Tag Archives: freelance money

Business, freelance money

The 411 on new 1099-MISC tax rules for freelancers

2 Comments

Not many headlines stop me in my tracks, but this one from CNNMoney.com Small Business did. (WARNING: You might want to swig some Peptol-Bismol before visiting the link.)

Health care law’s massive, hidden tax change

Currently, we’re all familiar with receiving 1099s at tax time; you’re also supposed to follow up with any client who owes you one. For those of us who hire other freelancers or legal services in excess of $600, you need to send 1099s to them, too. No big deal, it’s part of being in business for yourself.

But the new healthcare law slides a pair of nasty little requirements into your accounting for 2012 and beyond. You’ll now need to:

  1. Track not just services over $600, but tangible goods you purchase, and
  2. Send 1099s not just to individuals, but to corporations.

So, spend more than $599 and you’re going to send a 1099-MISC Apple or Dell, after researching their federal tax information. Same with GoDaddy, Staples, Costco, Verizon, Exxon and so on. Regardless of whether you are thrilled or horrified at the healthcare law, there’s no question this will add significantly to your accounting workload. (And you might want to stock up on stamps.) Naturally, our friends in D.C. are saying it’s for our own good, because it will aid in tax compliance to help pay for the new benefits.

Philosophically, I take issue with that concept, or at least with the execution. I pay my taxes willingly, but the process already consumes more than its fair share of my time and energy. $600 is an awfully low threshold nowadays, and this puts a burden on the people least equipped to handle it, in order to “police” scofflaws. I suspect it is laying the foundation for a VAT tax in our near future.

I also suspect it will create more unwitting criminals through tax bureaucracy. This opinion from a respected registered investment adviser, “1099 Mandate from Hell Slipped into Health Bill,” concludes: “Clearly this is insanity. If enacted, it will be the most widely ignored IRS regulation in history.” Time will tell.

New Freelance-Zone contributor Jake Poinier is the founder/owner of Boomvang Creative Group and the newly launched advice blog for freelancers, Dr. Freelance.

Business

Making Your Freelance Business Pay…Literally

This post is sponsored by Outright — Your Livelihood, Right Now.  Getting your taxes right with free bookkeeping.

There are plenty of ways to handle your freelance income, but once you start getting out of the 30K range it might be time to start thinking seriously about structuring your cash flow more like a business rather than as something you earn as an individual. One of the oldest maxims in the freelance book is to treat your freelance business AS a business; paying yourself a salary is a very good step in that direction.

Once you start making this kind of money as a freelancer, chances are you’re already being tempted to incorporate or set up an LLC–if you’re thinking along these lines it’s even more important to consider giving yourself a set salary even–if you haven’t drawn up the paperwork for the LLC or S-Corp.

There are two good reasons to do this, aside from goal setting and keeping yourself motivated. For starters, you’ll have a much cleaner paper trail between your business expenses, your pay, and other deductions. Anything you do that makes it clear to the IRS exactly how and where you paid expenses for your business is a good thing.

5MinIRS_300X300

The second reason to pay yourself a salary even before you file your LLC or S-Corp papers? Discipline. Depending on which formal, legal arrangement you choose you may be required by law to pay a salary to yourself. S-Corp filers have a whole set of payroll concerns to deal with and while we won’t argue the merits of choosing an LLC over an S-Corp (or vice-versa) here, suffice it to say that getting in the habit of paying yourself as an employee is definitely a good thing if you want to go the S-Corp route.

Giving yourself a set paycheck also allows you to properly budget for the future. How much are you able to dedicate towards other tax-deductible expenses such as travel, equipment replacement, and insurance? Without a fixed paycheck to factor into your budget, deciding on those amounts may be more like guesswork than careful planning–and no serious business survives long on guessing.

This post on the business of freelancing is sponsored by Outright — Your Livelihood, Right Now.  Getting your taxes right with free bookkeeping.

freelance money

Freelance Tax Time

1 Comment

taxes-for-freelancersby Joe Wallace

I’m not going to be one of those sissy bloggers who says, “This is not tax advice.” This IS tax advice. It’s the best tax advice you’ll ever get. It’s two little words with a universe of implications.

