Savings vs Current Account for Freelancer and borang BE or B

[benroy]

Hi everyone. As the title suggests, need to get some insight on the benefit of creating a a current account or whether it’s necessary to do so considering my situation.

Just a little background, I’m currently freelancing full time. However, my “freelance” work may be slightly different to what most freelancers do, as I’m currently engaged with a US company on a contract basis and being paid a supposedly fixed amount each month.

The only variations each month is when I needed to include claims and also have to adjust the amount to vary so as not to flag on their side as a “salaried/employee” of X company. But eventually total amount received will be the agreed contract amount. I work from home full time, so in terms of “business” expenses, perhaps internet, phone, meetings and transport would be part of it?

I’ve consulted a few accountants and the feedback I got varies. Some said that current account is necessary to ensure proper records considering I’m a sole proprietor, however another said not necessary as I don’t exactly have any major expenditures and can just track through my savings account.

My concern is if in the future I want to take a loan, would it be an issue under savings account? Would servicing loans and having credit cards sufficient to show my credit score? I never missed payment, however I don’t self contribute for EPF etc, just set aside my money in ASB and unit trust.

And on the matter of filing, would it be borang BE or B? I have registered for SSM, however because I didn’t create the current account at the time under the sole proprietor, all payment have been TT directly to my personal savings account. And according to one accountant, since I don’t have operations’ expanses, and have monthly “income”, BE is enough? And because I was a salaried employee only till April this year, so can continue filing in BE for both situations?

I wonder if the text exemptions and tax amount would be significantly different if I were to file BE or B.

Thanks

 

[allenkrookham]

@benroy Setup a sole prop, and ask US employer to pay/TT to your sole prop current bank account. That will help in audit/taxes/accounting. I’ve been doing this since 2 years ago. You can use the sole prop bank statement to show earnings and income to apply whatever loan you want. Preferable if the sole prop age is > 3 yrs to show stability.

I filled in borang B.

 

[benroy]

@allenkrookham Thanks for your reply. However, my only gripe if I were to amend and redirect the payment to sole proprietor current bank account is that they will take many months to process the new instruction. And given that my contract may end in July 2024, do you you think it’s still worth opening the current account?

 

[allenkrookham]

@benroy If it’s gonna end July 2024, then just continue as freelancer without sole prop. Just make sure that they at least provide you salary slip. If none, u create one yourself and ask the company for sign off. During taxation period, report under BE self employed and key in the income and reliefs as usual.

 

[benroy]

@allenkrookham Ok that’s another angle that I haven’t thought of…ok will try and see if they’re allowed to sign over a payslip I prepared (they are a US government agency..so not sure what their rulings are) if not since I have Letter of appointment, PO, invoice and bank statement then proceed with B? By the way thanks again…your response has been concise and easy to understand

 

[fractalhedgehog]

@allenkrookham Wait why do we need to have salary slip? If they just direct transfer into the account - can we not use the receipt of transaction instead?

 

[allenkrookham]

@benroy The tx receipt doesn’t have signatory. A pay slip on the other hand have company sign/chop for authentication purposes. Banks usually ask for pay slip and the statement to match the salary amount, for them to calculate the risk ratio of loan applicants.