Records for freelancers — the basics of keeping records for your tax return

What does "freelancer" mean?

A freelancer earns income from services or sales carried on actively to make a profit — not from a fixed salary. Examples include graphic designers, writers, photographers, e-hailing drivers, online sellers, and influencers. From a tax perspective, this income is usually treated as business income, and it is reported using Form B (not Form BE). Source: HASiL FAQ (Individuals) Q11; HASiL – Digital Business — see the Official Sources section below.

Why is keeping records important?

1. It is a legal obligation. For a business, business records must be kept for 7 years. Failure to keep records can lead to penalty provisions under Section 119A of the Income Tax Act 1967. Source: HASiL FAQ (Individuals) Q8–Q10.
2. It helps you calculate your net income correctly. Taxable business income is not the amount of money that comes in, but income less allowable expenses. Without records, you cannot prove your expenses.
3. It makes things easier if HASiL asks. You do not need to send your records with your return form, but you must be able to produce them when asked. Source: HASiL FAQ (Individuals) Q8–Q10.

What records should you keep?

HASiL lists examples of records and supporting documents, including:

• payment gateway statements;
• bank statements / financial statements;
• statements of income from online advertising companies;
• sales invoices and purchase records;
• sales/purchase confirmations by email;
• agreement documents;
• original receipts for expenses claimed.

The full list: refer to HASiL's Digital Business page.

Source: HASiL – Digital Business; HASiL FAQ (Individuals) Q8–Q10.

Claimable expenses — "not all expenses qualify"

As a general rule, expenses directly related to generating business income may be taken into account, but not all expenses qualify to be claimed. Personal expenses generally cannot be claimed, and there are specific rules for each expense category. Because the full list of allowable expenses must be verified against HASiL's latest guidelines, this guide does not list specific categories.

What you can do now: keep all receipts and evidence of business expenses, and separate personal expenses from business ones. That way, you are ready whether or not an expense qualifies.

Basic steps for managing records

1. Open a separate bank account for the business (if possible) so bank statements are easier to read.
2. Issue invoices for every sale/service and keep copies.
3. Keep receipts for every business expense; write the purpose of the expense on the receipt.
4. Record transactions regularly — once a week or once a month — in a book or spreadsheet.
5. Keep all records for 7 years, in physical or digital form. Source: HASiL FAQ (Individuals) Q8–Q10.

Other things to consider

• Tax Identification Number (TIN): If you are not yet registered, you can register through e-Daftar on the MyTax portal. Source: HASiL – Digital Business.
• Annual return: Business income is reported using Form B, with the filing and payment deadline before 30 June for individuals who carry on a business. Source: HASiL – Report Income; HASiL – Tax Obligations for Business Individuals.
• CP500 (estimated tax instalments): Individuals who carry on a business may need to pay estimated tax instalments (CP500). This scheme is subject to HASiL rules — confirm the current year's details with HASiL.

A simple example

Nadia is a freelance graphic designer. Every month she:

• sends invoices to clients (and keeps copies);
• receives payment into her business bank account; and
• buys design software subscriptions (with receipts).

She keeps all these documents in a digital folder by year. When tax season arrives, she can easily prepare a summary of income and expenses, and report her income in Form B.

Frequently Asked Questions (FAQ)

Q. How long do I need to keep records? A. For 7 years. This includes business records and supporting documents. Source: HASiL FAQ (Individuals) Q8–Q10.

Q. Do I need to send my records with my return form? A. No. Records do not need to be sent with the form, but you must be able to produce them when HASiL asks. Source: HASiL FAQ (Individuals) Q8–Q10.

Q. I do gig work through an app (e.g. e-hailing). Am I a freelancer? A. Activities such as e-hailing, dropshipping and influencer work are listed by HASiL as digital business activities. You need to register for a TIN, report your income, and keep records. Source: HASiL – Digital Business.

Q. Can I deduct phone and internet costs? A. Allowable business expenses are subject to HASiL's rules and guidelines. This guide does not list specific categories; verify the full list with HASiL.

Q. What happens if I don't keep records? A. Failure to keep business records can lead to penalty provisions under Section 119A of the Income Tax Act 1967: a fine of RM300 to RM10,000 and/or imprisonment of up to one year. Source: HASiL FAQ (Individuals) Q8–Q10.

Glossary

• TIN — Tax Identification Number; your tax reference number.
• e-Daftar — HASiL's online TIN registration service.
• Form B — the tax return form for individuals who carry on a business.
• BNCP — Income Tax Return Form.
• CP500 — estimated tax instalment scheme for business individuals.
• Bank statement — a document from the bank showing your account transactions.
• Invoice — a document requesting payment for goods/services.
• Receipt — proof of payment received.