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6 Key Things To Keep in Mind As A Freelancer in 2022

As a freelancer, there is a long list of complicated financial matters for you to manage. Here are 6 key things that will help you with your finances!

Freelancing has spiked in popularity over the course of the pandemic, and for good reason. When you work for yourself, you can manage your own workload, work at your own pace, and enjoy the flexibility and freedom that most employees are unlikely to have.

However, being a freelancer also means that you don’t have an organisation to support you. You need to manage your own finances, and things like filing for taxes and making your CPF payments are your responsibility.

For those who due to one reason or another are part of the gig economy, here are 6 key things to keep in mind that will help you in your career as a freelancer in any industry.

1. Track Your Finances

Freelancers tend to receive payments from multiple sources as compensation for their services–many of which can be hard to trace back to their senders. With irregular amounts of money flowing in and out of their bank accounts, the most important thing for freelancers to do would be to keep close track of their finances.

The first and most crucial step would be to create a separate business bank account for transactions related to work. This draws a clear line between business transactions and personal expenditure, which will make filing for taxes and budgeting your personal finances much easier.

Freelancers who manage their own business earnings and expenditure would also love the convenience and clarity that comes with having a separate bank account dedicated solely for business transactions, as it makes accounting for their work-related finances more manageable.

Freelancers would also benefit from creating a detailed budget for their personal monthly expenses, such as groceries, rent, entertainment, and so on.

Unlike employees, freelancers receive a more irregular stream of income depending on the projects that they take on. A personalised budget helps freelancers keep track of the base amount that they spend monthly, helping them avoid overspending and finding themselves in tight spots.

Budgeting applications such as Household Account Book or Spendee are convenient options that can help you out with your personal budgeting.

2. Income Taxes

Filing taxes can be a daunting task for anyone, but it feels even more complicated when you’re a freelancer who doesn’t have an employer to help them out with the tax process. But don’t worry–paying your taxes can be fairly simple once you understand the requirements and regulations.

Freelancers are required to pay income taxes if their annual income exceeds S$22,000, with the exact amount of tax payable calculated based on the specific amount of annual income that they’ve earned.

As a freelancer, there are 5 main steps that you will need to follow during the tax season:

1. Decide on Your Accounting Period

The accounting period refers to a 12-month period over which you calculate all of the profits and losses for your business. While you are free to choose your own 12-month period, the most common dates are from 1st January to 31st December.

2. Have accurate and detailed records of all of your business transactions throughout the accounting period

This is where your business bank account will come in handy, as you will need a detailed and accurate record of all the transactions that you have made for your business throughout the 12-month accounting period that you have chosen. Be sure to keep any invoices or receipts that you might have dealt with as well.

3. Prepare your Statement of Accounts

This includes your:

  • Profit and Loss Accounts
  • Balance Sheet

4. Prepare your 4-line Statement

Based on the numbers from your Statement of Accounts, you need to craft a 4-line Statement that comprises:

  • 1st line: Revenue
  • 2nd line: Gross profit
  • 3rd line: Allowable Business Expenses
  • 4th line: Adjusted Profits

5. File your taxes

Once you’re done with the previous four steps, you can report your income details to the IRAS once you receive a notice from them. This notice is usually sent out at the start of every year by March 15.

There are tax reliefs available for freelancers depending on your personal background. The most commonly applicable criteria for tax reliefs are outlined in the table below:

Tax Relief CategoriesAmount of Relief
Course Fees ReliefAmount of actual course fees paid, up to S$5,500 annually
CPF Relief for Self-EmployedDepends on your net income and CPF contributions
CPF Top-Up ReliefMax S$14,000 (S$7,000 for self, S$7,000 for family members)
Earned Income Relief
  • S$1,000 for taxpayers below 55 years old
  • S$6,000 for taxpayers between 55 to 59 years old
  • S$8,000 for taxpayers above 60 years old
Life Insurance ReliefThe lower of:
  • The difference between your CPF contribution and S$5,000, or
  • Up to 7% of the insured value of you or your spouse’s life, or the amount of insurance premiums paid
Parent Relief
  • If taxpayer stays with dependant: S$9,000 per dependant (S$14,000 per handicapped dependant)
  • If taxpayer doesn’t stay with dependant: S$5,500 per dependant (S$10,000 per handicapped dependant)
Supplementary Retirement Scheme (SRS) ReliefAmount of SRS contribution made
Deductions on donations250% of amount of approved donations

You can find more details regarding tax reductions and rebates here.

3. CPF Contributions

CPF contributions are another thing that freelancers don’t receive help from employees to manage. There are two main points that freelancers need to know: Contributing to your MediSave account is compulsory as long as your annual net income is higher than S$6,000, and contributions to the Ordinary Account (OA) and the Special Account (SA) are optional.

The amount that you contribute to your MediSave account each year is calculated based on your age and the amount of income that you’ve earned that year. The CPF website has a convenient MediSave contribution calculator that you can use to find out how much you need to set aside. The deadline for your contribution is typically within 30 days of receiving the IRAS notice.

While contributions to the OA and SA are optional for freelancers, setting aside money to put into these accounts does have its benefits. Although the obvious downside would be that the amount inside these accounts would be inaccessible to you until you turn 55 years of age, it’s worth noting that the amount in your OA or SA can earn considerable interest for you over time, and even help with reducing your income taxes. However, do take note that the combined annual limit for CPF contributions is S$37,740.

If you would prefer to make your CPF contributions through smaller, spread-out sums, there is an option for freelancers to submit an Instalment Request that allows you to pay in manageable monthly sums instead.

For those who prefer investing yourself for retirement, you can check out our guides on the best online brokerages in Singapore here.

