Online Bookkeeping for Freelancers that Won’t Cost an Arm & Leg
If there’s one thing I’m bad at in this whole freelancing business it’s bookkeeping. I mean, I’m a writer — and frankly, one of the things that draws me to writing is that it’s not bookkeeping. If you’re a writer, a designer, or even a coder, chances are you were drawn by the possibility of putting words, images, and code together in creative ways, not by the prospect of meticulously recording financial transactions.
The bookkeeping and accounting a freelancer has to do boils down to three things:
- Recording invoices and payments,
- Recording expenses, and
- Computing and paying your taxes.
For the past year-and-a-half, I’ve been using LessAccounting to handle the first two, and sort of “winging it” to handle the third. I like LessAccounting, and with a little creative data entry (e.g. holding off on entering payments in months when I get several payments and entering them during slower months; the free account limits the number of payments you can enter in any given month) I’ve managed to do pretty well for myself with a free account. But that’s changing – I’m developing more clients and more steady invoicing and payments to record, and at the same time my income is growing to the point where taxes are becoming a nightmare.
Put It On Plastic: A Freelancer’s Credit Card
After doing my taxes this year, I’m firmly of the opinion that every freelancer needs a debit or credit card just for business expenses. A separate checking account for your freelancing business — and the debit card that comes with it — is ideal, but for freelancers who aren’t ready to do that, having a credit card that is used exclusively for office supplies, business lunches and all those other expenses you can write off on your taxes can pay off.
Freelancing Under the Table: The Pros and Cons
A few years ago, I did a couple of projects under the table for a local company. They paid me in cash, with a quiet understanding that they didn’t plan to issue me a 1099 and I didn’t plan on declaring that income.
I don’t work that way anymore, but I know the appeal. There are a lot of negatives to such an arrangement — which led me to make sure my income taxes actually reflect my income — and it’s worth giving them some consideration before going one way or the other for cash-only arrangements.
Incorporating as a Freelancer: The Questions You Need to Ask
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.
10 Tax Deductions Freelancers Can Make
Tax time can be especially stressful for freelancers: despite paying estimated tax payments throughout the year, it’s rare that a freelancer doesn’t still have to come up with some money for April 15 — or come up with a long enough list of deductions.
There are quite a few deductions available to freelancers that may not seem obvious when you first sit down with all those 1099s and receipts. But as long as you have the right documentation, you can write off plenty of deductions you may never have thought of.
Planning for Next Year: Your Professional Development Plan
We’ve reached the end of our series on New Year’s Planning. The previous three articles covered:
Now we’re going to talk about you. Specifically, about making you into a smarter business person. Here, my rule of thumb is that it’s not enough to be in business. You must also be a student of business.
Planning for Next Year’s Tax Bill
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:
10 Items You Absolutely Need For Financial Security
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
Five Things To Do To (Or For) Your Accountant At Tax Time
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
