Tax Basics For Freelance Writers

Hola, all. It has been over a year since I blogged for this website, and there is a reason for that: I was in full-time employment the whole of last year and only resurrected my business in January this year as I’m now back to full-time freelancing.

One minor drawback is that I now have to manage my taxes as a business owner (my company is called Peppered Ink and it is a sole proprietorship entity) and to do that, I’ve had to keep detailed records of my income and expenses.

I also made a phone call to the income tax authority (the Inland Revenue Board of Malaysia) to verify the claimable expenses for my freelancing business and was pleasantly surprised at how well-informed the office who took my call, was.

She also directed me to some resources on the IRB website, which are aimed at business owners. For information on tax rates, visit this page.

Now on to the income and expenses you need to record. Now, as a freelance writer you obviously need to record all income you receive from writing, editing, proofreading, consulting, etc. I keep a spreadsheet in Microsoft Excel for this that contains money owed to me as well as money I’ve earned. It keeps me on track so I know which clients to chase for payment and how well I am doing financially.

As for expenses, I’m keeping track of the following:

• Toll receipts

• Parking receipts

• Fuel receipts

• My mobile phone bills

• Entertainment expenses involving new or existing clients

• Stationery and office supplies

• Website-related expenses (hosting, domain, template, plugins, web design, etc)

• Writing-related software and tools

• Related literature

• Company registration expenses

• Company advertising/marketing expenses

• Payments to outsourced help

For a more comprehensive list of expenses, read Suraya’s post at Ringgit Oh Ringgit. If I’ve missed out any income types or expenses you think apply to freelance writers, please leave a comment in the comments section.