File early.

One year, I  had to file late. Because I filed late, I didn’t learn until it was too late that I needed one more deduction–a big one–to keep me out of hock with the IRS. I could have contributed a nice large chunk to my IRA and avoided owing the same amount. I would have owed something, to be sure, but not the large sum I wound up having to pay.

Continue reading Freelance Tax Time →

advice, freelance money

Tax Advice for 2009 Freelancer Income

money

by Joe Wallace

Most freelance blogs preface any post about taxes by saying, “This is not tax advice. Consult a tax pro for advice on filing your taxes.” Well, I’m through with all that–at least for this post. I’m going to flat out dispense some tax advice here and boy, is it some sound advice. (Nice ego, eh?)

This advice isn’t really that radical, but it can spare you plenty of grief come April 15th–especially if you’ve made too much money in 2009 and need some last-minute help offsetting a big tax bill.

Here’s my tax advice: Gather up all your receipts this weekend or next, figure out your expenses for the year and measure them against your income. Yes–I’m suggesting you do a dry run on figuring out your 2009 taxes to see how much you owe. Continue reading Tax Advice for 2009 Freelancer Income →

advice, freelance money

Make Money on Your Tax Money

accounting-banking-bonds-760365-l

By Yolander Prinzel

You know that big, annoying wad of cash you keep reserved for quarterly estimated taxes? Yeah, you know the one–the wad that obnoxiously sits there for months tempting you to spend it on clothes, books, records, vacations, and fancy alcoholic drinks. Well, anyway, instead of letting it sit in your business checking account, why not move it to a money market account and earn some interest on it? Show that wad who’s boss by making a little interest off of its obnoxious little behind.

If you are lazy (like me) you can just open a Paypal money market account. The rates are not as competitive but if you get paid through Paypal often, you can just leave the money there and let it earn some interest.

Either way, it isn’t going to net you a ton of money and you will have to pay taxes on the interest, but hey, maybe the interest will be enough to offset that fancy alcoholic beverage you desperately need after filling out your 941 every quarter.

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative with a decade of industry experience. She was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services. None of her posts are meant to be advisory. Only an advisor with close, personal knowledge of your financial situation can offer advice. You can get her new e-book You’ve Found Your Specialty–Now What? Tips and Tricks to Finding and Scoring Clients and Making a Living Writing What You Know here for just $7.95.

freelance money

I Know You’re Losing $50-$200 a Day

house good 1 bonvivant

By Yolander Prinzel

How do I know you are? Well, because I am and although this might cause you to break out into the cold sweat of denial, I’m pretty sure you and I aren’t that different.

I waste at least 2 hours every day sitting in front of my computer doing…well…absolutely nothing.

Yeah, no, I know, it’s terrible, right? But–surely–you aren’t that bad. You don’t spend time looking through pictures on Facebook of people you don’t even know. You don’t start conversations with strangers on Twitter. You don’t do housework off and on throughout the day. You don’t do anything but write and market yourself all day…right?

Yeah, that’s what I thought. So here is my challenge to you web writers next month. Let’s all try to take on 2 additional hours worth of work each workday and earn 2 more hours worth of pay. Whether 2 hours means 1 article for you or two, do it. Then take that money, which you normally wouldn’t have had because you would have been busy picking your split ends during those two hours, and put it in your savings account.

Let’s say you average (based on your writing speed and prices) $35 an hour. You will have banked an extra $350 in your savings account the first week. Do that for a month and you’ll have about $1,400. A year? $18,200–and that isn’t counting interest.

So put your hair down, log out of Facebook, sign off from Twitter and leave your laundry unfolded–it’s not like you have to leave the house anyway.

Print writers–you aren’t out of the challenge. I’m betting you could send out a couple extra queries during the week. The pay from any of those queries that get accepted should go straight to savings too.

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative with a decade of industry experience. She was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services. None of her posts are meant to be advisory. Only an advisor with close, personal knowledge of your financial situation can offer advice. You can get her new e-book You’ve Found Your Specialty–Now What? Tips and Tricks to Finding and Scoring Clients and Making a Living Writing What You Know here for just $7.95.