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.

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.

International Freelancers Day Conference Replays

Several readers left comments on my post about International Freelancers Day expressing regret that you missed the conference.

Now you can replay the video of every session, and the only cost is registering your e-mail address.

If you have already registered, you received an e-mail with a direct link to all the videos. If not, simply go to the replay page and sign up for free access to all 24 presentations.

Added 2/5/11: Even though the conference is over, check out the site as these folks are offering regular video training sessions for freelancers.

Today is International Freelancers Day

In a recent post, I told you about International Freelancers Day. Today is the first day of a two-day free online conference for solo professionals. Some of the best freelancers around will be sharing their expertise throughout both days. You’re bound to find several sessions that can help advance your freelancing career.

Added 2/5/11: Even though the conference is over, check out the site as these folks are offering regular video training sessions for freelancers.

International Freelancers Day – September 24, 2010

International Freelancers Day is actually two-day online conference. The event features 25 speakers in 24 sessions (45 minutes each) on Friday, September 24 and Saturday, September 25, 2010.

You must register to attend the event, but registration is free, and you will have access to replays of the presentations if you can’t attend all the sessions live. Registration also gives you access to six pre-event videos.

The event bills itself as “the biggest ever free online conference exclusively for solo professionals.” The lineup of speakers is impressive, and the topics include many important to the success of any freelancer. The Web site includes the complete schedule and speaker bios.

Added 2/5/11: Even though the conference is over, check out the site as these folks are offering regular video training sessions for freelancers.

Building Long-Term Client Relationships – Part 6: Nine Tips for Success

In previous posts, I’ve described how I build long-term client relationships. My goal was to provide examples that might be helpful to other freelancers. This final installment in the series will summarize the key points from the previous posts in nine tips:

• Focus your business on providing services that you enjoy, that you are good at, and that your clients want and need.
• Begin with the end in mind. Start off each client relationship in a way that will lead to a long-term, mutually beneficial relationship.
• Operate with total integrity and honesty, and always treat every client with respect.
• Take time to get to know each client and understand his projects. This will build confidence and trust in your client as well as making your job easier.
• Offer suggestions and expert advice that will be helpful to your client.
• Become a valuable resource to your client. If you don’t perform the service the client needs, consider outsourcing it. At the very least, offer a referral to help the client find a reliable service provider.
• Stay in regular contact with your client, whether you are working on a project or not. E-mailing interesting and useful information periodically will benefit the client and keep you top of mind.
• Strive always to make the client’s life easier.
• Treat each client, even on a small job, as a valued long-term client because every client has the potential to become a long-term client and to refer other long-term clients to you.

My long-term clients are the foundation of my freelance business, and I love to hear them say I seem to be able to read their minds.

I hope these tips have been helpful to you. Please share your own tips for building long-term client relationships in comments.

[tags]long-term client relationships, freelancing[/tags]

Building Long-Term Client Relationships – Part 5: Example – The Relationship Continues

I’m sharing the story of how I developed a long-term relationship with a hypothetical client, Susan, who is really a composite of several clients. As in the previous post, I’ll share my client experience and intersperse comments about how a long-term client relationship developed.

Now that Susan’s book was edited, we discussed the next steps. She had read the Self-Publishing Primeras well as several of the resources listed in the primer. She had registered her company name, got a mailbox and a business phone line, and opened a business checking account. Although she had the information she needed to purchase her ISBNs, she gave me her credit card number and asked me to place the order online. She didn’t mind making phone calls or even going to the county office to register her business name, but she wasn’t comfortable placing an order online.

Susan had developed enough trust in me during the editing process that she was more comfortable giving me her credit card information than placing an order online herself. By respecting the confidentiality of her information and ensuring the order was placed properly, I reinforced her trust.

I offered to provide Susan with a list of cover designers, formatters, and printers. However, she asked if I would get quotes and give her my recommendation in each category. Along with the quotes, I showed her samples of work done for other clients. I gave her a quote from a formatter who had many years of experience in book layout, and I gave her a quote for me to do it. The price quotes were the same, and I pointed out to Susan that the other person had more experience than I did. However, she said she preferred for me to do because she knew me and trusted me.

