It’s bonus time 🤑

It’s the start of a new quarter (October to December). So, I’ve been reviewing my net profit for the previous quarter (July to September) and deciding how much of a bonus to pay myself 🤑

Here’s a simplified look into my bonus-paying process.

Check my net profit

At the end of every quarter, I pay myself a bonus out of my net profit (i.e. income minus expenses) for that quarter.

Finding out my net profit is easy. I just open my accounting software and generate a profit and loss report for the previous quarter.

I calculate my bonus as a percentage of my net profit. But I don’t apply this calculation right away. That’s because I first:

Set aside some profit for taxes*

(*This refers to my business tax and mandatory self-employed Medisave contribution. I’ll collectively refer to them as “taxes” to keep things simple)

Let’s say that in an extreme scenario, I decide to pay myself all my net profit as my bonus. I do this for all four quarters of the year.

This would mean that when it’s time to pay taxes the following year, I might have no money to do so. :’)

I avoid this situation by (1) not withdrawing all my net profit as my bonus of course, but also (2) setting aside a portion of my net profit for paying taxes.

To do this, I use my current income performance to estimate how much Net Trade Income I might declare in my upcoming tax returns. Because this amount affects how much tax I have to pay.

I then divide the estimated tax amount by 12 to see how much I need to set aside every month and multiply this figure by 3 because there are 3 (NOT 4) months in a quarter.

I deduct this retained amount from my net profit. I’m now ready to:

Calculate my bonus!

I usually take 20% of my net profit as my bonus. But this doesn’t mean I get to keep the full 20%. Because I have to contribute some of it to my social security savings accounts (i.e. CPF). :’)

The good news is that I’ve created a spreadsheet that calculates this contribution amount (and others I won’t go into here) for me automatically.

I just need to plug in the relevant figures, e.g. my net profit and the amount I want to set aside for taxes, and then I can finally:

Pay myself my bonus 💰

• I transfer my CPF contributions via the CPF portal
• I transfer my bonus (or what’s left of it after CPF) to my personal bank account
• From there, I do further transfers of my bonus to save and spend parts of it. E.g. I usually donate a portion of it to charity, set aside some for guilt-free spending and then save the rest for things like emergency funds, investments and holidays.

And I usually also write some brief reflections on how business went during the last quarter.

I didn’t expect bonus-taking to involve so many considerations when I first started doing it. But this is part of the unglam, not-so-fun side of being your own boss that people don’t usually see, lol.

So, I just patiently go through the process and look forward to seeing my hard-earned bonus hit my personal bank account.

More freelancer news

Don’t get scammed on Upwork

A writer recently shared his experience of getting scammed on freelance platform Upwork.

Before the start of an Upwork project, the client is supposed to deposit the full milestone or project amount in escrow. The freelancer will receive the payment after they submit the work and the client approves it.

In this case, the client funded only $5 to the escrow account on the pretext that the writer was charging an hourly rate and both of them didn’t know how many hours the work would take.

But after the writer submitted the work, the client went MIA. The writer got his $5 (which became $4.50 after Upwork fees) from the escrow and is still owed $475 until now.

Although the writer reached out to Upwork for assistance, the platform wasn’t helpful. It also seems like this particular client has previously scammed other freelancers.

​Check out the writer’s full story so you don’t fall for a similar scam. Long story short: make sure the client deposits the full amount in escrow before you start work.

​I also wrote about my encounters with possible Upwork scams here if you want to know what other schemes scammers may be up to.

More benefits for Grab drivers coming soon

Ride-hailing company Grab is expanding its benefits programme for its drivers and riders from 1 Jan 2025.

These new perks include:

• Free annual flu jabs
• Subsidised doctor consultations

Only drivers and riders who qualify for the top two tiers of the company’s Emerald Circle rewards system will be eligible.

Grab’s competitor, Gojek, is also planning to offer its drivers more benefits over the next few months.

​Read the news about this here.​