Guest Post from Vanessa Lang: Tax Deductions for Freelancers

As a freelancer, it is very important to pay close attention to all of your tax information. If you aren’t careful, you could easily get audited. You should know by now that you will need to report absolutely every form of income you have received, but you may not know that there are quite a few tax deductions you are entitled to as well. The following are just a few of the many tax deductions you may be able to use as a freelancer.

• Books, periodicals, DVD’s, and other materials used for research
• Any type of entertainment directly related to your research or writing (golfing for a golf piece, seeing a movie to review it, etc.)
• Magazine subscriptions
• Blog expenses
• Memberships to clubs and affiliations related to your business
• Internet access fees
• Equipment (digital camera, web camera, computer, flash drives, printer and ink, other computer equipment, etc.)
• Office supplies (paper, pens, paperclips, etc.)
• Office furniture (To be used only for business)
• Business phone line used just for business (Always remember to keep your business and personal expenses separate.)
• Computer software (for your business and for your taxes/accounting)
• Business cards and other stationery
• Home office expenses (Deduct a part of your rent or home payment for your home office. Also, include water, insurance, heating bills, etc. in the deduction.)
• Advertising costs
• Travel and hotel expenses on business trips
• Health insurance if you are self-employed
• PayPal fees
• Annual fees on a business credit card (Yet another way to keep your business and personal expenses separate. Just make sure you are using this card only for business expenses.)
• Business mentor (Some of these services are paid and some are not. If they do require a fee, you can deduct it.)
• Clothing (You can’t deduct everything, but if you need to make sure you look nice for a client, you can deduct the cost of a nice suit or dress. Just don’t try to buy something really expensive and unnecessary expecting to deduct the cost later.)
• Donations to a charity or other charity work (This one can be tricky, so make sure you check out the rules before you deduct.)

While all of these deductions may seem great, it is very important that you don’t try to abuse the system. You should always assume that the IRS already knows everything about you, so you should never report something that shouldn’t be reported. For example, you should not try to report a Rolex watch because you want to impress your clients. This is not necessary and could cause suspicion with the IRS. You should also make sure to disclose all of the information that you are supposed to disclose. In order to do this, you will need to keep all of your receipts handy and organized to prove the necessity of these deductions.

About the Author

Vanessa Lang is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about factors to consider before getting a payday loan.

Guest Post from Danny Ashton: Five Gadgets Every Freelancer Needs

Note from Lillie: The recommendations in this post come from the guest poster, Danny Ashton. I am not familiar with these gadgets and have no opinion of their usefulness.

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Being a freelancer is a great way to earn a living. However, there are a number of little gadgets that can help make your freelancing career go a bit smoother. Below is a list of five computer gadgets that you can use right away.

1. LessTimeSpent.com

They say that time is money, and that is certainly true for the freelancer. It is important to accurately keep track of your time, because minor mistakes with your time tracking could end up costing you quite lot in unpaid money by the end of the year. LessTimeSpent.com is a great way to accurately keep track of your time and the tasks you have completed.

Price: Free

LessTimeSpent

2. SimplyBill.com

As well as keeping track of your time, you need to be able to invoice your clients for the work you have done. You don’t want to waste time getting bogged down with software that is too complicated or time-consuming to use. SimplyBill.com enables you to easily send out attractive invoices to your clients with minimal fuss. Let SimplyBill.com take the time and hassle out of your invoicing.

SimplyBill

Price: Free Version (3 invoices, 15 quotes and 10 client max) – full details

3. BackPackIt.com

If you are working on team projects, it is important to be able to easily share documents and information with your team members. BackPackIt.com enables you to keep all your project’s documents in one central location all the time. So, no matter where you are, you can access the relevant documents with just a few clicks. No more having to shuffle through pieces of paper from your briefcase.

Backpack

Price: Basic = $24/month

4. RememberTheMilk.com

One of the most important things when you work freelance is being able to organize your day. But if you are juggling many different tasks throughout your day, it’s not good enough just to have loads of post-it notes or scraps of paper lying about. RememberTheMilk.com is a central online location where you can easily organize your tasks, and makes the whole process an enjoyable experience.

