[Tax Deduction Guide for Self-Employed Persons] Key points in tax filing for freelancers, freelancers, part-time workers, and companies
2024-05-31 | Chinglink
Explore the self-employed person’s guide to tax deduction and filing. Whether you are a Freelancer, a freelancer, a part-time employee, or a company owner, this article will share every opportunity to save taxes and effectively manage tax matters.
The new generation of professionals refuse to be "social animals" and pursue diversification of income, becoming leveragers, or transforming into freelancers, or even starting their own business while they are still young. How should I file my taxes as a self-employed person? Should I apply for a business registration certificate first? How to calculate tax rate?
*Do self-employed people need to file taxes? **
Of course self-employed people have to file taxes! The tax returns for self-employed people are different from those for working people, and the required documents are different. Self-employed persons may be required to submit an Individual Tax Return (BIR60) and Profits Tax Return (BIR52).
If you are a partnership you need to pay even more attention - in addition to the self-employed documents, you must also submit a partnership financial statement and a profits tax calculation form.
*When do self-employed individuals file taxes? **
The tax return must be submitted within 1 month from the date of issuance by the tax bureau. The tax bureau will indicate the submission deadline on the first page of the tax return. If you file your taxes electronically, you are automatically entitled to a one-month grace period for filing. As for proprietors of sole proprietorships, the deadline for submitting tax returns can be extended to early August of the same year.
Remember not to leave it until the last minute to file your tax return, Chinglink believes you can handle it easily!
Items that self-employed people need to file tax returns
As a self-employed person, you are required to pay profits tax on the assessable profits earned by your sole proprietorship or partnership. If you are required to pay both salaries tax and profits tax and qualify, you may be able to obtain relief by electing personal assessment.
After you send your tax return, the tax bureau will analyze it based on the situation. If choosing "Personal Assessment" will cause you to pay more tax, the Inland Revenue Department will choose a lower "taxation method" for calculation and will notify you of this situation.
Items that self-employed people need to file tax returns:
- Profit: Self-employed persons are required to report the profits they derive from their business, including total income, sales, gross profit/loss, net profit/loss, and assessable tax.
- And other business income.
- Inactive business (if the business does not operate for the entire year, a declaration must still be made)
Of course, the above tax filing steps are trivial and complicated. It is recommended that you consider hiring a professional accountant to handle your accounts.
Tax deduction items for self-employed persons
Generally speaking, all expenses incurred by self-employed persons to earn assessable profits are allowed to be deducted, such as office rent, water and electricity bills, telephone bills, car club interest, [accounting audit services] ( https://www.chinglink.com/bookkeeping ) expenses, and even MPF contributions; in addition, if you have a registered trademark, design or patent, the registration fee can be used as a tax-deductible expense.
However, please note that some items are not tax deductible, such as household, personal expenses, and expenses not related to business; insurance or indemnity contract compensation, building rent or expenses not related to profits cannot be used for tax deduction purposes.
so! There are many provisions in tax filing that you need to pay attention to. If you handle tax filing with only a little knowledge, especially for self-employed people and novice entrepreneurs, it will cost a lot of manpower and material resources! It is recommended to find a professional accountant to help you deal with it, and you can save most of your worries!
*What do self-employed people need to prepare for tax filing? **
As a self-employed person, you need to prepare a lot of tax returns. The Chinglink team reminds you:
- Application for Business Registration Certificate is required as legal proof of operating business in Hong Kong;
- Keep enough business records for 7 years in case the tax bureau suddenly needs to inspect the records;
- Prepare detailed accounting records;
- If your business has ended, you need to notify the tax bureau within 1 month;
- If the business address changes, the tax bureau needs to be notified within 1 month;
- Remember to pay taxes on time to avoid problems with tax collection by the tax bureau.
*How should Freelancer be calculated if he/she works part-time or part-time in different companies? **
If you are a Freelancer working part-time or part-time in different companies, your employer needs to declare your income and fill out the "Notice of Payment of Remuneration to Persons Other than Employees" - the IR56M form. However, there is an important principle when filing taxes, which is “accuracy.” Therefore, if the company does not proactively provide a copy of the form, you must proactively request it to ensure that the tax return is filled out accurately.
If you run a sole proprietorship business without any employment relationship, such as opening an online store, being a makeup artist, a private tutor, a taxi driver, etc., you will be classified as a self-employed person. Generally, you must pay tax on the assessable profits earned by the sole proprietorship business. Profits tax is payable.
*Freelancer opens a company and becomes his own boss? **
Freelancer can allocate the company's profits to the director's salary tax through [Establishing a Limited Company] ( https://www.chinglink.com/limited-company ) (the general practice is that the company uses the director's salary) to achieve legal tax savings .
Finally, if you need help, remember to ask Chinglink for help. I wish you smooth tax filing and become a successful self-employed person!
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