Working at Home

Your Home Base

By now, you may have decided to start freelancing. You’ve found the niche you want to work in, and either you see yourself managing a full-blown business or accepting clients on a per-project basis. It could get inconvenient to do your stuff in your workplace or a coffee shop all the time, so a good thing to consider is to work at home.

The Perks of Working at Home

Having your own workplace at home is advantageous in a lot of ways.

  1. Working at home can make you more productive. With all of your resources close by, you can concentrate on the tasks at hand and maintain your momentum. You get less of the distractions present in regular offices. It also feels good when you work in a place where you’re most comfortable.
  2. Apart from commuting to your regular job (if you have one), you don’t need to travel often. That saves you time wasted mostly on traffic, gasoline, and fare, relieving you from a lot of stress.
  3. Working at home can be healthy. That means less work-related stress plus more time to rest and exercise.
  4. Working at home helps you achieve a work-life balance. You have plenty of time to work, even at your own pace. With a flexible schedule, you can spend more quality time for yourself and your family. That includes finishing chores, studying, playing with your children and/or pets, and accomplishing personal tasks that you can’t make time for as a regular employee.
  5. Working at home can give you a sense of independence. By learning to balance your time, set goals, budget your expenses, and maintain discipline, you can make your home-based job a successful and profitable venture.

Setting Up Your Workspace

Having a home office simply means you will need a place that’s favorable for working at home. With this goal in mind, set up your workspace at home in a way that you can utilize every resource you have to your advantage.

Identify Your Work Area

Pick an infrequently used part of your house, where you can easily move around. Make sure it’s well-lit and ventilated. You may want a workplace with a good view, like a window view, but ensure that it is less prone to distractions such as environmental noise.

Once you have a space to work on, pick a suitable desk where you can work at ease. You’ll also need a comfortable chair, as well as added space for your tools and paperwork. If you have the budget, you may want to get space-saving furniture, like DIY shelves and double-duty file cabinets. The key is to install office furniture that provides functionality, ease, and comfort.

But what if I want to work in my bedroom?” you may ask. The same principle of functionality, ease, and comfort applies here. Just don’t get tempted to plop into bed every now and then, unless you’re disciplined enough to work where you’re most comfortable.

One other thing: keep your wires out of the way when you can. Plan this way ahead while setting up your furniture. Badly installed wires can cause fires.

Tools of the Trade

Once you know what equipment you have and need, make some space in your workplace to keep them safe from the elements. Your computer must be set up in a manner where you don’t feel cramped.

Your basic tools as a freelancer are your computer/laptop, a telephone (if applicable), and internet connection. Later on, you may decide to get a printer or scanner. If your job requires chatting online, invest in a video camera and headset. If you work with pictures or graphics, a camera and some art tools or software will be useful. Think of what services you are offering, and what tools will make your job easier. Save and invest in them as you go along.

Organize Your Files

The next thing you need to do is organize your papers. If you registered with the BIR, you may already have your Certificate of Registration, also known as the BIR Form 2303, among others. Keep your books of accounts on a dedicated shelf. You will need to look at them periodically, especially now that you are required to pay income taxes. To prove that you’re a bonafide taxpayer, display your Form 2303 and your Ask Your Receipt Notice in a conspicuous part of your home.

Other business-related documents you may have on hand are client profiles, email and letter templates, proposals, directories, and other legal papers. File everything related to your services in one cabinet, your clients’ papers on another, and other materials and references in a shelf or two.

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Design Your Office

Aesthetics will help your productivity at home. Here are some basic ways to do this:

  1. Assign a space for everything — your equipment, files, etc. — in a way that flows best for the way you work.
  2. Make sure you’ve got lots of storage and keep the room free from clutter (even organized messes can silently stress the mind).
  3. Showcase objects that interest you like books and and souvenirs so that you can continually inspire yourself throughout the day (If you have clients coming over, your literary choices may pique their interest on you.)
  4. If you can, paint your workspace with a color that helps induce productivity or a state of relaxation.

