Tax-filing tips for freelancers

Study hard, get good results and land a stable job in a reputable company. That used to be the standard pathway to success. However, the rise of the gig economy offered an alternative to workers seeking flexible work and the freedom to choose projects instead of being tied to the same employer. With the tight talent market today, gig workers are also a solution to plugging the skills shortage gap as companies hire them to do short-term projects. 

Gig workers are generally self-employed persons, or in layman terms, their own bosses. Some examples of gig workers include independent consultants, coaches, online graphic designers, freelance delivery riders, private hire car drivers, home tutors, baby sitters and home bakers.  Earnings from gig work vary depending on the fees earned from carrying out assignments/projects and this income is taxable.

As the gig economy gains traction, gig work is now a viable work choice for people who prefer the less trodden career path. If you are thinking of taking a plunge into the gig economy, let’s hear it from TZ, a veteran in the creative industry who freelanced for 8 years before setting up his own company.

How did you decide on a freelance career?

TZ: I was forced into it! After graduation, I worked in a design house for some years but the company closed down. I was suddenly jobless. While looking for a new job, I took on freelance projects. Surprisingly, I was overwhelmed by so many projects that I decided to just carry on freelancing as a career choice. I also freelanced when I was studying in Nanyang Polytechnic so freelancing is not entirely new to me

What is a typical day at work like for a freelancer?

TZ: The hours we keep are very different from an office worker. I have no fixed working hours. So, I can be working through the night and over the weekends. 

I had to bao ka liao (do everything) when I started out. From understanding clients’ needs, designing and even running errands such as personally delivering brochures to clients. In fact, my girlfriend, who is now my wife, came along with me on my delivery runs. We treated doing errands together as our dates! 

Was the transition to freelance work easy for you?

TZ: Personally, I found it easy to adapt as my previous company was very small. Although I had some fear that income would be unstable, I was then young and also naïve so I did not think too much. I just made a choice and I moved on to embrace freelance designing. My then-girlfriend was also supportive of my decision to do freelance work.

What advice would you give someone considering gig work?

TZ: Constantly keep up to date with current trends. I create value for my clients by being on-trend. I also push myself to change and innovate. When I started, 80% of my revenue was generated from graphic design. Today, some 90% of revenue is from digital works such as producing videos, animation, website design and also branding. 

TZ: The most tedious part is dealing with the paperwork. As cashflow is very important to freelancers, I have to do billing promptly to get paid on time.

Keeping proper records is important not just for tax-filing but also for the long-term benefit of the business. It’s easy to do tax filing when you have proper records. Also, don’t claim business expenses which are not allowed such as restaurant meals for yourself. I use Xero accounting software and an app Dext to auto capture receipt data from photos to help me manage my tax affairs.