Freelance Finance

Did you start 2012 with the goal of becoming a full-time freelance writer? For many people, the writing part of a writing business is the easy part. The business part – making a living and following the necessary tax rules – is harder. Income & Taxes To be a successful freelance writer, you need to make enough money to pay your taxes, save money, and

It’s a good idea to keep your business finances separate from your personal finances and you might do this by opening a business checking account. Having a separate account makes it easier to track your tax-deductible expenses and helps you manage your money better. But, business checking accounts are a little more complex than personal checking accounts. For some of us, they’re not the best

Some who use Paypal to receive freelance writing payments may have noticed them asking for your Tax ID number. That’s so they can meet the new the IRS rule that requires third party payment processors to send IRS notification if you receive more than $20,000 in gross payments and exceed 200 payments for goods or services in a calendar years. This goes for part-time and

Having an accountant isn’t a requirement for running a successful freelance writing business. In fact, you can save money by doing your own accounting. But, there are certain situations where hiring an accountant makes more sense than doing it yourself. You’re too busy to focus on bookkeeping and other financial tasks. As your freelance business grows or your life outside of work changes, you may

I realized something kind of depressing today. I’m spending 30% more now than two years ago and the extra 30% isn’t being spent on new shoes. I was reviewing my budget earlier and it occurred to me that it’s taking a lot more money to pay for living expenses than it used to. I’m going over the numbers thinking there should be more leftover, but there’s

Some expenses only happen a few times every year: car maintenance, certain insurance premiums, birthdays, holidays, etc. Because these expenses happen so infrequently, it’s hard to budget for them. You may not be able to add a budget line item in your January budget for $600 car maintenance or in July for the $2,000 property tax. You have to prepare for large, one-time expenses, preferably

Have you heard about  Netflix’s plan to increase their prices on a segment of customers who were getting the best of two services for a really great price. It’s kind of old news by now, but here’s the background: Right now, Netflix subscribers can get unlimited streaming and unlimited DVDs (one at a time) for $10 per month. Starting September 1, that same plan will

In a freelancer’s life, when the going gets tough, the amenities get going. We all start looking for things to cut out of our budgets during those “famine” months when income isn’t so great. As you’re calling companies giving them the “I’d like to cancel my account” spiel, make sure you don’t cancel these. Homeowners or Renter’s Insurance Your mortgage company requires you to have

Writers should always have multiple revenue streams, even if they all involve writing. In fact, no single client should make up such a large part of your income that you would suffer if you lost that client. Not only is this good money sense, it’s good business sense. Don’t put all your eggs in one basket as the proverb goes. I can see why a

A health savings account (HSA) is a type of tax-deferred savings account that gives you a tax break on out-of-pocket medical expenses. The plan is only available to individuals and families who have high deductible health plan – a type of insurance that requires you to pay a lot of money out of pocket before the insurance kicks in and pays anything. These high deductible

After Google’s recent algorithm changes, income from at least one of my sites dropped a lot than I could have predicted. Unfortunately, I didn’t see the change coming. It made me a lot more thankful of the famine/feast budgeting method I use. Whenever I have great income months, I don’t spend the extra money, though I’m often tempted to. Instead, I put the extra in

Most self-employed workers and small business owners take the maximum number of tax deductions to minimize the amount of taxes owed. The benefit in the short run is that you don’t pay the IRS as much money. However, there’s a downside that you may not immediately realize – your reduced income may disqualify you for major loans, like a mortgage or small business loan. Tax

You never think a disaster will happen to you and then it actually does. Hurricanes, tornados, earthquakes, house fire, and theft are just a few of the things that can turn your world upside-down in a matter of seconds. Disasters hit us harder because we work from our homes. Are you prepared for the worst? Do you have an emergency fund? When you’re depositing money

Most states don’t offer unemployment benefits for self-employed workers, so if something happens and you’re out of work, don’t expect to get help from your local unemployment office. Instead, it’s up to you to pull some strings to get through the rough patch. Predict the shortage as soon as possible. If you know in advance you’re going have a drop in income, you can prepare.

