What is more advantageous between registering as a business owner and being a 3.3% freelancer?


💡 What is more advantageous between registering as a business owner and being a 3.3% freelancer?

Many people wonder which is more beneficial in terms of tax benefits, whether it's working as a freelancer and contracting with other businesses or individuals, or registering as a business owner and working.

In general, both business owners and freelancers earn business income, but there are differences in terms of taxes and business characteristics. Here's a table that summarizes the differences:



Business Owner
Freelancer

Issuance of Tax Invoice 

Possible 
Not Possible

Card Terminal, PG 
Can be activated
Cannot be activated
Value Added Tax Refund
10% refund of purchase amount (based on general taxpayers)
None 
Government Support Funds such as Loss Compensation
Available for business owners Only minimal support available for freelancers 
Accounting Fees
Can be supported
Fully borne by freelancer

Scope of Expense Recognition 

Wide 
Relatively narrow
Labor Cost Reporting (Outsourcing, etc.)
Easy
Difficult

Labor Cost Subsidy 
Up to KRW 9.6 million per year
None
Tax Reporting
Simple tax payment and benefits up to 100% for small amounts
Tax burden is high for large amounts

You can scroll the table left and right on mobile 😃



https://cdn.imweb.me/upload/S20210317a96d22bffcce0/79d8d231ab573.jpg

One of the biggest advantages of registering as a business is that you can receive appropriate certification. You can receive various government grants, including labor cost subsidies, and receive partial support for accounting fees.

In particular, if you meet the requirements, you can save up to 100% of your taxes, which is a significant benefit.

Freelancers can be considered to have relatively less to worry about since they do not need to issue tax invoices or install card terminals and do not need to report value-added tax. However, since it is difficult to distinguish between living expenses and business expenses, it can be difficult to reflect expenses compared to business owners.

Support funds and tax benefits are also much less.