Tag Archives: taxes

Simultaneously Penniless and Rich

By Jake Poinier
get rich writingIn response to my previous post, “Taxes Don’t Lie,” V.R. writes: “Won’t disagree with you on importance of metrics and measurements for the self-employed. As a freelancer myself, I had to go back and read the blog twice to make sure the entire context of your message could be categorized as ‘financial’ success. Of course it was and I calmed down. Had you attempted to speak to a ‘success’ in general, I was going to challenge your notion that the only measurements that matter are income, expenses and savings. I believe a lot of freelancers measure their success more unconventionally; perhaps by hours spent at work (or rather hours spent with their family), number of press mentions, awards and accolades, mental and physical health, number of countries visited — you know, the things that causes one to transition from corporate life to freelance life. The freelancers I know are simultaneously penniless and rich!”

V.R. wanted me to ensure that he got credit for that phrase — “simultaneously penniless and rich” — so credit is duly noted. (As it happens, it fits in with my philosophy that you should Write Like You’re Rich.) More important, his point expands nicely on what I was getting at: Measuring the financial health of your freelance business can be accomplished easily at tax time, but it’s by no means a comprehensive measurement of your overall success.

All that said, measuring success is highly individual — including those items V.R. enumerated above, and many others. The metric changes over the course of your freelance career — I don’t have the same goals as I did in 1999. Back then, it was pure survival, as the “penniless” part of the equation was all too true. Today, while I might be “rich” by third-world standards, my true wealth comes from the people, experiences and opportunities from freelancing that simply wouldn’t exist if I were still in the 9-5 corporate grind.

In the comments, what’s your favorite non-financial measure of success?

Jake Poinier can be found at DoctorFreelance.com or @DrFreelance.

Taxes Don’t Lie

freelance taxesBy Jake Poinier

In my last corporate job, I had a boss who was fond of saying “What gets measured gets done.” Mind you, it didn’t always make our editorial staff happy. (If you can show me something that makes a graphic designer crazier than being measured with metrics like “page output per day,” I’d be stunned.)

As a freelancer, I try to avoid such micro measures, not just because they make me crazy, but because I find them unhelpful. I don’t really care how many words I write per hour or day, because it simply doesn’t matter. At the risk of sounding crass, the only measurement that does is income, expenses, and savings. And since I spent much of last weekend doing my taxes, well, I have a pretty good idea of what went on last year, and even some insight into the first quarter of 2013.

Your taxes don’t lie. And as much as I hate doing taxes, they’re as good a reality check as a freelancer can get, and that’s an important part of being self-employed. Here’s what I learned this year:

  • Revenues were an improvement over the previous year, and expenses were about the same. Yippee!
  • Starting up a Solo 401(k) saved me a significant amount on taxes, and gets me that much closer to retirement. Double yippee!
  • I had one client that was a four-figure income stream in 2011 that dried up entirely in 2012 because they hired a full-time person who now does all their writing. Same thing happened with one of my clients that was great for the first half of the year, then my main contact left. Losing a client stinks.
  • I did work for 19 different entities, most of which sent me a 1099, meaning they’d spent $600+. Eight of them represented 75% of my total income, and no single client was more than 25%, so I feel comfortable with my diversification.

I know Catherine is a believer in hiring a CPA to do your taxes — and I do have a CPA double-check my work. But, call me a masochist, there’s a value to getting into the numbers yourself that can’t be measured.

When he’s not doing his taxes, Jake Poinier can be found at DoctorFreelance.com or @DrFreelance.

Photo by Jakub Krechowicz

Top Tax Advice For The Freelancer

Catherine L. Tullyby Catherine L. Tully

I’m about to share with you my top piece of tax advice. It’s very simple–and I believe it will help you in more ways than you can imagine…

Hire an accountant to do your taxes.

I’m serious. An accountant (CPA preferred) will help you navigate the write-offs, assist you in understanding the latest laws, keep you informed about any changes and make the entire, miserable process of paying taxes a bit less stressful.

I love my CPA, and will never do my own taxes again. He has saved me money over the years, given super advice, and made sure I know what the latest information is for those who are self-employed. Sure, it costs me several hundred dollars–but it’s worth it knowing that I am working with a person who knows a heck of a lot more than I do about Mr. Taxman.

It’s a confusing web of information to sift through when you are self-employed. I strongly urge you to let a professional handle it. I’d love to know how many of you out there are currently getting your taxes taken care of by an accountant or CPA…ring in if you have a second…

Tax Time For Freelancers

Joe Wallace Freelance Social Media

by Joe Wallace

Are you ready for tax time? One very important set of numbers you should be crunching–or planning to crunch next year–is the work you have donated for charity. Have you done any freelance work for your favorite causes? If not, consider doing some this year in anticipation of next year’s tax season. In addition to supporting a worthy organization that could use your skills, you’ll be able (with the advice of your favorite tax prep expert) take the allowable deductions in the appropriate manner.

