[상담해DREAM] Tax Differences between Corporation and Sole Proprietorship

Tax differences between corporation and sole proprietorship

Entrepreneur “O”

 

Entrepreneur “O,” an F-4 visa holder, has learned that he is allowed to

operate a business under the current status of sojourn in the same way

as Korean nationals. While preparing to establish a business,

he has become aware that he could choose between a corporation and

sole proprietorship, and wanted to know about their differences.

To understand the differences between corporation

and sole proprietorship

 

A corporate representative establishes an entity with a capital

and operates the business in lieu of the entity,

while a sole proprietor serves as the company itself and

operates the business.

Tax for Sole Proprietor

 

A sole proprietor must file and pay the general income tax without

distinguishing business income from individual income since the owner serves

as the company itself. In addition, a value-added tax return should be filed,

and the frequency of value-added tax returns differs

depending on whether they are general taxpayer or simplified one.

Tax for Corporation

 

A corporate representative must file a corporate tax return within

three months after the fiscal year and pay the corporate tax.

A value-added tax return should be filed four times.

A corporate representative operates the corporation and

receives a monthly wage as an employee.

The corporation should deduct the relevant tax from the wage paid,

and file and complete the tax payment within 10 days of

the following month of the month when the monthly wage is paid.

In addition, the year-end tax settlement must be filed by

the corporation.