The term freelance is not a foreign term for some people, especially those who are in productive age. Being able to work anywhere and anytime is predicted to be the reason for the high public interest in becoming a freelancer. In Indonesia itself, there are a number of fields of work whose services are provided by a freelancer or a group of freelancers. Some of these jobs include photography, graphic design, translators, content writers, and many others. But even though it is not a permanent employee, freelance also has acceptable rights. This is important for freelancers to know for the smooth running of their business / work in the future. The rights and obligations have been regulated in Law No. 11 of 2020 concerning Job Creation and refined in Government Regulation No. 35 of 2021 concerning Fixed-Term Employment Agreements, Outsourcing, Working Time, Work Relationships and Rest Time, and Termination of Employment. In addition, it is important to know that freelance activities are also actually included in business activities, so they must have business legality, you know! What are the business legalities needed? And why is it needed for a freelancer? Let’s check it out here!
Freelance at a glance
Freelance is a job that is not bound by a long-term contract but still has strong work ties to the company. The contract given to this freelancer usually only contains the project, design, processing time, and also the fees charged. The fees charged to freelancers also vary depending on the difficulty of the project and also flight hours. Freelancing is one of the fastest growing career paths for young people today. It is a response to what they see as the overly structured work environment of the previous generation.
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Being a freelancer allows them to work full-time on a freelance basis, across national borders, industries, and occupations. Popular jobs include content writer, copywriter, photographer, photo/video editor, graphic designer, and many more.
What are the Business Legalities for Freelancers?
Business legality plays an important role for freelancers because by having valid legality, they can show clients, business partners, and other stakeholders that they operate officially and in accordance with applicable regulations. Here are the necessary business legalities for freelance workers:
PT Individual
Currently, the formation of a PT can be easily done by only one individual founder. The PT in question is referred to as an Individual PT. The requirements to establish an Individual PT in this case are very easy, including:
- Business actors must meet the criteria for businesses classified as Micro and Small Enterprises. Where micro businesses have a maximum business capital of Rp1 billion excluding land and buildings, and small businesses have a capital of Rp1 billion to a maximum of Rp5 billion excluding land and buildings.
- Business actors are Indonesian citizens
- The business actor has not established an Individual Company in the last one year
- There is only one shareholder.
Later, the process that freelancers need to go through to form an Individual Company, includes:
- Setting up a PT name
- Depositing authorized capital
- Prepare documents for the declaration of establishment
- Registering an Individual Company with the Minister of Law and Human Rights electronically.
Business Licensing
Furthermore, business licensing for freelance businesses at this time also does not require complicated licensing documents. Currently, most businesses classified as micro and small businesses only need to obtain a Business Identification Number (NIB) as part of their business licensing. NIB can now be easily obtained online through the Online Single Submission (OSS) system. All business actors, including MSEs, only need to complete the data and activity plans requested by the OSS system to obtain an NIB.
Taxpayer Identification Number (NPWP)
NPWP is required to fulfill tax obligations. Yes, quoting the official Indonesia.go.id page, even though they are not tied to a particular company, freelancers are still considered to have a job because they make money from the work they do. Well, there are several types of freelancers who are subject to income tax, namely:
- Researcher, author, and translator
- Supervisor
- Insurance agent
- Sportsman
- Advertising agency
- Intermediary
- Experts such as notaries, actuaries, lawyers, consultants, accountants, doctors, architects, and appraisers
- Teachers, counselors, lecturers, and advisors
- Dancers, dramatists, advertisement stars, movie stars, musicians, comedians, soap opera stars, directors, film crew, singers, performers, and presenters
- Multi level marketing, direct selling, and the like
- Merchandise picker
Cooperation Agreement
In freelance work, a cooperation agreement is an important thing that should be drafted to protect both parties, namely the freelancer and the client. While there are differences in the type of service or project, a cooperation agreement may cover matters such as project description, payment terms, intellectual property rights, obligations and responsibilities, as well as confidentiality and non-disclosure.
What are the Benefits of Business Legality for Freelancers?
There are three main reasons why freelance work must have business legality, namely:
Financial and Legal Protection
If a freelancer has legality for his business, for example by forming a PT, then the personal assets of a freelancer in this case will be protected when financial problems occur. This is because the liability of the business owner will be limited to the amount of capital deposited into the PT. In addition, the person of the freelancer who has been incorporated will also be protected in the event of a legal dispute. This is because in the event of a legal dispute in a business activity, the party that will be involved in the case is the entity of the legal entity itself as a legal subject.
Ease of Business Scalability
In the event that a freelancer wants to expand the business such as expanding the area of operation, then having business legality such as business licensing will help make it easier for him to do so. This is because business legality is currently used as a basis for the authority to grant business licenses related to the business expansion plan. In addition, business legality also opens up opportunities to recruit labor in a more structured manner. Freelancers as business actors can offer clear work contracts if they have business legality first.
Increase Credibility
Business legality plays an important role in increasing the credibility of a freelancer’s business. By having legal business legality, freelancers can show clients, business partners, and other stakeholders that they operate officially and in accordance with applicable regulations.
READ ALSO: Risks of Owning a Business Without Legality
A business that is a PT and has a business license in practice helps build trust and shows commitment to professionalism. Thus, this will help others believe that freelance business is a reliable endeavor.
KH Contact
Well, for KH Pals who are also currently running a freelance business, don’t ignore business legality! To take care of it, you can contact Kontrak Hukum. As a digital legal platform, we have been trusted by business people in fulfilling the legality documents needed, such as the establishment of Individual PTs and business licensing. No need to worry because the legality arrangement at Kontrak Hukum is guaranteed to be safe, fast, and affordable so it is very suitable for freelancers. For ordering information, please visit the KH Services – Starting a Business page. If you have questions about other business needs, you can also consult for free at Tanya KH or via direct message (DM) to Instagram @Kontrakhukum.
