Most freelancers automatically set up business as sole proprietors. In most countries, running a sole proprietorship is as simple as hanging out your shingle — the government only cares whether you pay your taxes on time. Just because operating as a sole proprietor — also known as a sole trader in some parts of the world — is the easiest option, however, doesn’t mean that it’s the best. For some freelancers, making the switch to a corporation or another business structure can offer some benefits.

If you just automatically moved into running your freelance business as a sole proprietor, there are a couple of questions worth asking yourself. Depending on the answers you may find that incorporation makes sense for your business.

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Since we’re closing in on 2009, it’s time to start doing some New Year’s Planning.

The first item on your agenda should be something that we all love to deal with – taxes. If you haven’t done so by now, make an appointment with your tax accountant so you can get ready for April 15, or whatever the magic day is in your country.

Here’s what to take to your accountant:

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In this article, I’m going to talk about how you can hold yourself accountable on a yearly basis. The first three articles in this series covered:

1. Daily accountability. At the start of each workday, you made a list of things you absolutely had to accomplish. At the day’s end, you asked yourself what you did to make money and what you did to bring in business.
2. Weekly accountability. At the end of your work week, you wrote a review and evaluation of how things went. You also planned the following week, with special attention paid to the tasks involved in doing the work for which you are paid, getting more of it, and running your business.
3. Monthly accountability. On the daily and weekly level, you were working in the world of words. For your monthly accountability, the focus shifted to numbers, specifically, your profit and loss statement as compared to your budget and to the previous year. You also looked at your cash flow and bank balances, and you forecasted your revenues and expenses.

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Photo by Shermeee.

In this article, I’m going to talk about how you can hold yourself accountable on a monthly basis. The first two articles in this series covered:

1. Daily accountability
2. Weekly accountability

The focus of the first two articles was on things that you can do with words – evaluating your day and your week. When we move up to the monthly level, the focus shifts to numbers. Which means that it’s time to talk about accounting software and your business. Yes, I know that this is a sore spot for many creatives. It was for me for many years, but I got over it.

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Photo by Ella's Dad.

Once you have left the land of COLA raises, paid sick days, and employer-matched 401Ks, not only do you need to be the writer/programmer/web designer for your business, you also need to be your own CFO.

Here are some absolutely necessary components for your business (and life) financial portfolio:

1. You need insurance. In addition to car and home insurance, you must also now fund life, health, and disability insurance. Without these critical coverages, not only could you be swamped with debt brought on by an unforeseen medical situation, but your business could lose its most important asset—you!

2. You need to pay your taxes. Religiously. As soon as income hits your mailbox or PayPal account, it is imperative that you take 30% off the top and tuck it securely away in a separate (interest-bearing) savings account. This money will then be ready to pay your monthly, quarterly, or annual IRS bill, in full and on time. Continue Reading

When I came up with the headline for this article, I figured that many freelancers are so busy that they probably don’t have any time to organize their tax information before they hand it over to their accountants. We’re all so focused on our businesses—who has time to do nice for their accountant? You do, actually. And the payoffs could be big!

It really doesn’t take much to get things together to make things easier for your accountant, and perhaps save time. If you’re like me and you toss pay stubs and receipts into one large envelope during the year, you may want to break things up so your accountant can easily work through your taxes. This saves your accountant time, and it saves you money. Also, I don’t use anything fancy for invoicing (something I need to change, I suppose) but even organizing your Quicken files can be a huge help for the accountant, save you money, and offer more time for you to ask questions and help your business.

You’ll find that little things will make tax time much more manageable for you and your accountant. Here are some easy things you can do to get organized. Continue Reading