How to save on freelancing?
Being a freelancer is a freedom that sometimes has to be paid dearly. The decision to go "on your own" must be well thought out. You should weigh the pros and cons. One aspect that should be particularly well looked at is taxation.
How can you save on them? To answer this question, you need to know what, where and how much to pay.
Freelancing and activities performed in person
A freelancer carries out activities in person when he does not conduct non-agricultural business activities (although not always, these activities may, for example, be consecutive). Freelancer in the case of activities performed in person is not required to register a company, he only has to submit annual tax returns. This means that a freelancer is subject to personal income tax on general terms (settlement of revenues in the annual tax return - PIT-37 or PIT-36). Therefore, in such a situation, the payer becomes a person / company that uses the services of a freelancer on the basis of civil law contracts. In this case, it is the person ordering the service that must calculate and pay tax advances - 19 percent. receivables less tax deductible costs.
NOTE: annual tax returns are not necessary when revenues from activities performed in person are the only revenues obtained in a tax year and do not exceed the tax-free amount. However, it is worth submitting them, because in this way you will regain tax advances collected during the year by the payer.
Freelancing and economic activity
Freelancing in conjunction with business activity concerns only the provision of services personally to natural persons.
NOTE: in this case, the freelancer independently calculates and pays tax advances and submits tax forms. However, he must first choose the form of taxation - lump sum, tax card, or taxation on general principles. The benefits of freelancing depend to a large extent on the right choice.
The client pays the freelancer the remuneration for the task performed in the form of a gross amount, assuming that the freelancer will pay the tax himself.
NOTE: the freelancer is a cost for the client, so he can deduct it from the tax.
Meanwhile, a freelancer in a given month purchases some items necessary for the company and thus may reduce the VAT deducted from the client's remuneration by the entire VAT of the purchased items. As a result, it may happen that the tax office will not receive the proverbial zloty in a given period.
Income tax is calculated on the revenue less tax deductible costs. So, before a freelancer calculates the appropriate tax rate from his income, you must first lower the sum by company costs - materials and goods, utility expenses, depreciation, etc.
Freelancer will not buy equipment for the company every month, he can consider his private property as a fixed asset, depreciate and pay lower tax every month. High income is achieved not only thanks to low tax rates, because the flat-rate tax is paid cyclically, regardless of costs. On the other hand, by using the game of costs in taxation according to general principles, it is possible to achieve correspondingly high profits. In addition, natural persons conducting non-agricultural business activity have the right to reduce the tax base by actual tax deductible costs, and there are many such costs when running a business, e.g. related to the operation of a flat or a private car, as well as a company telephone bill, printer paper, etc. As you can see, with proper discipline and independence, a freelancer can save on taxes, and thus earn much more than a full-time employee.