As a freelance web-developer, Rohini decided to go solo when the internet boomed in India. But she made the same mistake as many freelancers.

“I didn’t get it in writing,” she recalls. “The projects were exciting, and they looked great in my portfolio, but I wasn’t paid immediately.”

Know the best ways to receive payments for freelancers.

Financial freedom and flexibility for the torchbearers of the gig economy weren’t exactly easy; they had to figure it out all by themselves. Today, the situation remains the same, but the competition has gone up. 

There’s a reason why contracts exist: To help our client relationships turn out the way we want. Also, if you are in a country or state where a contract isn’t mandatory by law, we’d recommend you to have one. Because that’s the only antidote that will bail you out if things go sour or otherwise. 

Framing a contract isn’t rocket science. Here’s how you can make one.

What is a letter of agreement for freelancers? 

A letter of agreement is a contract between the two parties: The freelancer and a company or business. The contract outlines all terms and conditions regarding the work between the freelancer and the company, which ensures better understanding and engagement. 

Few details that are present in the contract:

  • Compensation: The agreed amount that needs to be paid after completion of work
  • Timeline: A deadline set mutually by both parties 
  • Scope of work: Defines the freelancer’s nature of work during the tenure of the agreement
  • Additional services: Payment terms set by the freelancer for any extra effort 
  • Late payment clause: A freelancer can charge an interest rate or set any other terms 
  • Advance payment: This clause allows freelancers to charge a specific sum in advance
  • Termination: Circumstances under which the client can choose to terminate the contract
  • Confidentiality: During the tenure, a freelancer should not disclose the work information to any third party
  • Privity: Showcases the relationship between the client and the freelancer
  • Jurisdiction and dispute resolution: Depends on the nationality of both parties

What are the documents required to prepare a freelancer agreement? 

  • Address proof of parties that are involved in the agreement
  • Identity proof of the business or company and the freelancer 
  • Documents that verify the names of the involved parties or organisations

What are the essential clauses in a freelancer contract? 

  • Scope or purpose of work 
  • Timeline of the contract, termination and commencement
  • Payment timeline and mode 
  • Verification of basic information
  • Most importantly, a valid consideration under Section 2(d) India Contract Act, 1872

Know how to create and send GST compliant invoices

What is intellectual property for freelancers?

Intellectual property (IP) for freelancers is generally the work created by them during their tenure with an organisation. IP can be referred to as an invention, design, brand or any other creation that an individual or business has legal rights over. 

Here are a few examples of familiar IPs: 

Trademarks – It safeguards logos, signs, language or tonality that differentiates your offerings from others

Copyright – The most popular segment, always on the news. This protects your original music, background scores, scripts, book, web content or any creative work 

Patents – Often, businesses patent their innovations because someone else might do the same. Any new solution, creation, process, software and product design business product fall under this category.

How to protect your intellectual property?

So, before you jump onto the bandwagon, as a freelancer, you must clarify how intellectual property should be taken care of. 

For example, are you handing over the licence of your work to the client? Or are you submitting the copyright of your work to the client? 

Of course, down the line, you’ll need to showcase your work. Hence, it is crucial to discuss the terms before you begin. Protect your work and make sure that you don’t infringe others’ intellectual property too.

What are the tax responsibilities for freelancers? 

The revenue of a freelancer depends on their assignments, which mainly are contract-based tasks for companies and organisations. 

Income tax laws in India state that any revenue generated by an individual by implementing their intellectual or manual skills is considered an income from a profession. And the income you earn is the sum of all receipts that you get from your clients.

According to Section 80 of the Income Tax Act, a freelancer can cut down his/her tax outgo by more than Rs 1.5 lakh if they invest a specific amount in tax-saving instruments. 

Check out the tax slabs for freelancers.

Is it mandatory for freelancers to register under GST?

As a service provider, a freelancer is required to register under GST in the following situations mandatorily:

  • When turnover exceeds Rs 20 lakh in a financial year (For states other than the North-Eastern States)
  • When turnover exceeds Rs 10 lakh in a financial year (For North-Eastern states)
  • For services covered under Online Information and Database Access and Retrieval services (OIDAR services*)
  • In case of an export service whose value exceeds Rs 20 lakh 

*According to the GST Act, OIDAR services include the following services:

  • Providing cloud-based services
  • Advertising on the Internet
  • Online gaming services
  • Provision for selling e-books, music, movie, software and other intangibles via the internet
  • Providing data or information, retrieval or otherwise to any person in electronic form through a computer network

Know more about GST registration guidelines for freelancers

Here’s how a freelancer contract would look like:

Freelancer Contract

That’d be all, folks. Feel free to write to us If you have any queries. If you want to explore our product suite, then click here.

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When I'm not gushing over World of Warcraft or playing Witcher you'll find me strumming my six strings and minting rhymes.

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