When a freelancer should form a company
My freelance work is growing. When should I form a company?
The situation
The Companies Law lets one person own an LLC. A company can hire staff, sign larger contracts and separate business risk.
The law
- Companies Law (effective 19 January 2023): One person can own an LLC; financial statements deposited within 6 months of year end
- Saudi VAT Law and VAT Implementing Regulations, registration rules: Mandatory registration above SAR 375,000 of taxable supplies; voluntary above SAR 187,500; apply within 30 days
What it means for you
Common triggers are hiring, contracts that need a CR, and VAT registration above SAR 375,000. A company adds costs such as audit for foreign-owned firms and Qawaem filing. Compare the costs before switching.
What to do
- List triggers.
- Estimate company costs.
- Form the LLC when worth it.
We can do this for youFreelancers in Saudi Arabia: freelance document for Saudis, legal routes for expats, VAT and tax: SAR 1,500