MANAGING FINANCES AS A FREELANCER

The UAE is increasingly acknowledging the emergence of freelancing as a viable and alternative
avenue of employment. In response, the government has proactively implemented various
measures aimed at assisting freelancers in Dubai to operate within the legal framework. The
recognition of freelancing as a legitimate form of work in the UAE is a positive step that not only
promotes individual autonomy but also contributes to the overall economic growth of the
country.
To facilitate the growth of freelancers, specific free zones have been established throughout the
UAE, such as the Ajman Free Zone, Dubai Silicon Oasis, and twofour54 Abu Dhabi. These
free zones serve as designated areas where freelancers can establish their businesses and benefit
from a supportive environment tailored to their unique needs. By designating these areas, the
government aims to attract and nurture talent in various sectors, including creative industries,
technology, and media.

WAYS TO MANAGE YOUR FINANCES:

1. Separate Personal and Business Finances:
 One of the first steps in managing your finances as a freelancer is to separate your
personal and business finances.
 It allows freelancers to monitor cash flow, analyze financial performance, and
make informed decisions based on solid financial data.
 Open a separate bank account dedicated solely to your freelance income and
expenses.
 Having a dedicated business bank account for freelancing revenue and expenses
facilitates easy tracking, calculation of profit and loss, and provides clarity in
financial transactions.
 Separating personal and business funds helps freelancers to maintain a
professional image. Using a specialized company bank account for client
invoicing and payments indicates professionalism, dependability, and a
methodical attitude to financial concerns.

2. Develop a Budget:
 Creating a budget is vital for freelancers to keep financial management.
 To calculate the true value of your services you can check the following article:
“Mastering the Art of Freelancing: Calculating the True Value of Your Services”
available at (https://www.aefreelance.com/blog/mastering-the-art-of-freelancing-
calculating-the-true-value-of-your-services).
 Calculate your monthly income needs by considering your living expenditures,
debt payments, savings objectives, and other financial commitments.
  It is critical to account for the volatility of freelancing income by setting realistic
expectations and factoring in future earnings variations.
 A well-defined budget allows you to make educated judgements about your
spending and saving habits.

3. Track Income and Expenses:

 Choose the best tracking strategy for you. Accounting software, such as
QuickBooks which offers a wide range of functionality and automates several
operations.
 Spreadsheets, such as Microsoft Excel or Google Sheets, provide a more manual
method but may be tailored to your requirements. Select a technique based on
your preferences and technical ability.
 Make a method for tracking your sources of money. When you receive payments
from clients, make a note of the client's name, project description, payment
amount, and payment date.
 Track issued bills and record their payment status (paid, pending, or late). This
will assist you in identifying late payments and following up with clients as
necessary.

4. Establish an Emergency Fund:

 Unexpected costs might occur at any time, regardless of whether you operate as a
freelancer. Medical crises, automobile repairs, equipment failures, and unplanned
company expenditures are examples of these.
 During difficult times, an emergency fund acts as a safety net, offering financial
stability and peace of mind.
 It enables you to deal with unforeseen events without resorting to severe methods
such as borrowing money or jeopardizing your financial security.
 Set aside a percentage of your freelancing earnings to donate to your emergency
fund monthly.
 The emergency fund's objective is to pay unexpected and required costs. Only use
it in true situations and avoid using it for non-essential items or trips.

5. Continuous Education and Professional Development:

 Effective financial management involves not only controlling expenses and
preparing for challenging times but also focusing on increasing the top line, which
refers to the revenue generated from billing customers.
 By optimizing billing strategies and maximizing revenue, freelancers can enhance
their financial standing and overall business success.
 You can keep up with industry developments, rising technology, and changing
customer expectations by investing in ongoing education.
 This expertise will enable you to provide clients with current and up-to-date
services, promoting yourself as a useful asset.
  Expanding your skill set as a freelancer might lead to new possibilities and boost
your marketability.
 While learning new talents is crucial, so is refining and improving your old ones.
Evaluate your talents and find areas where you may improve your knowledge.

