Freelancer Accounting & Tax Advisory

From registration to the first annual return

On the freelance side the most expensive mistakes are made in the first three months and usually noticed in the second year. So the sequence starts with the setup items.

1. Employment income or professional income

   This distinction comes before everything else, because the wrong position invalidates all the planning that follows. Someone tied to one client, working set hours with the client’s equipment, can have the relationship treated as employment even though they issue invoices, and the liability arises on the paying side.

2. Unregistered past years

   For someone who has earned through a platform for years without registering, a new registration does not close the past on its own. The cost of the same history depends on whether it is corrected before any letter from the tax office, after an invitation to explain, or once an inspection has begun. The years are mapped first, with platform, payment provider and bank records side by side, and the registration is opened as part of that plan.

3. Platform fees and VAT

   Upwork collects VAT on fees, Connects and membership charges from users in Turkey who have not entered a tax number, and for an unregistered freelancer that amount can never be offset. Once registered, the VAT is declared by the freelancer instead, which is why the receipt is issued on the gross amount and the fee recorded separately.

4. Registration and the decision to incorporate

   Sole trader or company is less about a turnover threshold than about the character of the income, where the clients are, and how much liability you want to carry. The tax and social security consequences work differently in each, so the decision is made on structure rather than on a number.

5. E-invoicing and document discipline

   Whether you issue a professional receipt or an invoice depends on your registration type, and the wrong document type leaves the cost undocumentable. What a document issued to a client abroad must contain is discussed separately, because the first condition of the exemption is established there.

6. The service export exemption and earnings deduction

   The conditions must be in place from the first invoice: the service being used abroad, the proceeds being brought into Turkey, and both being documented. A file assembled after the fact produces risk instead of relief. The deduction also applies to earnings rather than turnover, so the cost side has to be split correctly too.

7. Deductible costs and their documentation

   Foreign platform, software licence and subscription invoices usually sit only in email and, uncollected, never become deductible. For mixed-use items such as a home office, phone or car, what matters is how the split is made and what is documented.

8. Foreign currency collection and payment provider balances

   How exchange differences are recorded, and the status of balances sitting with a payment provider. The second is often missed: where the earnings must reach Turkey by the filing deadline, a balance left with the provider puts the relief on that portion at risk.

9. Advance tax and the annual return

   Setting up the in-year payment plan and seeing the year-end difference in advance. The most common squeeze on the freelance side is money collected during the year having been spent, leaving nothing set aside for the tax due at filing.

10. Reading client contracts for their tax consequences

    The contract, the invoice and the cash flow have to tell the same story. A service described one way in the contract and another on the invoice, or a payer different from the contracting party, is the kind of inconsistency a review spots fastest.