by Joe Wallace
I was chatting with a fellow freelancer about writing blogs and such when the conversation turned towards under-reported, under-represented, and just plain not-much-bothered with topics in the freelance writing blogosphere.
For my friend, it was how to advance to the next level of pay. “I read all the time about these six-figure freelancers, but it’s hard to tell what people do to go from small-time to mid-range pay for their writing.”
To me that one seems pretty simple (not easy) because it’s about setting your rates and not letting yourself be pulled back into your former lower income work, but I can see how a lack of specific details from writers (how I did it-type stuff) would be one of those under-served themes.
For me, the most under-represented topic in freelance writing is also one of the trickiest to write about–specific tax issues connected with self employment and how-to articles on maximizing your legitimate tax breaks. And why you should take them.
I don’t mean the usual “deduct your travel expenses and make your vacation a working vacation” type information–that’s already been done to death. I am talking more about issues like whether to claim the whole computer purchase as a deduction for work, or whether to depreciate it over three years. Issues including why you might not want to donate your car to charity for the tax break (sad as that is) because self-employed tax rules change the game for personal deductions vs. business ones.
I am actually contemplating taking an H&R Block tax class to get certified in tax work so I can dispense real, step-by-step ADVICE (I hate those disclaimers I have to currently give) in this area. The investment would be worth it to bring you the real-deal tax info needed to make the freelance game work in your favor come April 15th.
So there are two topics (some) freelancers feel are woefully under-reported. What do YOU feel is the most under-represented freelance writing topic? Please share your comments, we’d love to know where you could be better served in these posts.
I don’t find those issues to be underrepresented at all. Instead what I find is that a lot of freelance writers are either A) too lazy to search for it or B) don’t know how to search effectively (especially on the tax topics).
There are BOOKS, nonetheless countless articles, specifically targeting tax issues for independent contractors. There’s no good excuse for someone not to be able to find information. And that’s not even to mention all of the articles floating around more specifically talking about things like common tax deductions for freelance writers. It’s out there.
As for moving to the next level, I’ve personally been telling newer writers how to do that for years (as have other bloggers). The real problem is that if you don’t tell readers it’s going to be a cakewalk, many ignore it and keep complaining that no one’s telling them how to do it. I’ve shared my story with specifics on how I broke into (actually created) a market for myself. I’ve told them not only to set better rates but specifically how to do it correctly, laid out in an easy formula. I’ve told them what to do to get higher paying gigs. I’ve told them what NOT to do if they want higher paying gigs. I’ve not only told them to network, but I’ve told them how and where. I’ve not only told them to start building a platform of their own, but I’ve given them 30 specific activities to choose from to get started. I’ve given them professional templates so they can setup their own blog or website to attract clients. I’ve got an e-book that lumps it all together for them in an easy-to-follow plan.
None of that matters. The information IS there. People just don’t care enough to look for it. You could spoon-feed it to them and half of them forget about it anyway because (god forbid) it might take a little bit of time and work to make it happen.
The only topic I find woefully underreported is effective marketing and PR advice for writers. There are plenty of tips out there, but many are either outdated or don’t make sense for the newer breed of Web writers. More importantly, huge numbers of freelance writers know little to nothing about market targeting (why they get into the low rate trap in the first place). Again, there’s enough info out there that they could find it if they looked hard enough, but that’s the kind of information bloggers should be drilling into readers’ heads if they don’t want to be asked the same “how do I earn more than $5 per article?” type of questions for decades to come.
I do think there’s a lack of more specific tax advice (books aside) for freelancers BY freelancers…but the real issues wind up going beyond taxes themselves and into other areas of personal finance. For example, what are the implications of investing 8K into a SEP IRA?
According to a 2007 article on SmallBiz.com, “Simplified employee pensions — referred to as SEPs or SEP-IRAs — are generic retirement plans that allow you to contribute and deduct up to 20% of self-employment income (25% of salary if you’re an employee of your own corporation)”
Do I bite the bullet and file as an S-Corp? What does that do to my bottom line? I’m not asking YOU personally, I’m asking rhetorically.
Now fortunately that 2007 article was updated in January of 2009, but you see the dilemma—tax issues change so much that by the time you get to a lot of these articles it’s difficult to tell what’s out of date or still in force.
But that doesn’t answer my real question–is a SEP IRA better than a Solo 401(k)? Should you also do a Roth IRA? What are the tax implications of doing so?
I don’t know about you, but freelance taxes are a real puzzler and it’s so easy to make a critical error…I think there’s real lack in freelance writing pubs specifically in keeping up with all this stuff.
You can have both, but you need to watch the aggregate limits. Also, you can get a roth 401k or a non-roth. Or, as you mentioned, a roth IRA. It all still works toward your aggregate limits.
With a roth, as you know, you miss out on the deductions now, but it will make life easier when you are retired.
The real problem in this scenario, to me, is not finding out about the tax crap–you can find that on IRS.gov. The problem is that people go throw a bunch of money in their IRAs and don’t invest is (because they think an IRA IS an investment).
Back to your question, I wouldn’t take the class unless you wanted to for personal reasons.
a) the IRS.gov site does a great job of answering most questions and a course like HR Block would offer probably only covers those basics anyway.
b)
I hit submit..sorry
b) I would not say that an HR Block course now means you can remove your hedge. 1st, you can’t give blanket tax advice to freelancers. 2nd, you don’t have any kind of E&O insurance. 3rd, taking off the hedge = you are responsible. You do not want that.
Okay, at this point I’m just being obnoxious…
I do think it is difficult to find good tax info for freelancers by freelancers (although I think I’d found some good stuff on the Anti 9-5 blog) and if you do, it isn’t comprehensive–it’s a one of question here and there. I think that you could accomplish a little tax guide just based on researching IRS.gov and telling us about your own experiences.