. Current structure: registering as a sole proprietor this week. Exposure: copyright claims, handled by a contract clause but with no insurance behind it; unpaid projects, partly covered by deposits; and missed deadlines, capped by her contract. Signals: a contract worth more than three months of income, two clients in a year who need a company, or an accountant's view that the tax saving would cover the running costs with room to spare. Questions: four, including one about moving contracts across. Review: her annual review in December.
A page like that means she will never again find herself wondering whether she has been doing something wrong. She knows what she chose, what would change it and when she will check.
If you are unsure about any point on your page, mark it with a question rather than guessing. A guess written down tends to harden into a fact by the following year, and a question stays open until someone answers it. An accountant's time is easier to use well when you arrive with written questions.
Gather your notes from lessons 5.1 to 5.3 and fill in the four parts in the activity.
Complete the one-page structure decision with your current choice, your risks, your change signals and your questions for an accountant.
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