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 considered 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 run a non-agricultural business (although not always, because there are exceptions to each rule, these activities, for example, may follow one another).
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.
Annual declarations 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 business activities
Freelancing in conjunction with business activity concerns only the provision of services personally to natural persons.
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.
The freelancer service for the client is a tax deductible cost. Meanwhile, if a freelancer purchases some items necessary for the company in a given month, he may thus reduce the VAT deducted from the remuneration received from the client 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.
Freelancer only calculates income tax after deducting the costs of company purchases from the salary. When the tax on the 19 percent rate is calculated on taxable income less costs, you can get a tax rate lower than, for example, 8.5 percent. lump sum.
EXAMPLE: a freelancer received 2.8 thousand. PLN salary. In the given billing period he bought a laptop worth 2,000 PLN. Which gives: 2.8 - 2 = 800 PLN. And it is only from these PLN 800 that he calculates the income tax, i.e. 800 multiplied by 0.19 (19 percent, because this is the current flat tax rate), which gives him PLN 152, which he has to pay to the tax office.
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 e.g. flat tax is paid 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.