4. Get a Good Savings Account

Freelancers are likely to deal with an irregular stream of income that varies depending on the number of projects they take on every month. This makes it all the more important to set up a good savings account that will help you maintain a safe emergency fund in case of an unfortunate dry spell.

The most suitable savings accounts for freelancers would offer high interest rates with a manageable maintaining balance requirement. Some accounts that fit the bill include:

CIMB FastSaver Savings Account

Chance to win fully-paid trips
Consider this if you want a simple and easy savings account
  • Min. Age Requirement
    • 16
    • Min. Initial Deposit
      • S$1,000
      • Min. Balance Requirement
        • N/A
        No product on the market offers higher base interest rates than CIMB FastSaver Savings Account, which is also exceptionally easy to use. Base rates are tiered according to bands within the balance size; the 1st S$50,000 of the balance earns 0.50% p.a. interest, the next S$25,000 earns 0.80% p.a., the following S$25,000 earns 1.50% p.a., and any remaining amount earns 0.40% p.a. Altogether, the maximum effective interest rate is 0.825% p.a., reached at S$100,000 balance.

        CIMB FastSaver does not offer promotional or bonus measures. However, its base rates are far higher than the 0.05% p.a. market standard, and even eclipse the bonus rates offered by most alternatives. This simplicity is actually a huge perk, as it eliminated the need for tracking or worrying about bonus criteria. This account is also very low maintenance as there are no fall below fees (though only balances of S$1,000 or more will earn interest). This makes CIMB FastSaver an exceptional option for those who want high rates but also value simplicity.

        UOB One Savings Account

        Win up to S$1,880 when you deposit fresh funds
        UOB One Account
        UOB One Account
        Consider this if you want a simple plan to maximise your savings
        • Min. Age Requirement
          • 18
          • Min. Initial Deposit
            • S$1,000
            • Min. Balance Requirement
              • S$1,000

              UOB One is by far one of the easiest savings accounts to use for maximising your interest rate. Account holders can earn up to a 2.50% p.a. effective interest rate upon reaching a S$75,000 balance, which is notably higher than the market average. Rates are based on just 3 factors: credit card use, salary crediting, and size of current balance.

              First, spending at least S$500/month with select UOB credit cards earns a bonus of 0.20% p.a. on top of the 0.05% p.a. base rate. Next, consumers who meet the credit card spend can earn an additional boost when they credit their salary or make 3+ GIRO debit transactions. Finally, boosted rates also depend on your total balance. The total is divided into bands (1st S$15,000, next S$15,000…), and each band earns at a different bonus rate. Altogether, salaried employees with a UOB credit card can easily earn competitive rates, without the need for extensive tracking. While similar accounts tend to be very complex, UOB One is a great option that doesn't require a lot of extra effort.

              DBS Multiplier Account

              Consider this if you're looking for a high-interest account for high-spenders
              • Min. Age Requirement
                • 18
                • Min. Initial Deposit
                  • S$0
                  • Min. Balance Requirement
                    • S$3,000
                    DBS Multiplier Savings Account is an exceptional option for high-spenders with financial involvement across a variety of DBS banking products. Account holders earn interest based on a few intersecting factors. First, consumers must credit dividends or their salary to their account each month. Then, you must make a transaction in one or more specific categories ranging from credit card purchases and home loan payments to insurance policies and investments through DBS. Depending on the amount of total monthly transactions and the number of categories in which transactions were made, your total interest can reach 3.00% p.a.

                    While this is the highest EIR available on the market, meeting the necessary criteria is quite challenging. The average consumer may expect to earn more along the lines of 1.50% p.a., which is still a market-leading rate. This makes DBS Multiplier one of the best savings accounts in Singapore, especially for those who can balance multiple financial products.


                    To find out more about the best savings accounts available in Singapore, check out ValueChampion’s comprehensive list here.

                    5. Find The Right Insurance Policies

                    Freelancers are just as likely as anyone else to have an unfortunate sick day here and there, but unlike other employees, they don’t receive paid leave or coverage for medical expenses when these things happen. That’s why it’s all the more important for freelancers to get the perfect income protection insurance policy for themselves so that any unexpected day off is well-compensated.

                    Here are some income protection policies that work great for freelancers:

                    MSIG Freelancer CashPlus:

                    • Hospitalisation and daily outpatient cash benefits of up to S$60 per day each
                    • Immediate policy issuance
                    • Affordable premiums from S$6.89 weekly

                    Income’s Prolonged Medical Insurance for Self-Employed Persons

                    • Daily hospital income for each day of hospitalisation & subsequent hospitalisation leave
                    • Daily cash benefits from the 8th day of consecutive non-hospitalisation leave

                    Depending on your specific profession, freelancers might also consider applying for policies such as Equipment Insurance. For an easy and convenient way to track and manage your policies, download the PolicyPal mobile application.

                    6. Know Your Worth and Your Rights

                    Unfortunately, it can be difficult for freelancers to deal with clients who underpay them or create legal trouble. This is why freelancers need to be well aware of the resources that they can turn to in times of trouble.

                    NTUC’s U Freelancers and Self-Employed webpage is a resourceful platform that posts constant tips and guides for a range of issues–from well-being and working tips, to legal advice for freelancers.

                    As a freelancer, you might also struggle to name your price to your client. But it is crucial that you do your research on average market rates, connect with other similar freelancers for guidance and support, and know your worth.

                    Looking for more personal finance guides? Check out our ValueChampion blog for tips on budgeting, family finances, career spending, and more!

                    Tan Boon Hun

                    Boon Hun spent over five years in the content marketing space as the managing editor of Goody Feed creating interesting and relevant content for the social media generation. In 2022, he moved to the FinTech space while remaining true to his roots, intending to bring financial literacy to more people in Singapore. When not doing his work, he can be found watching people build homes on YouTube.