She chose the cover designer and the  printer that I recommended. In comparing printers, I had asked for quotes for 500, 750, 1000, 1500, 2000, and 2500 copies. I shared with her in general terms – without identifying individual clients – the quantities of books my other clients typically order. She should consider the following in determining how many books to order, I suggested: the unit cost, the total cash outlay in relation to her budget, her available storage space, and the amount and kind of marketing she intended to do. I also mentioned that other clients who had written similar books had discovered new information they wanted to add or other changes they wanted to make in a second printing, which was much easier if the original order wasn’t a huge quantity.

Susan had a statistician help her determine the number of descendants of her ancestor who was the main character. She learned there were probably at least 10,000 living descendants, and she expected that descendants of other characters in the story as well as people interested in history of the period would also be potential book buyers. Although the unit price was the lowest for 2500 copies, Susan decided that 1000 copies was the best quantity for her.

Giving Susan the information she needed to make the right publishing decisions showed her I was working in her best interests and continued to build a collaborative working relationship. Susan felt that I was as interested in the success of her book as she was.

Throughout the process, I was available to consult with Susan on any aspect of self-publishing. I gave her feedback on the cover design and proofread the text in final format. We discussed the timing of the release of the book and scheduled it in time for Susan to have copies available for a family reunion. I suggested a news release about the book; Susan agreed, and I wrote a release for online distribution as well as for local media and the media in the community where the family reunion would be held.

I registered Susan’s domain name, provided Web hosting, designed her Web site, and installed the shopping cart. To encourage early orders, she took my advice to offer a free e-book that could be downloaded immediately when someone ordered a print book. Susan asked me to create a business card with her contact information on one side and the book cover and blurb on the other. I also made up a pre-order flyer that we sent to Susan’s family mailing list. At my recommendation, she offered a discount for books ordered in advance for her to deliver at the family reunion. We started a blog on her site – Susan sent me draft blog posts in e-mail or dictated them over the phone.

Susan began to think of me first for whatever advice or services she needed for publishing or marketing her book. By this time, she felt that I knew her book as well as she did so I could do a better job of just about anything to do with the book than someone who had not spent months getting to know Susan and her book.

Since the book was published, Susan has continued to call on me – to send out review copies of the book; to register with Amazon.com and with a distributor; to submit her book to contests and promotional sites and her blog and Web site to directories; to maintain her Web site and to edit and post blog posts; to send news releases about booksignings; to make the initial contact for potential appearances …

Susan doesn’t have to learn to do these things herself, and she doesn’t have to look for a different provider for various projects she wants done. She is confident that if I can’t provide the service myself, I can recommend a reliable person or company.

I stay in regular contact with Susan and all my author clients. I have a distribution list in Outlook, and whenever I find something that I think would be interesting or helpful I sent the e-mail to myself with a BCC to my author client list. A marketing tip in a blog, a new promotional opportunity, statistics on the publishing industry, anything they might want or need to know. Often Susan and several other clients respond to these messages asking me to take advantage of the promotional opportunity for their books.

For example, an acquaintance e-mailed me asking for donations for a silent auction at a gala fund-raising event for a literacy organization. They wanted to keep the auction items related to books and reading and would provide good publicity for the donors. I passed the request along to my author clients, and I’m assembling a number of donations – individual books and a gift basket of several books. The literacy organization benefits from the income generated at the auction, and my clients benefit from the publicity.

The messages provide valuable information to my clients, and the regular contact keeps me top of mind. Several of my author clients give me anywhere from as little as two or three hours work to as much as thirty  or forty hours in a given month, depending on where they are in the publishing process. I keep a running tab of the hours worked (not charging for a quick phone call or e-mail but rounding everything else to the nearest quarter hour) and invoice monthly for all the work done.