The key to an organized workplace is not only to maximize its functions, but also to make your surroundings pleasing to work in and visit.

Working at home has a lot of perks. Your home office will be the first step to making a giant step for your freelancing career, so establish it according to your needs and preferences.

 

 

[Podcast] Minding Your Business Episode 5: Freelancing Versus Other Jobs

 

During the last episode of Minding your Business, Danella and Cristina talked about why freelance? We have learned how Miguel was able to pursue his passion in photography by being a freelancer. Today, we will have another guest to share with us his own story when it comes to freelancing. This week’s episode is all about freelancing versus other kinds of jobs.

Excited to know more of what’s in store for you if you freelance?

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Danella and Cristina invited Christian San Jose, currently the managing director of Make Technology, to share his journey when it comes to freelancing and what makes freelancing different from other types of jobs.

HOW CHRISTIAN STARTED

Christian started freelancing when he was still school, around 13 years old. When he was a kid, he stumbled upon Photoshop and played around it. Also, being a basketball fanatic, he started designing basketball wallpapers which led him to design the websites of actual basketball players for free. As a 16-year-old, he does not know how to properly charge his skills so he started freelancing for free. Later on, he realized that this hobby can turn into something worth the money. He started building his own portfolio and clients started contacting him, wanting him to design for their business. As a teenager, he didn’t foresee himself that this is going to be his future.

Being a freelancer, Christian realized he was able to improve his skills in communicating, most especially because he is meeting clients virtually, which is a bit challenging. He also said that he basically relied on his gut when it comes to trusting his clients. Because most of his first clients are foreigners, it requires great trust from the both of them and he mainly relied on his gut for it. That is something he learned from freelancing that is applicable to what he is doing right now.

WHAT IS THE ONE THING YOU WISH PEOPLE TOLD YOU AS YOU WERE DEVELOPING YOUR OWN CAREER?

During his freelancing career, he was not able to have a mentor that he can look up to. He realized that learning from his own is hard for him since there’s no one who can assess his actions when it comes to freelancing. There is no formal learning and there is not enough information that can guide him through his career. Christian also emphasized that he mainly based everything on experience, from mistakes. It’s a painful learning experience but he was able to surpass that.

AT WHAT POINT OF YOUR JOURNEY YOU REALIZED THAT THIS SKILL CAN TURN INTO A BUSINESS?

Christian realized that this could be something when people started commenting positively on his portfolio and are willing to pay for his services. He was able to know that you do not need to be a professional in order for you get paid. You just have to put yourself out there.

WHAT IS YOUR FAVORITE JOB STORY THAT YOU CAN SHARE WITH US?

Christian shared their experience when they started designing the official website of Solaire where they experienced a bit of trouble prior to the deadline. Since it was their first big client, Christian’s team was very eager to get everything in place just in time for the deadline. However, a day before the deadline, their office experienced a total blackout and they have to rely on their cellular data to be able to continue working. At that time, cellular data are not that strong enough so they really had a hard time completing their work.

Another memorable experience they had with Solaire was when their website was hacked. They had to fix this problem right away and that was the first time it happened to them. Eventually, they were able to locate the hackers, it was in Indonesia and they had to block the whole country to fix the website. Good thing they were able to fix the problem in no time.

With that experience, he realized that there is a big responsibility with what they do. He believes that you have to fake it till you make it. It is committing to something, feeling you’re ready but not quite yet. And when the right time comes, you tend to over-deliver so that is actually making it. You just have to believe in yourself.

HOW’S THE FEELING OF BEING A MANAGING DIRECTOR VS WORKING WITH TEAMS?

Christian emphasized that he liked the both of it. Being a freelancer has its own pros and cons like having your own time, your own schedule, choosing your own clients, however, sometimes it makes you realized you need to learn more beyond what you could do on your own. When it comes to managing the company, Christian reiterated that he needs to manage expectations so this makes it above him. It was a decision for him to learn a little more because he wanted to be something successful. After selling his company, Create.ph, he transferred to an advertising agency where he believes there is so much learning experience from there.