HOW FREELANCING IN UAE IS HELPFUL:

1. Tax Benefits:
 Individuals, including freelancers, are not subject to personal income tax in the
UAE. This implies that freelancers may keep a larger share of their profits,
maximizing their income and financial resources.
 For freelancers, the amount of tax to be imposed depends upon the income. If a
freelancer is operating under the ambit of a company, then it will be subject to
taxes on net income exceeding AED 375,000 whereas if the freelancer is working
as employee of the company and receives a salary then the freelancer is exempted
from tax. To know more about corporate tax, you can check the article:
“Introducing the UAE Corporate Tax: A Basic Guide for The Freelancers”
available at: (https://www.aefreelance.com/blog/introducing-the-uae-corporate-
tax-a-basic-guide-for-the-freelancers).
 Additionally, the UAE government provides attractive tax incentives to
businesses, including freelancers operating as independent contractors. These
incentives aim to promote economic growth, attract foreign investment, and foster
a favorable business environment.
 One of these incentives is the exemption from corporate tax, which means that
freelancers can avoid the burden of corporate taxation on their business profits.
 This provides freelancers with greater financial flexibility and enables them to
reinvest their earnings or allocate them for personal use as they see fit.
 Furthermore, the UAE offers exemptions from value-added tax (VAT) and
customs duty for eligible businesses. VAT is a consumption-based tax levied on
the supply of goods and services, but certain sectors and transactions may be
exempt.
 By being exempt from VAT, freelancers can avoid additional costs and
complexities associated with collecting and remitting VAT on their services.
 For freelancers, the amount of tax to be imposed depends upon the income. If a
freelancer is operating under the ambit of a company, then it will be subject to
taxes on net income exceeding AED 375,000 whereas if the freelancer is working
as employee of the company and receives a salary then the freelancer is exempted
from tax.

2. Access to Global Clients:

  The UAE, known as a global commercial hub, attracts enterprises from all over
the world. As a freelancer, it is an incredible opportunity to tap into
a diverse market and interact with clients from a variety of nations and sectors.
 The UAE's strategic position, along with its outstanding infrastructure and
business-friendly climate, makes it an appealing destination for enterprises
looking to grow their activities in the Middle East and beyond.
 The UAE's strategic position is critical to its attraction to enterprises. The country
acts as a gateway to Europe, Asia, and Africa due to its location at the crossroads
of these three continents.
 This positioning allows freelancers to access a broad range of international clients
who are drawn to the UAE's connectivity and accessibility.

3. Better Work Life Balance:

 In comparison to regular employment, freelancers in the UAE have a better work-
life balance. Individuals who work as freelancers have the freedom to choose their
own work schedule, choose assignments that suit their interests, and work from
any place.
 This amount of independence allows freelancers to efficiently manage their job
with other responsibilities, such as caring for family, following hobbies, or even
travelling.
 One of the primary benefits of freelancing is the ability to determine your own
working hours. Unlike traditional jobs with set timetables, freelancers may choose
when they work, allowing them to fit their requirements and preferences.
 This flexibility allows freelancers to combine work and personal life, lowering
stress and improving general well-being.

4. Networking Opportunities:
 Freelancing in the UAE offers outstanding networking opportunities, allowing
freelancers to meet with individuals from a variety of sectors and backgrounds.
 Freelancers may develop crucial contacts with new customers, collaborators, and
mentors by actively participating in networking activities such as attending
events, joining industry associations, and participating in online forums.
 This networking practice is critical to their reputation, skill expansion, and
freelance business growth.
 Attending networking events in the UAE allows freelancers to meet and engage
with individuals from a variety of sectors.
 Conferences, workshops, seminars, and meetups dedicated to certain industries or
freelancing in general are examples of such events.
 Conversations and contacts formed at such gatherings can lead to useful
connections and future partnerships or client referrals.
Managing finances as a freelancer requires discipline, organization, and proactive planning. By
implementing these strategies, you can gain control over your finances, achieve stability, and
create a solid foundation for long-term success in your freelance career. Remember, effective
financial management is not only about tracking numbers but also about making informed
decisions that support your financial goals and aspirations.