What one of the things I love most about freelance writing is that I only need a few tools to get my job done. I can work nearly anywhere and any situation. I prefer my laptop and an internet connection, but if I have a pen or pencil and some type of paper, I can be just as productive. Because there are only a few necessary resources for writing, the operating costs for a freelance writing business are low. You can have a successful writing business without spending much, or even any, money on the actual business.
Phone and Internet
Internet service is one of the most crucial aspects for my business. It's absolutely necessary for communicating with clients, researching, and sending my work. I could work at the library, a local coffee shop, or any other business that has the internet, but I prefer the convenience of being able do everything from home.
I don’t use the phone much in my business, but I know that other writers that do. You can use your personal phone for your writing business if your call volume is low. Consider getting a Google voice number to use specifically for your business, especially if you don't want clients to have your personal phone number.
These vary depending on how you market your business. You may have to pay for business cards or brochures. If you have an online portfolio, you’ll have annual domain and webhosting fees, perhaps $70 or more each year.
Computing and software
Thankfully, we don’t need the most advanced computer or the latest version of Microsoft office. A good laptop will cost from $600 to $1,200 and probably last two to four years. Knowing this, you might set aside money each month, $20 to $50 is good, so you can afford to replace your computer when it's necessary.
Once you purchase a document processing software, it can outlast your computer. I'm still using the 2008 version of Word, which is fine for the clients who prefer their work in .doc or .docx format. There are also free options for creating documents, like Open Office and Google Docs.
You can do your own accounting or you can hire an accountant. Doing it yourself is cheaper, assuming you do things right. Doing it yourself, you'll still have tax preparation fees, unless you do your taxes by hand using paper forms. You’ll also pay an additional cost if you use an accounting software for invoicing and billing.
Payment processing fees
If you accept payments through a third-party processor, you’ll typically have to pay a percentage of each transaction. For example, Paypal charges 2.9% + $0.30 for transactions. Paypal fees are slightly less if your monthly sales are more than $3,000.
All workers pay taxes, but self-employed workers are required to pay self-employment taxes on net earnings. The Temporary Payroll Tax Cut Continuation Act of 2011, makes the self-employment tax rate 13.3% for 2012 (as it was in 2011). Otherwise, the rate is 15.3%. We have to pay self-employment tax in addition to federal, state, and municipal taxes.
You might subscribe to magazines or regularly purchase books within your niche. If you want to lower that cost, you can stay up-to-date by borrowing books and magazines from the library or by reading on the web.
Overhead for freelance writing is very low, which is good because it means you get to keep more of the money you earn. What other business-related expenses are fellow freelance writers paying?