The scent of rain-kissed earth mixed with the familiar aroma of ginger chai as Astraea and Vardaan settled into their evening routine. Vardaan, usually bubbling with business ideas, looked a little hesitant today.
“Astraea,” he started, stirring his chai slowly, “my cousin just started freelancing – graphic design work – and he’s completely overwhelmed. He asked me, ‘How do I even begin to file taxes as a freelancer? It’s not like getting a salary slip!’ I didn’t have a solid answer, and it got me thinking… it must be a huge puzzle for many.”
Astraea nodded, a reassuring smile on her lips. “That’s a very common worry, Vardaan! The truth is, when you’re a freelancer or a consultant, you’re not just providing a service; you’re essentially running a small business. And with running a business comes the responsibility of managing your own finances and, yes, your taxes.”
The Freelancer’s Hat: You’re a Business Owner!
“So, a freelancer is basically a mini-company?” Vardaan mused.
“Exactly!” Astraea affirmed. “And just like any business, even a one-person show, you need to track things properly. The good news is, it’s not as scary as it sounds, especially if you set up simple systems from the start.”
Astraea explained the core responsibilities:
- Tracking Your Income: “This is paramount. Every rupee you earn from every client, big or small, needs to be recorded. Whether it’s through bank transfers, online payment platforms, or even cash, it all counts. Think of it as your business’s total sales.”
- Tracking Your Expenses: “This is where freelancers can save a lot! Unlike salaried employees, you can deduct expenses that are directly related to your work. Did you buy a new laptop for design? Pay for specific software? Rent a co-working space? All these business expenses can reduce your taxable income. It’s like logging all the ingredients you bought for your business’s ‘meal’.”
- Understanding Advance Tax: “This is often the biggest surprise for new freelancers. Since tax isn’t deducted at source by an employer (like with a salary), you’re usually required to pay your estimated taxes in advance, throughout the year. It’s like making quarterly payments instead of one big lump sum at the end.”
Why Get It Right? Peace of Mind and No Surprises!
“So, it’s all about avoiding that last-minute panic, right?” Vardaan asked.
“Precisely!” Astraea confirmed. “Getting this right is crucial for a few reasons:
- No Nasty Surprises: You don’t want a huge tax bill at the end of the year that you haven’t budgeted for. Regular tracking and advance tax payments help you stay on top of things.
- Stay Compliant: The tax authorities have clear rules. Following them correctly keeps you out of legal trouble and protects your reputation.
- Claim What’s Yours: By meticulously tracking expenses, you ensure you’re claiming every legitimate deduction, which means you pay only what you truly owe, and not a rupee more!”
How 21DEGREES Helps Freelancers Navigate the Tax Maze
“It still sounds like a lot of detail for someone just trying to get their client work done,” Vardaan confessed.
“That’s exactly where partners like 21DEGREES step in to simplify things,” Astraea said reassuringly. “We understand that freelancers are often busy with their core creative or consulting work, not with intricate tax laws.”
“At 21DEGREES, we help freelancers and consultants by:
- Setting up Simple Systems: We don’t complicate things. We help you establish easy-to-use systems for tracking your income and expenses – often using cloud-based tools that make daily recording straightforward.
- Guiding on Deductions: We advise you on what expenses you can legitimately claim, ensuring you maximize your savings.
- Calculating and Managing Advance Tax: We help you estimate your advance tax liability and guide you on timely payments, so there are no surprises.
- Accurate and Timely Filing: And of course, we handle the correct and timely filing of your annual tax returns, giving you complete peace of mind.”
Vardaan closed his notepad, a lighter expression on his face. “So, it’s about seeing freelancing as a business, setting up smart tracking, and then getting expert help to make sure all the tax bits are handled correctly. That’s a huge relief for someone like my cousin!”
Astraea smiled. “Exactly, Vardaan. It’s about empowering freelancers to focus on their passion, knowing their finances are in capable hands, and that their tax journey will be smooth and surprise-free. Now, about that second cup of chai?”
Vardaan reached for his mug, already thinking about how to explain this to his cousin. “Definitely! And next time, perhaps we can talk about funding options for startups?”
