How to protect yourself as a freelancer

Freelancing is a growing industry in the Philippines due in part to the rise of digital, economical factors such as imbalance between rising prices of goods and employee salaries, worsening traffic, and the desire to earn more. In the Philippines, 2% of the population are freelancers and our country has the highest number of freelancers per capita based on 22 surveyed countries with 24 to 39 year olds as the biggest demographic, according to Paypal. Soon enough, Freelancing will no longer be simply treated as the "gig economy".

I started as a Freelancer before putting up my own business. Just like any industry, it is very challenging in a sense that you can't stop looking for work (even if that sometimes means taking more than you can handle! But this ain't good practice, ha!) because if you do, you won't earn! Freelancing can be unstable and irregular at times, especially now that competition is tough nowadays, but I won't deny that it taught me a lot of important skills like protecting your business and yourself.

Thinking of entering the world of freelancing or are you just beginning with your journey? Here are important things that you should know in order to protect your career as a Freelancer.

1. HAVE BASIC KNOWLEDGE OF THE LAW

- Luckily for me, I had dreams of becoming a lawyer so it was easy for me to set aside time to gain a bit of knowledge about basic law. Read up on how to draft contracts/moa (memorandum of agreement), tax obligations and processes, freelancer rights, and other related laws. I would also consult lawyer friends regarding legal situations so that I am properly informed and updated.

2. GET TO KNOW RELEVANT INSTITUTIONS

- Freelancing or self- employment is a business; it's a business of skill and just like any business, there are relevant organizations and institutions that you need to be aware of such as the Department of Trade and Industry (DTI) that legitimizes small, single- proprietorship businesses, Intellectual Property Office (IPO) that guarantees protection for creations/inventions/logos, Bureau of Internal Revenue (BIR) for all things related to taxes and TIN IDs, and Small Claims Court for financial disputes (only for settlements P200,000 and below. Settlements P300,000 and up will automatically be referred to a regular court). 

3. KNOW HOW TO READ A CONTRACT

- I could not stress this enough. A lot of Freelancers end up taken advantage of just because they sign their name on something that they barely understand. You have to understand that once you sign your name on a contract, you are bound by everything in it whether you like it or not; read up on tips on how to understand and break down a contract, and when in doubt, ask a lawyer to interpret the contract for you before signing.

4. DON'T START A PROJECT WITHOUT A CONTRACT

- This one is just as important as number 3 and I couldn't stress this enough as well. A friend is currently having trouble seeking compensation for a finished project because there's no contract that legalized it!

A contract is protection and without it, a client may just run away from you without settling their dues.

Also, don't forget to put these details in your contract:

1. Start and end date of the project and contract

2. Honorarium/Talent Fee (Say if it's inclusive or exclusive of all taxes; if inclusive, put the gross amount (honorarium/TF plus the corresponding VAT percentage). If exclusive, just put your net honorarium/TF.)

3. Scope of work

4. Date of issuance of payment

5. SET EXPECTATIONS AND LIMITATIONS

- I've had my share of freelance work where clients asked me to do more than what they were willing to pay me for. I know when to give additional value for my work, but sometimes, clients can be abusive. This is why it's important to determine scope of work in the MOA/contract/project cost estimate so both parties are clear with the responsibilities to be delivered.

6. DISCUSS AND BE CLEAR WITH THIRD PARTY COSTS

- Transportation, food, clothing, lodging, and other miscellaneous services/items needed to complete the project are considered third party costs and they should not be considered as part of and deductible from your honorarium. Before, I wasn't aware of this and I ended up taking home a little over P5,000 only of my P10,000 honorarium from one project when I totaled the expenses I incurred because client required me to visit shops and do ocular at least 3- 4 times a week. Lesson learned!

7. KEEP AND GATHER PROOF

- In the event of a dispute, email exchanges, messages, and screenshots are finally considered proof even in the absence of a contract so keep these while the project is ongoing and at least 3- 6 months after the project has ended.

I hope you liked this post! Fellow freelancers, let's help other freelancers out and share your tips on how we can protect our business and industry.