Two recent comments, the first in an e-mail and the second in a phone call, exemplify my long-term client relationships:
“You make my life easier.”
“You know me and my book so well it seems like you can read my mind.”

In the final installment of this series, I’ll summarize tips to build long-term client relationships. Ask any questions or make any suggestions of tips of your own in comments.

[tags]client relationships, freelancing[/tags] 

Building Long-Term Client Relationships – Part 4: Example – The Beginning

I’ve talked in general about my business model. Now, let’s discuss my long-term relationship with a single client. To maintain client confidentiality, my example will be a hypothetical writer who is a composite of several clients. I’ll share my client experience and intersperse comments about how my actions helped create a long-term client relationship.

Susan was referred by a writing consultant friend who told me Susan was looking for an editor for her novel based on her family history. When Susan called, she said that another client had also recommended me.

Since two different people that she respected had referred Susan to me, she already had a favorable impression of me. Starting off with positive expectations is an excellent beginning for a long-term relationship.

I asked about her writing experience and learned this was her first manuscript. Susan had not joined a writers groups, taken a class, or done anything else to develop her writing skill. She wanted to get the book published, but she didn’t know anything about the publishing industry.

Taking the time to learn about Susan’s background guided me in how to best meet her needs.

I told her how difficult finding a traditional publisher is and explained that an edited manuscript would have a better chance of being published than an unedited manuscript … but the odds were still heavily against traditional publication. I also warned her that she might hear some things from me that she didn’t want to hear. If someone is going to pay me for my advice, I’m going to give the very best advice I can. If the writer is looking for someone to tell them their words are golden, I’m not the right editor for them.

Absolute honesty builds trust and confidence. Aspiring writers, like many other people, often hear all kinds of false promises and don’t know who to trust. Telling the truth is in the client’s best interest.

After Susan assured me she was serious about publication, I sent her information about how I work with clients along with a short questionnaire. Susan answered the questions - genre, word count,  how much self-editing had been done – and returned the questionnaire with a synopsis of the novel and five pages for a sample edit.

I edited the five page sample, using Word’s Track Changes feature and including lots of comments to explain why I recommended specific changes. Then I used my experience with the sample and the information Susan had provided to estimate how long the project would take.

Time and effort to ensure a good understanding of the project  by both parties before the prospect becomes a client pays off down the line.

I also added a general critique pointing out recurring problems: dialogue was written incorrectly (no paragraph breaks between speakers and improper punctuation) and there were numerous run-on sentences. If Susan would use the examples I gave to make corrections throughout the manuscript, I would revise the price quote since editing would require less time. I also suggested she would benefit from joining a writers group and getting critiques from other writers before hiring a professional editor.

Giving the prospective client alternatives that can save her money gives her the opportunity to find the services that meet her budget and also builds trust.

Susan decided she would rather pay me to edit the manuscript in its current state than spend more time and effort herself. She signed the agreement and sent me the manuscript and a deposit for the first two hours of work.

I edited the first chapter and returned it to Susan with an invoice. Again, I made extensive use of comments to explain why I suggested changes to ensure she understood my reasoning. My goal was to keep Susan’s voice and excellent story but correct grammatical errors and make the book more readable. Susan approved the revisions and sent a check for the balance due. This process continued one chapter at a time until the book was finished.

Working on one chapter at a time ensured that I didn’t get off track and that payments were made on time.  The frequent contacts also built the relationship.

While I was editing the manuscript, I encouraged Susan to learn more about her publishing options. I sent her my Self-Publishing Primer. Periodically, I e-mailed links to helpful articles or blog posts, and I recommended several resources on publishing and marketing. Susan determined that her ideal market was her extended family members, people descended from the main character in her novel, an ancestor from several generations back. She decided she could reach that niche market better than a large publisher targeting a mass market; therefore, self-publishing would the best route for her.

Providing useful resources to help the client make an important decision strengthened the relationship and built trust.