Remember the Milk

Price: Free

5. Scirocco Take a Break

If you work as a freelancer, you don’t have the structure of set hours and routines that you would have if you were working in a standard office. While most freelancers work on a computer, spending too long in front of a computer can be bad for your health. Take a Break is a little program which prompts you every hour to take a 10-minute break away from your computer. This prevents you from spending hours and hours hunched in the same position, which can lead to back and neck pain and also eye strain.

Take a Break

Price: Free

Conclusion

These five gadgets/websites won’t make freelancing a walk in the park, but they can help to make your day that little bit easier. I would suggest trying just one of these gadgets at a time and testing it to see if it improves your work day. Not every one of these gadget will work for everyone or every situation, but it’s worth giving them a go. I hope this list will open your eyes to the possibility of gadgets that can take away the strain of being a freelancer.

About the Author

This guest post was written by Danny Ashton who writes about Android Tablets on his blog: www.androidtabletfanatic.com (if you want to ask him any gadget questions, feel free to email: androidtabletfanatic@gmail.com)

Disclaimer: The author contacted me to write a guest post. The opinions expressed are his; none of the links are affiliate links.

How to Handle Your Finances While Freelancing — Guest Post by Jane Sanders

Working as a freelancer can be a rewarding and exciting way to supplement your income or even become its sole source. You’ll have complete control over your work and scheduling, which are major incentives for most freelancers. Still, many are concerned with the potential lack of income stability while freelancing. To handle this, you will essentially have to become your own financial planner.

Know Your Financial Picture

The first step in handling your finances while freelancing is to have a clear picture of your expenses, debts, and other financial obligations. These include long-term planning such as retirement saving, home purchase, and student loan payoff. Don’t forget to plan for work-related expenses such as office supplies, space rental, and travel to and from client meetings. The first step in handling your finances while freelancing is to understand your financial pictures.

Keep Your Expenses Low

Freelancing can be very unpredictable at times. Losing a major client can put a huge strain on your finances. Be prepared to handle the unexpected by budgeting accordingly and maximizing your savings during profitable periods. Take advantage of free service from the public library such as internet access, reading materials, and classes. Consider joining a co-op of other freelancers to pool expenses.

Keep Accurate Records

Keeping track of your contracts, invoices, and payments not only helps you manage your money while freelancing, it is very valuable when attempting to take on debt such as a mortgage. Because freelancing is non-traditional, lenders want to know that you have a solid financial outlook. This requires extensive documentation, such as as profit and loss statements, ledgers, and invoices.

Take Advantage of Freelancer Benefits

There are many benefits that are available to freelancers at nominal charges. Organizations such as the freelancer’s union offer low-cost health insurance plans, retirement plans, and credit union memberships. Take advantage of these programs that are designed to help you save money while you perform your craft.

Network and Gain Clients

Most freelancers will tell you that the key to managing your finances is to have enough clients to keep you afloat in the event that you lose a major client. Attend networking events geared toward freelancers and meet other people in your field. Diversify your portfolio of clients to make sure you have adequate cash flow. Many freelancers have a mix of high- and low-paying clients that keep the money flowing on a regular basis.

Grab a Side Hustle

Many freelancers moonlight at traditional part-time jobs to supplement their income. You can still do what you love while enjoying the stability of a relatively stable paycheck. Some freelancers work as contractors for employment agencies during slow periods.

There are many ways to manage your finances while freelancing. From pooling resources with other freelancers to taking advantage of low-cost benefits, there’s no reason your finances should suffer while you do what you love.

This article was contributed by Jane Sanders from Debt Management. Visit her site for tips on choosing the right debt management service.

Looking for a Job?

Recent comments on my Job Search series from about a year and a half ago suggest that with the current high unemployment, job seekers could benefit from this information today.

If you’re seeking employment, I encourage you to read the entire  series. Those posts include practical and detailed information about resumes, cover letters, and job interviews.

I’ve been an entrepreneur or freelancer for most of my working life so my personal experience of looking for a job is limited. However, I hired many employees during my business career, so I understand hiring from the employer perspective. One of my clients is a career transition coach, and I have worked with her on resumes, cover letters, and job interview preparation for many of her clients in addition to individual clients of my own. I know this advice works.

As important as it is for you to know how to write a resume (or hire me or someone like me to do it for you), it’s even more important that you have the right mindset.