Christian had an amazing experience, from stumbling upon Photoshop to being the managing director. He was able to experience a lot of things that made him what he is now. He wanted us to know to never stop learning as it can lead you to greater things.
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How to Turn Your Freelancing Career into a Business

Freelancing is pretty much a buzz word in the United States, where there were 15.5 million Americans who were self-employed in May 2015 according to the Bureau of Labor Statistics. The numbers increased approximately one million since May 2014.

In a related American study, researchers estimated that over 40 percent (roughly 60 million) of the U.S. workforce would be freelancers by the year 2020.

In the Philippines, the freelancing practice has pretty much caught on. In 2012, a Filipina freelancer earned PHP1.5 million after completing about 35 writing and translating jobs through Elance, an online freelance platform.

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If you’re a freelancer, you can go even further and turn your freelancing gigs into a business by going through a Bureau of Internal Revenue (BIR) registration.

Freelancing Career Turn Into a Business

Go Legit

The first thing you need to do is to register your business. There are three types of business ownerships in the Philippines. A sole proprietorship is a type owned by a single individual, and this is how you can turn freelancing into a legitimate business.

In a single proprietorship, one person owns all of the assets of the business and is also responsible for all the liabilities the business may incur.

In terms of taxes, the individual and his or her business are considered one taxpayer and can use a single tax identification number (TIN). However, as a sole proprietorship, he or she needs to apply for a trade name with the Department of Trade and Industry (DTI), as well as secure several business permits and licenses for the business application.

On the other hand, an individual who doesn’t have a client yet that he or she is catering to has a taxable income. In this case, the person can register with the BIR as an independent contractor/professional. However, in this case, a DTI trade name application is no longer necessary as the individual’s name will be used as the trade name.

Creating Your Own Personal Brand

Just like in freelancing, your clientele grows through word of mouth and recommendations. This is where personal branding comes in. Whether you are a sole proprietor or an independent contractor, it is important to build your own personal brand, as it can affect both sales and lead generation.

Researchers found that 84 percent of decision makers start their purchase process with a referral. So, the more people recommending you, the more projects and clients you will gain, and this is where personal branding can help you a lot.

Simply put, personal branding is the method of people marketing themselves and their expertise as “brands.” Basically, this is how you package yourself as a product or service and how you market it to colleagues, clients, and leads.

Today’s freelancers often make the most out of social media and blogs and even their own personal website to market their personal brand. The easier people can find your business information and works online, the faster they can touch base with you.

Benefits of Going Legit

A BIR registration and official receipts will increase your credibility as a professional business provider. Applying for credit cards and loans will also be easier now that you are a registered business. Moreover, you wouldn’t have to worry about cases of tax evasion, as well as your clients who choose to work with you.

While the registration process can be a bit daunting, especially with the list of application requirements, in the long run, turning your freelancing gigs into well-oiled business operation will benefit you and your career. Being registered will enable you to work with bigger clients and projects, which translate to greater earnings.

If you’ve been freelancing for a while now and want to take your career to the next level, it’s time to go legit and build your own brand.

 

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Tax Strategy: Freelancer vs. Employee

Back in the day, the only ways to advance one’s career in the Philippines was to establish a business or get a job and climb the corporate ladder. However, many Filipinos these days have taken a different route, that of being an independent contractor or a freelancer.

Judging by the continuous growth in the number of freelancers in the country, it is has become quite a popular option. There are still some, however, who prefer the security of stable employment.

Both options offer advantages and disadvantages, and these can be categorized in terms of registration, emotional or personal commitments, as well as tax obligations.

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Independent Contractor vs. Employee

We all know that the government imposes heavy taxes in the Philippines, and most business-related transactions are taxed.

In a country where even business permit renewal can be a tedious process, you can expect that the process involved in paying taxes will be just as challenging—if not more.

Independent contractors and employees are taxed differently. The process for declaring income and paying taxes also differ. So, regarding taxes, which one would be more advantageous, working as an independent contractor or employee?

