More and more Filipinos are into freelancing work these days as noted by Evan Tan, Freelancer.com’s former Southeast Asia regional communications director. In fact, he said that our country is even a standout in the Southeast Asian region.
Many of the freelancers were former regular employees of a company, transitioning from working in an office full of colleagues to doing business in the comfort of their homes.
There are major adjustments freelancers have to make to strike a balance between their professional and personal lives. One of these is in financial management.
If you’re a freelancer, especially one without a regular contract, it is easy to forget that you’re essentially running a business on your own. It’s even tougher when you’re used to working in a company. Without the usual departments such as the finance, payroll, billings and collections, among others, you’re left to handle everything yourself.
So what are some solutions to help you cope with financial dilemmas?
- Consider contributing to your health and pension funds.
Medical insurance companies only cater to large businesses, and while there are those offering medical insurance policy for individuals, it can be expensive.
As a freelancer, your cheapest option is registering as a voluntary contributor to the Social Security System (SSS) and Philhealth. For as low as P200 a month for Philhealth and P110 for SSS, you can be sure to have the funds you need just in case you are hospitalized.
- Invest in life insurance policies with beneficial “riders”.
Although SSS can also serve as your pension fund, you can find life insurance companies offering policies with additional features.
Insurance plans these days aren’t just maintained to provide money to your loved ones should you untimely leave this world, but also to receive retirement funds if ever you’re still alive by the time you’re 60. Some features allow you to gain cash values which you can withdraw when needed. Others put a part of your money into investment portfolio to boost the value of your plan.
- Take advantage of business advisory services offered by the government.
Did you know that as a freelancer with less than P3 million worth of assets, you can register a micro business with the Department of Trade and Industry (DTI)?
Many freelancers do not consider registering themselves because of the tax implications, but there are actually many benefits of doing so. For one, the Negosyo Center under the wings of DTI offers a range of business advisory services including facilitating financial assistance if your business qualifies. They can also help you find prospective investors and gain access to business development programs.
What’s more is that you may probably be able to take advantage of the Barangay Micro Business Enterprise (BMBE) program, which lets you enjoy business tax exemption for at least two years.
- Have a consistent payment and collection system that protects you.
A common problem among many freelancers is getting scammed by “clients” who disappear after receiving the finished project. While most freelancers are used to asking for payments only after finishing the project, it is recommended to ask for upfront fees of around 30 percent or less, and another 50 percent halfway through the project. It can be awkward at first if you’re not used to doing it, but it will definitely minimize your risk of not being paid for 100 percent of your output.
To keep agreements transparent, have a written contract stating the payment terms before starting the project. Alternatively, some freelancing websites such as Fiverr have an escrow system wherein payment is reserved to ensure that you’ll be paid after delivering your output.