Here are seven tips to help you succeed in your job search:

• Realize that the job search is a process. You may have to submit many resumes to get one interview. Then you may have to go through interviews with several companies before you find a serious prospect, and you may have to go through several interviews with one company before you get the job. Generally the process is longer for jobs at the top executive levels, but you’re not likely to get hired immediately for any job.
• Remember that employers want to know what you can do for them. They aren’t going to hire you because you need a job but because you can solve a problem for them. Always think and present yourself in terms of what you have to offer.
• Understand that most jobs aren’t advertised. Network constantly and research the industry and companies you are interested in to find the hidden unadvertised openings.
• Stay in job search mode wherever you are. Be prepared to tell everyone you come in contact with what kind of work you seek and how you can contribute to an employer. Even when you’re not talking, always act as you would if your ideal boss might be watching you—because he or she could be.
• Recognize that networking is a two-way street. Often job seekers make contacts strictly to get help; help others first, and they’ll be more apt to help you. The more people you help, the more people you have willing to help you.
• Remain positive and confident. It’s easy to get discouraged when you’ve been out of work a while and all you hear on the news is how bad the economy is. But you’ll more attractive to employers, happier, and more successful if you remember past accomplishments and expect future successes.
• Smile and say “Thank you.” Smiles are contagious and make everyone—those who smile and those who see the smiles—feel better. We all like to be appreciated, and many job seekers don’t put forth the effort to show appreciation. Thank everyone who gives you a lead or a referral and everyone who interviews you—even if you don’t get the job. Hand-written notes are rare and will make you stand out among job seekers. And when you stand out in a positive way … you just might get that job!

photo credit: woodleywonderworks

Freelance Rates Survey Results

 A few weeks ago, I discovered that freelance editing rates is the most popular search term people use to find this blog and the most popular post is How Much Will It Cost? Average Freelance Editing Rates. I decided to update the information in a new series and created an online survey to gather information.

The results of the survey are available as a PDF download. Only 45 people responded, and most of them were writers rather than editors. I’m not sure how statistically significant the results are, but political polls make headlines with only a thousand or two responses representing millions of voters.

The report includes the following:

• The data as compiled by Survey Monkey: each question with the number of responses and the corresponding percentage for each multiple choice answer
• Comments submitted on each question
• A summary of the results by the length of time the respondents have freelanced—the time frames were compressed in the report because of the small number of respondents
• Charts showing the breakdown for the length of time (5 or fewer years, 5 to 15 years, and more than 15 years) and for the kind of freelancer (writer, editor, writer-editor)

Highlights of the results:

• There is a wide range in freelance prices, from less than $5/hour to more than $150/hour.
• The results are skewed toward less experienced freelancers. Nearly 1/4 of the respondents have freelanced 1 to 5 years part-time; more than 15% have freelanced less than 1 year part-time.
• More than half are primarily Web writers; only 1 is an editor only; 7 are writer-editors.
• Regular clients and referrals are the primary ways the respondents find work, but other sources are also important.
• About 22% charge an hourly rate; an equal number charge by the project.
• Three respondents charge less than $5/hour. Two charge $100 to $125/hour, and one charges more than $150/hour. The most popular rate is $20 to $30/hour.
• Rates seemed more closely correlated to length of time freelancing than whether the freelancer is part-time or full-time. All those charging less than $5/hour are part-timers who have freelanced less than 5 years. The writer who charges more than $150/hour is also a part-timer (10 to 15 years as a freelancer).
• Nearly 2/3 require clients to request a quote and do not post their rates.

I’m not a statistician; in fact, I’m not even good at math. Let me know if you find an error in the report.

Look over the survey results. Do you think the numbers have any statistical validity? Did anything either surprise you or validate your current ideas about freelance rates? Is there anything in the results useful to you, either as a freelancer setting your own prices or as a client wondering how much work will cost? Please leave your thoughts in a comment.

In the next installment in this series (in a week or two), I’ll discuss how to go about setting prices.

Updated 12/3/09 with two points:

• I have become extremely busy and don’t have time to devote to the research and writing needed to continue this series right away. The series will resume  in January.
• One question I did not ask that I should have was where the freelancer was located. Someone suggested that I can look up the IP addresses of the respondents and correlate them to a country. I will attempt to do that when I have more time. Perhaps that will give a better picture—$5/hour is less than minimum wage in the US but is respectable pay in some parts of the world.

photo credit: pinguino

Freelance Rates Survey Ends Next Week

I’ve been running a freelance writing and editing rates survey for several weeks but haven’t had a great deal of response. My goal is to have statistically significant information for my two-part series scheduled for the third week in November.

