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    August 25, 2016
    Freelancer 2 Comments

    Facts about Freelancing

    Freedom

    The term ‘freelancing’ has no legal meaning, but it is generally understood to be an individual who runs a business providing services. It’s a pretty straightforward type of business to start.

    Here’s how to tell if you’d be a good candidate for freelancing.

    A freelancer business might work for you if:

    • You crave more freedom and flexibility than you can get working for a single company. As a freelancer, you set your own hours and can choose which assignments to accept and reject. You also decide where you’ll work and what equipment you’ll use for your jobs.
    • You don’t want to rely on a boss for a raise. As a freelancer, you can choose to work more hours to get more business, or market yourself to higher-paying clients to make increased income. You may be able to make more money per hour than an employee in the same position because companies won’t have to pay benefits when they hire you — you’re responsible for your own taxes and insurance.
    • You enjoy working with different people. Chances are you’ll be working with new clients on a regular basis. In fact, one major of benefit of being a freelancer and having several clients is that even if you lose one job, your income won’t drop to zero. A client’s layoffs or firings won’t affect you the same way they’d affect an employee.
    • You like working from home. When you’re a freelancer, you choose where your office is located, and many times the cheapest and most practical place is a room in your home.
    • You have home office expenses. Freelancers have more freedom than employees to deduct expenses from income, as long as those expenses are ordinary and necessary for business. Examples include cleaning costs for the home office, magazine subscriptions and the cost of creating a website. They could also include trips to restaurants and events with clients and potential clients.

    A freelancer business might not work if:

    • You require a steady paycheck from Day One. Like any business owner, as a freelancer you probably won’t have regular income when you start. You’ll do a lot of marketing and it might take time to build up a client base. Even when you do get work, you might have to chase down payments from some clients.
    • You don’t have a savings cushion or other source of income to rely on while you get your business off the ground. You should probably keep your day job and save money (enough to cover expenses for a few months) before starting your own company.
    • You don’t want to spend money on equipment and permits. As a freelancer, you’ll need to pay for business registration licenses. You’ll also need to provide your own EPF and buy your own insurance.
    • You want to avoid self-employment tax. If you have a sole proprietorship, you’ll need to pay your own investment like EPF and income tax on your income. This is in addition to the regular income tax you would owe. Of course, as an entrepreneur, you get to decide your business structure: sole proprietorship, partnership or corporation. If you decide to go with another choice, you might not owe as much self-employment tax, but you’d have more paperwork to manage.
    • You prefer job security. While there’s less risk of being fired or laid off, as a freelancer your assignment may be among the first to end if a client is trying to cut costs. And as an freelancer, you’re generally not entitled to EPF savings or unemployment benefits.
    • You’re really an employee. Your job shouldn’t be confused with that of a company hire. A freelancer is a type of contractor. If your client’s providing you with the tools to do your work, telling you when to work and controlling how you work, then you may be an employee, not a freelance contractor.
    • You’re an entrepreneur, but you don’t really freelance. If you plan to sell products and keep inventory, you probably wouldn’t refer to your company as a freelance business.

    Summary

    You should consider starting a business as a freelancer if you sell services to multiple clients. If you’re a writer, a graphic designer or an web developer, you’re a good candidate to start afreelance business in Malaysia. You can also freelance successfully as an independent sales representative, especially if you represent multiple clients and don’t have to manage extensive inventory.

    Being a freelancer is not a great idea if you require a steady income from your work and you don’t like marketing for new clients. In fact, if you work for just one customer who gives you the technology and tools you’ll use, and monitors the hours that you work, you should check with your contact person to make sure you’re not an employee who’s being misclassified.

    If you plan to sell products, manage inventory or hire employees, you probably won’t refer to yourself as a freelancer. Owners of flower shops, franchise restaurants and day care center operators all have many customers, but “entrepreneur” is a better description for their type of work.

    How to get started

    • Decide the type of business structure you want for your freelancer small business: sole proprietorship, partnership or corporation. Most freelancers are sole proprietors because that’s the cheapest and easiest way to go. But you should learn about all the business types before making a decision.
    • Contact your local Suruhanjaya Syarikat Malaysia (SSM) to get necessary licenses and permits, even for home-based businesses.
    • Apply for a GST account if your sales exceed RM500k per annum.
    • Open a business checking account and consider getting a credit card for your freelance business. This will help you keep business and personal finances separate. Make sure you keep good financial records.
    • Create a business plan that includes a great marketing strategy.

    Happy Freelancing

    Join Freelancing.my to find local freelance work in Malaysia

    2 Comments on this article

    1. Michelle Tan

      I would like to be informed of any freelance corporate tax job opportunities in the market.

    2. Mat

      Hi there would like to ask, am Sarawakian, but I divide my time between Sabah/Sarawak/West Malaysia. Do I need to apply for any work permits or anything if I were to freelance out of Sabah for example? even if it was for clients based in KL?

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