How to Register a Sole Proprietorship (Sole Trader) in Samoa

Setting up as a sole trader in Samoa is a practical option for individuals who want to run a business independently without forming a company. The process is generally straightforward, but it still involves registering with the authorities, gathering the right documents, and paying annual licence fees.

The main challenges include preparing evidence of starting capital, meeting licensing obligations, and staying compliant with tax rules. On the other hand, the benefits are significant: low setup costs, simple reporting requirements, and full control over the direction of the business.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Samoa?

In Samoa, a sole proprietorship is officially called a sole trader. Depending on context, it may also be referred to as:

• Sole trader
• Self-employed worker
• Independent contractor

These terms all describe the same business model: one person legally running a business without forming a separate company.

How does a sole proprietorship (sole trader) work in Samoa?

Sole trader vs. other business structures in Samoa

Apart from sole proprietorships, Samoa also allows other business structures, such as limited liability companies and partnerships. Below is a comparison of how a sole trader stacks up against these alternatives.

Step-by-step guide: How to register a sole proprietorship in Samoa

Step 1: Check your eligibility

For Samoan citizens, the process is straightforward: you must be at least 18 years old and not bankrupt to apply for a business licence under the Business Licences Act 1998. Foreign nationals can also register as sole traders, but they must first obtain a Foreign Investment Certificate (FIC) from the MCIL. Certain business activities are restricted or reserved for citizens, so foreigners should confirm their eligibility before applying.

Step 2: Choose your business name

You can operate under your own name or register a trade name, as long as it is unique and not already in use. For non-citizens, the approved name and business activity must match what is specified in the Foreign Investment Certificate. You can search existing businesses with the government search tool.

Step 3: Gather required documents

You will need:

• Completed IR24S Sole Trader Business Application Form
• Copy of identification (passport, national ID, or driver’s licence)
• Evidence of starting capital (bank statement)
• Site map of your business premises
• Foreign Investment Certificate (if required)
• Additional certificates depending on activity (e.g., Health Certificate, Samoa Tourism Authority approval)

Step 4: Register with the authorities

To register a business in Samoa, you need to apply for a business licence with the Inland Revenue Services of the Ministry of Customs & Revenue. Samoan citizens can do this directly by submitting the IR24S Sole Trader Business Application Form through the Samoa Trade Portal. This licence legally authorises you to operate your business.

If you are a foreigner, you must first obtain an FIC from the MCIL (Foreign Investment Registration). Once the certificate is approved, you can then proceed to submit the IR24S form with the Inland Revenue Services to complete your registration and receive your business licence.

Step 5: Pay registration fees and contributions

The annual fee for a sole trader business licence is WST 282. If your business has more than one activity, you must pay the fee for each. Licences run on a calendar year and must be renewed annually, with late renewals incurring penalties. Foreign investors must also pay Foreign Investment Certificate fees, such as WST 50 for lodgement and issuance.

Step 6: Complete post-registration obligations

After registration, you are responsible for keeping proper financial records, including invoices and receipts. If your turnover reaches WST 130,000 or more, you must register for VAGST and issue compliant invoices that include your VAGST number. You must also file tax returns, renew your licence each year, and comply with additional obligations if you employ staff, such as making contributions to the Samoa National Provident Fund and Accident Compensation Corporation.

Financial and tax obligations for sole proprietors in Samoa

You are responsible for:

• Income tax: Sole traders in Samoa are taxed under the personal income tax system. The progressive rates are 0% on income up to WST 15,000, 20% from WST 15,001–25,000, and 27% above WST 25,000. Income tax is administered by the Ministry of Customs & Revenue. Sole traders file annual tax returns and pay based on net profit (revenue minus allowable business expenses).
• Value Added Goods and Services Tax (VAGST): The standard rate is 15%. VAGST is Samoa’s version of VAT and applies to the sale of most goods and services. Registration is mandatory if your annual turnover is WST 130,000 or more, and voluntary registration is possible below this threshold. Once registered, you must add VAGST to your invoices, file returns (usually monthly), and remit the tax to the Ministry of Customs & Revenue.
• Social security contributions: Sole traders do not contribute on their own profit. However, if you hire employees, you must register them with the Samoa National Provident Fund (SNPF) and make monthly contributions, as well as pay levies to the Accident Compensation Corporation (ACC). Employer contributions to SNPF are generally 10% of wages, and ACC levies vary depending on industry.
• Record-keeping: You must maintain proper accounts, including contracts, receipts, and issued invoices. Records should be retained to support your tax filings and be available for inspection by the Ministry of Customs & Revenue if requested.
• Invoicing: If registered for VAGST, invoices must comply with Samoa’s VAT rules. This means including your VAGST registration number, business and client details, invoice date, a description of goods or services, the value, and the VAGST amount. Invoices must be sequentially numbered and stored as part of your records. Even if not registered for VAGST, you are still expected to issue receipts or invoices for all business transactions.

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FAQs

What is the minimum capital required to start a sole trader in Samoa?
At least WST 500 for micro and small businesses, or WST 1,000 for others.

Do sole traders need to register for VAGST?
Yes, if turnover is WST 130,000 or more.

How much are the standard annual fees?
WST 282 per activity per year, plus penalties for late renewal.

Can a sole trader hire employees?
Yes, but you must register them for PAYE and make SNPF and Accident Compensation contributions.

How long does it take to register as a sole trader in Samoa?
A few days if all documents are ready.

Can foreign nationals register as sole traders in Samoa?
Yes, but they must first obtain a Foreign Investment Certificate.

Do sole traders need a separate business bank account?
Not mandatory, but highly recommended for clarity and compliance.

What happens if I stop working as a sole trader?
You must notify Inland Revenue Services, file final tax returns, and deregister your business licence.

Are there any government incentives for new sole traders?
No standard first-year discounts, though occasional fee reductions have been announced in budgets.

Can I use Deel as a sole trader to get paid by international clients?
Yes. Deel makes it easy to receive payments globally with low fees and transparent exchange rates.

Does Deel generate compliant invoices for sole traders?
Yes, Deel issues legally compliant invoices that meet Samoa’s tax rules.

Can Deel help me with taxes as a sole proprietor in Samoa?
Yes, Deel provides tax reports and payment records to simplify your filings.

Does Deel offer contracts for freelancers and sole traders?
Yes, Deel provides compliant contract templates.

Can I access benefits through Deel as a sole trader?
Yes, Deel offers perks like health insurance and retirement savings options.