Freelance as a Business

Below are the pros and cons of working as a freelancer in terms of taxes:

Pros:

• You will be complying with the Law.

Section 232 of the National Internal Revenue Code requires freelancers to pay taxes, as not doing so will be breaking the law. Complying with the law instead will help you avoid being penalized.

• Your income tax returns are proof of income.

In case you need to apply for a credit card, a phone line, a car or housing loan in the future, you will need to present an actual proof of income and your Income Tax Returns will serve that purpose.

• You will be in control.

Being self-employed is said to be one of the best tax strategies because it gives you the ability to reduce your current income using any losses you have incurred from the course of operating your business, and without the BIR having to dictate how much to declare each year.

Cons:

•  You have to register on your own.

Freelancers usually register their business as a sole proprietor. The process involves registering in various government institutions, which can be very tedious. You need to secure a business permit register under the BIR as well. Renewal of business permit and other licenses or registrations is also something you have to take note of regularly.

•  You will be required to register and issue Official Receipts to your customers.

The BIR will require you to register and issue official receipts to your customers or clients. If not, you will be penalized with PHP 1,000 and can be charged with tax evasion.

•  You have to maintain books of accounts.

Transparency is required in encoding all your financials, and these must be listed in your books of accounts. You will need a bookkeeper to do this for you if you’re not an accountant yourself, and are unfamiliar with accounting principles and practices.

•  You might need to pay Business Taxes (VAT and Percentage Tax) and Expanded Withholding Tax.

Businesses are required by the BIR to pay business taxes regardless if you’re earning or not. This is based on your gross receipts or sales and not your net income. These are remitted monthly to the BIR.

•  You will be expected to pay taxes monthly, quarterly, and annually, and renew your registration annually as well.

Monthly Percentage Tax (3% of your gross revenue) must be paid by the 20th of every month. Quarterly Income Tax (based on net income) is due every April 15th, August 15th, and November 15th. Annual and Last Quarter Payment of Income Tax is paid on April 15th of the following year. You also need to submit a Renewal of Annual Registration Tax on January 30th every year.

•  You will need to pay local taxes too.

You will need to comply with local tax requirements for your business to legally operate. If not, you run the risk of being sanctioned accordingly.

The 8-6 Grind

Below are the pros and cons of working as an employee in terms of taxes:

Pros:

•  Your employer will take care of all the computations.

The monthly income tax computations will be done by your company’s accounting department. The only thing you have to do is understand how it is computed so that you can double check if it was done correctly.

•  Your employer will take care of all the filings.

There is no need for you to go to the BIR and pay your taxes yourself. Your company will do it for you, which saves you time and effort.

•  Your income tax can decrease depending on your civil status.

Deductions can be made on your income tax computation depending on whether you are married or not, and if you have qualified dependents.

•  Your gross benefits are exempt from taxes under certain conditions.

Gross benefits including 13th-month pay, Christmas bonuses, productivity, and incentive bonuses, and other benefits of the same nature, either in cash or kind are excluded from the computation of gross income, as long as it remains under PHP 82,000. De Minimis Benefits are likewise excluded from the computation.

•  Minimum wage earners are exempted from paying income tax.

The law states that minimum wage earners shall be exempted from paying income tax on their taxable income. Their holiday pay, overtime pay, night shift differential pay, and hazard pay are exempted as well.

Cons:

•  You will not have the same tax advantages as freelancers do.

Freelancers or sole proprietors can write off all reasonable and necessary business expenses to lessen the amount of tax they have to pay. Employees do not have this advantage.

•  People who earn more are taxed more.

Income tax rates are based on the Income Tax table. The higher you make, the higher your taxes will be.

Both options clearly have their own sets of advantages and disadvantages. What you choose would depend on what kind of arrangement you think will be best for you.

If you are unable to choose just one at the moment, as an employee, you can always choose to have freelance jobs on the side or just pursue it later on instead.

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