The survey is anonymous, quick, and easy. There are only six multiple-choice questions:

How long have you freelanced part-time or full-time?

What kind of freelancer are you—writer, editor, both?

How do you find freelance jobs?

How do you price your work—hourly, project, bid, etc.?

What is your standard hourly or word rate?

Do you post your rates?

An optional seventh question gives you the opportunity to add comments and further information.

If you are a freelance writer or editor—part-time or full-time—and have not already done so, please take the survey by Wednesday, November 12. Then come back the following week for the series on pricing, including the results of the survey.

Freelance Rates Survey Reminder

I’m planning a series on freelance writing and editing rates. Freelancers want to know what others charge, and potential clients want to know how much to expect a project to cost.

As mentioned in a previous post, I am trying to collect real-world data from freelance writers and editors through a short anonymous online survey.

There are only six multiple-choice questions:

How long have you freelanced part-time or full-time?

What kind of freelancer are you—writer, editor, both?

How do you find freelance jobs?

How do you price your work—hourly, project, bid, etc.?

What is your standard hourly or word rate?

Do you post your rates?

An optional seventh question gives you the opportunity to add comments and further information.

The more responses I get, the more valuable the information will be. If you are a freelance writer and/or editor (part-time or full-time), please complete the survey and encourage fellow freelancers to do the same.

Freelance Rates Survey

Recently I wrote that freelance editing rates is the most popular keyword phrase that brings visitors to this blog. When I realized that one post on this subject has more than 300 visitors per month, I decided it was time to write more on the topic.

For an upcoming series, I would like to have some feedback on how freelancers price their writing and editing services.

I have compiled a simple anonymous survey that asks the following questions:

• How long have you freelanced part-time or full-time?
• What kind of freelancer are you—writer, editor, both?
• How do you find freelance jobs?
• How do you price your work—hourly, project, bid, etc.?
• What is your standard hourly or word rate?
• Do you post your rates?

There is an optional question to share any additional information that you think will be helpful. The survey should take only a few minutes as the six questions are all multiple choice.

Click here to take the freelance editing and writing rates survey

Please take the survey yourself and pass the link to every freelancer you know. The more responses I receive, the more accurate the information in my series will be.

Freelance Writers Appreciation Week

Just like last year, Kristen King at Inkthinker brought Freelance Writers Appreciation Week to my attention. Visit her blog this week to read posts about what she appreciates about being a freelance writer.

I appreciate many things about being a freelancer, most of all, being able to work from home on my own schedule doing what I love.

Secretaries get flowers from their boss on  Secretary’s Day. What do freelancer writers get during Freelance Writers Appreciation Week? Our clients don’t even know about the event, but I’m blessed to have clients who appreciate me even when it’s not a special occasion.

To all freelance writers, here’s a hug of appreciation.

Barter—Part 4: How Does It Compare to Cash?

Question from a reader: Would you ever perform a service for “trade dollars” when you can get an equivalent amount of “real dollars”?

Answer: Of course, if there is a choice, cash is usually preferable. However, I have accepted trade dollars when I could have been paid in cash. For example, the writer who was originally referred to me by a trade exchange periodically has trade dollars to spend. I always accept trade at those times because he would not be my client if the trade exchange had not referred him to me. Any time I get business from the trade exchange, I accept trade dollars from that person/company for future business. Also there are times that I am trying to build my trade dollar balance for a specific purchase (such as when I needed extensive and expensive dental work) so I would choose trade dollars over cash dollars.

I first joined a trade exchange more than 20 years. I was quickly hooked on barter and have been happily trading ever since. Just like cash business, sometimes I want more trade business … and sometimes I have more than I handle. A milder version of the notorious feast or famine cycle of freelancing. But, like freelancing, I would never give up bartering.

This whole series resulted from an e-mail exchange with a reader who wanted to know more about barter. If you want to know more, ask your questions in comments so everyone can read the replies. Even if you don’t have questions, read the comments—there are excellent ideas there from readers.

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