After the first round of editing was done, Susan took my advice and found three readers to give input on the manuscript. Two family members and a history buff could offer perspectives that I could not. To encourage the readers to respond candidly without fear of hurting Susan’s feelings, I sent the manuscripts and asked that the feedback be sent directly to me. Susan would know what they said only if they told her. We found that Susan had made a factual error, which the history buff pointed out. I verified the information and made the change.

Going the extra step to solicit other opinions produced a better product and continued to build trust.

I did a second edit of the entire manuscript. Then, since Susan is local, she came to my office for several hours a day for several days in a row for a read-aloud edit. Reading aloud reveals awkward phrasing and errors that were missed on the earlier edits.

Spending so many hours working together on the manuscript created a stronger relationship.

That completed editing Susan’s manuscript, but it didn’t end the relationship. The next post will cover what happened next.

Share your suggestions on building long-term client relationships in comments.

[tags]client relationships, freelancing[/tags]

Building Long-Term Client Relationships – Part 3: My Business Model

My business model won’t work for everyone; in fact, it probably won’t work for anyone reading this. My goal is for you to find some useful information that you can adapt to fit your own business model.

Although, my blog title says I’m a writer and editor, my services are actually much broader than that. I’ve toyed with several ways to describe what I do: virtual assistant, author’s assistant, book midwife, writer’s right hand … but none cover the full scope of what I do.

When I first started freelancing I took every job that I could get. I spent several hours and interviewed four sources (one in person and three by phone) for a local business newspaper. I helped a professional in solo practice to organize files. I edited doctoral dissertations and legal documents – at least one lawyer wanted ordinary people to read and understand their contracts. I wrote letters of complaint and business proposals. Some of these projects were fun … others merely boring. I never accepted another assignment from the business newspaper; $130 for an article that took several hours to research and write wasn’t a good use of my time, especially when it seemed like work.

I wanted to do things I enjoyed and still earn a decent income. So I started turning down jobs that bored me, such as academic papers. I started letting people know I would accept virtual assistant work. I know some writers don’t want to do that kind of work; in fact, they hire virtual assistants themselves. But I enjoy doing a wide variety of things, and I like to organize and research.

In the 12 years I’ve been freelancing, I’ve discovered that I prefer to work with a few clients during a variety of tasks than to specialize in one kind of work for many clients. Now, I have a handful of long-term clients, and I do just about whatever they ask me to do. Sometimes I’ll work only a few hours for a client; other times I’ll work more than 80 hours in a single month for a single client. I’ve learned many new skills - I say “Yes, I’ll do it” if it sounds interesting … whether or not I know how at the time.

I charge by the hour and bill at the end of the month for the hours worked during the month. Although many freelancers advise against charging by the hour, charging by the project would be too complicated for me since some my “projects” are to file a few documents and delete a few e-mails.

Several of my clients trust me with their credit card information so I can register them for a paid Web site or make purchases for them online. One client gives me remote access to a computer in her office so I can organize her files and e-mails.

Perhaps a list (in no particular order) of some of the tasks I have performed in the last couple of months for my long-term clients will give a better picture of what I do:

• Upgraded WordPress on six client blogs
• Created YouTube account and uploaded videos
• Edited and posted blog posts drafted by clients and either sent to me in Word or dictated over the phone
• Updated several Web sites
• Searched for an obituary and ordered the archived obituary from the Web site
• Formatted a book for printing; created e-book
• Wrote news releases and edited releases drafted by clients; submitted releases to media and PRWeb
• Modified logos to fit the Revolution theme header space
• Changed photos to grayscale, changed resolution, and enhanced for print book; laid book out in InDesign
• Resolved formatting problems in Word and Excel documents
• Negotiated with cover designer, ordered cover for client’s book, and made payment
• Created bar code for book cover, made payment for online service, and sent bar code to designer
• Wrote back cover blurbs for books
• Created and uploaded advertising flyers and posted property descriptions for real estate site
• Developed book of sample documents for client to give to clients
• Researched a topic for a consultant and drafted a plan of action; after several rounds of editing, finalized the document as PDF for my client to submit to his client
• Performed cost analysis and created Excel spreadsheet for consultant to use in calculating prices to quote in a proposal
• Drafted survey questions based on previous surveys; after client’s edits and final approval, created the surveys online, sent to participants, and compiled the responses
• Edited and formatted resumes
• Drafted business proposals based on previous proposals for similar projects by client, along with research and additional information from client via phone, fax, and e-mail; after several rounds of back and forth editing, finalized the documents and created PDF
• Created PowerPoint presentations based on information provided by the client
• Organized files and e-mails on client’s computer, deleting unnecessary documents and ensuring that folders for each project contained complete information
• Edited employee handbook, including making recommendations for the policies as well as the structure of the handbook
• Created Web site, purchased shopping cart service, set up shopping cart, and uploaded products
• Advised clients on publishing and writing
• Recommended a company style guide to a client; compiled style guide after receiving approval
• Composed reports for consultant and finalized after several rounds of edits
• Proofed printer’s proof of book and submitted changes to the printer
• Listed books at Web sites; drafted answers for author interviews and promotional questionnaires about clients and their books
• Created advertisements (post cards as well as magazine, newsletter, and program ads)
• Worked with an author on development of his manuscript; copyedited

Some items (such as “sample documents”) are deliberately vague to protect client confidentiality. I’ve also mixed up the list so the work for individual clients isn’t listed consecutively. My purpose isn’t to describe specific projects and clients but to give you a scope of the kinds of things I do.

Next, I’ll give you the perspective of how I work with an individual client.

[tags]client relationships, freelancing[/tags]

Building Long-Term Client Relationships – Part 2: Getting Started

If you want to build a long-term relationship with a client, you need to start off correctly.

The best way to get long-term clients is by referrals from existing clients. People who know – and like – your work are the most effective at referring other people who are apt to also like your work. Your current clients also know your personality and probably won’t refer people who aren’t a good fit.

However, if you aren’t getting enough work from current clients and referrals, you may have to do some marketing to find new clients. Although I don’t recommend that you commit to a long-term relationship immediately, I do suggest that you think about whether each prospective client might turn into a long-term business relationship.

As Stephen R. Covey wrote in The Seven Habits of Highly Effective People:

Begin with the end in mind.

Not every client will develop into a long-term client, but if you don’t begin as if they will, you can begin in a way that doesn’t produce the end (a long-term relationship) you’d like.

For example, if you are bidding on a freelance site, you might think twice about submitting an extremely low bid to “get your foot in the door.” Chances are, if the client selects you on the basis of price rather than other factors, price will continue to be his most important criteria. Seldom can you start off with a low price and expect to earn substantially higher rates from that client on future jobs.

However, in a seeming contradiction to what I’ve just said, I give free samples to prospective editing clients. The sample is small – about five pages of a book-length manuscript. However, it serves two important purposes: 1) it gives me an idea of both how much work will be required and how the client will be to work with, and 2) it gives the potential client an idea of how I work and what suggestions I will make to the manuscript.

The small amount of time spent doing the sample edit is an investment in determining whether the client is a good match for my services. Some self-publishing clients are serious about publishing and want to take the right steps to make their book a success. Unfortunately, there is a large number of writers who decide to self-publish because they want to do it their way, which means not taking advice from anyone. They think they want an editor, but when the editor makes suggestions for major changes – sometimes even for minor changes – they want their beautiful prose to stay just as they wrote it. Although I don’t expect my clients to take every suggestion, I expect them to be willing to consider the recommendations I make and discuss any differences of opinion. If they aren’t open to making changes, they’re not a good client for me. That free edit has screened out a lot of people I wouldn’t want a short-term, much less a long-term, relationship with.

A free sample isn’t necessary for writing jobs because you can show the clients clips of other work you have done. They can see that you are a competent writer without having to see what you would write for their project. But since each editing job is very different, I think it’s a good idea to make sure you and the client have the same expectations.

Next, we’ll talk about my business model, and I how I create long-term client relationships.

[tags]long-term client relationships, freelancing[/tags]

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