Update: I’ve just gotten back from my new CPA (my first ever!) who tells me you need to be able to show a financial investment–not just a time investment–in your charity work in order to take a deduction for such involvement.

For example, as a freelance editor I could donate my time, which is done for the satisfaction of a cause well-supported–the IRS won’t cut you a break for that. But if I SPEND money to support my cause, it’s closer to being deductible. What’s the difference between a simple donation and, say, offering to pay part of the costs associated with a charitable event? Your tax preparer knows the answers–be sure to ask!

Save yourself some tax pain and give something back at the same time–you’ll be glad you did. And yes, the reason why this is top-of-mind for me is that today was the day I got to deal with the tax man…

Free Bookkeeping For Writers With Outright

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

This post is meant to give you a little peek inside of a business that we here at Freelance-Zone think is a great match for our readers. I, for one, hate keeping books–but I know that it is a necessary evil. I was excited to learn about Outright, and the thought of having all my records with me on the laptop is an appealing thing. We took some time to talk with Jennifer Escalona from Outright to bring you a closer look at what they are all about. With tax time approaching, you may want to consider signing on…

1.   What is Outright.com?

Outright.com is a free online accounting service that makes bookkeeping simple so that you can keep track of income, expenses, and taxes easy and – dare I say it – fun.

2.   How can freelance writers benefit from connecting with them?

When I started freelance writing, I kept track of my income on an Excel spreadsheet. I was so naïve that I didn’t even think about keeping track of my expenses until I’d been freelancing for months. There went those tax deductions.

I’ve heard stories of other freelance writers who buy complicated accounting software programs and then get so overwhelmed by all the bells and whistles that they fail to track their income and expenses at all. This is a big no no. You have to pay those darn estimated taxes, and it’s always vital to watch how much money is coming in and going out so you can adjust your business accordingly.

That’s why I was so thrilled when I found Outright. (I was an Outright.com user first. Working with them came later.) I’m a writer partially because numbers terrify me, but Outright.com gives me detailed charts and graphs of my income and expenses, and estimates for me the amount of federal taxes I need to pay every quarter. Better yet, it prints a Schedule C for me at the end of the year so that I can pay my annual income taxes with as little hassle as possible.

All freelance writers can benefit from a clear representation of how much money is coming in and how much money is going out. They can also easily keep track of deductions on Outright.com, which means they pay a little less at tax time. Who doesn’t want that?

3.   What are some of the specific features that freelancers might find useful?

As a freelance writer, many clients pay me through Paypal, so Outright’s integration with Paypal has saved me hours of manual data entry. Outright.com also integrates with oDesk, where many freelance writers find jobs, and several other services, like Freshbooks and Shoeboxed, that help take all the hassle of keeping track of income. If you have a business credit card, Outright.com can automatically import that data, too.

Freelance writers will also find the profit and loss report very useful. Just seeing the income (or, ouch, the losses) they make from month to month helps freelance writers track their income and make goals. Goals might include finding more clients to boost the bottom line, or maybe dropping a client who’s causing a lot of hassle but, according to Outright’s interactive “Income by Customer” chart, not bringing in a lot of income.  Outright’s reporting feature also allows a freelance writer to create reports on things like “Expenses by Category” so you can see where all of your money is going.

And, while it’s a sore subject at my house, freelance writers will benefit from watching with growing dread as the amount due in quarterly estimated taxes rises and rises. This lets them know how much money they need to be setting aside for that awful day four times per year.


4.   People will naturally want to know how you protect the privacy of their financial information. How does Outright do that?

Information security is an extremely valid concern, so Outright.com protects your financial data in a number of ways:

  • Outright encrypts all information you enter before it’s ever sent to our servers.
  • We use secure socket layer technology (note the https at the beginning of each page URL and the little lock in the URL bar) to protect your information, which is the same technology online stores use to protect credit card information.
  • All information in Outright is backed up every hour. This means you won’t lose financial information even if the service goes down briefly.
  • We strongly believe that your data belongs to you. You are able to pull your data (via a .csv file) out of Outright at anytime you like.

5.   What is the cost?

Outright.com is free! And, happily, the core Outright service will always remain free.

Outright did add their first paid add-on service earlier this year. If you hire contractors and pay them over $600 in a year, you have to file a form 1099 for them by January 31st the next year. Outright’s first paid service took care of filing those 1099 forms for only $5 per contractor. And, if the contractor decided to sign up with Outright.com, the $5 fee was even waived!

6.   Is the system easy to use, or do you need to have a bit of technical savvy in order to utilize it well?

Outright.com is extremely easy to use. The home screen is a simple ledger where you can decide if you want to enter your expenses or income first. The tabs at the top (i.e. “Taxes,” “Reports,” etc.) are self-explanatory and easy to explore. Outright.com also offers easy setup with partners like Paypal and oDesk.

But, if anybody has questions about using Outright, they can always visit Outright.com where support folks and other members will happily answer your questions, or they can always email support@outright.com and expect to receive a quick and thorough response.

This post was brought to you by Outright

Make Money on Your Tax Money


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.