Yesterday, I found a post on About.com’s Freelance Write mentioning a pending law that would provide payment protection for freelancers and other independent workers. Don’t get too excited. The law is currently in the New York Senate and would allow the New York Department of Labor to get involved in payment disputes for residents of that state. It got me to thinking though – would it help

I’m not used to doing big projects. Most of my projects are either a one-time set of articles or a recurring set of articles. It’s easy to quote those since I do them all the time. Recurring payments are either set up on an automatic subscription or invoiced weekly. When I do a one-time set of articles, I ask for an upfront deposit and the

Starting this month, I resolve to save 5% of my income every month, always, no matter what. If I can consistently pay the IRS, the cell phone company, the electric company, the health insurance provider, etc., there’s no reason I can’t do the same for myself. I do have an automatic savings draft set up, but it’s just $50 a month and I now feel

Don’t let stereotypes fool you. Financial freedom is not about being rich. In fact, you could be a millionaire and still be a financial slave. You know you’re financially free when you’re not worried about money anymore. The path to financial freedom isn’t much different for freelancers. I’d even say we have the ability to get there faster by making certain business choices. So how

The first year I filed taxes, I was so excited I could finally claim church donations on my taxes. Except, it wasn’t really worth it to claim the donation because my itemized deductions were less than my standard deduction. Yep, even though you qualify for a certain tax break, it’s not always beneficial to take it. Deductions allow you to lower your taxable income and

When it comes to unauthorized bank account and credit card charges, the sooner you find out these charges have hit, the better. Checking account and Paypal account fraud are the worst because these charges reduce your available money. Depending on your bank’s policy, you may have to wait until a fraud investigation is complete before you can get your money back. In some cases (mentioned

One of the things that keeps me out of financial trouble is spending only the money I have on hand. Call me skeptical, but I avoid spending freelance money before I actually have it, even when I’ve already done the work. When you’re a freelancer, you can pretty much count on something going wrong with payments at any given time. Here are some rules I

Everyone who’s been freelancing for a while knows that there are ups and downs in a freelancer’s income. Though I don’t like the decrease in cash flow, I sometimes appreciate the downs because it means I get a bit of a break from working so much. Fortunately, even my “down” months bring in enough income to cover all my expenses, so I’m never depressed about

Getting paid to write isn’t always seamless. While you may have some clients who pay you automatically, most of them probably need to be told what to pay, how much to pay, and how to pay. No problem. There are all types of clients and you need to be prepared for all of them. An invoice is basically a bill for the work that you’ve

Earlier this summer, the (U.S.) government passed a law that requires you to opt-in before banks can charge you an overdraft fee. By opting-in, you agree that banks can process transactions that are over your account balance and you agree to pay the associated overdraft fee. You can also opt-out, which means banks won’t process transactions that exceed your balance and therefore your account won’t

Throughout the time I’ve been freelancing, I’ve worked with several different clients. I’ve encountered all types of payment situations. While some clients have sent payments on time without a hassle, not all clients payments have been ideal. As you work with clients, you’ll notice their payment habits fall into one of several categories. “The check’s in the mail.” This is the client who claims they’ve

When you’re a freelancer, your money comes in spurts. You might get $500 this week, $200 next week, and $1,500 the week after that. Some money comes by check, others direct deposit, and others through PayPal or maybe even wire transfer. And you have to keep up with all of it. Managing a freelance income is hard enough. If you’re spending money as it comes

At 22 years old, I was making $55K per year and I was the envy of all my friends. But I was still broke and I couldn’t figure out why. For months, I was unhappy about my job partly because I wasn’t enjoying the money I was making. Then, it dawned on me – the money’s going somewhere, I just had to figure out where

When you make the switch from full-time employee to full-time freelance writer, your health insurance options will change dramatically. If your spouse is still employed, you may be able to enjoy their group health benefits. Otherwise, you’ll be seeking an outside source for health coverage. There are more options than you may believe. I can’t cover all of them extensively in a single post, so