Tax Tips Every Freelance Writer Should Follow

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The tax deadline is closing in. Check out my re-post for some tips that every freelancer can use.


Whether you’re new to freelancing or a seasoned entrepreneur, tax season may have you breaking out in a cold sweat. Understanding the tax laws relating to business expenses can be a little intimidating, so here are a few tips I’ve assembled to help you determine what you may be able to claim:

Documentation

Keeping track of your income and expenses throughout the year is critical if you’re going to avoid the last-minute rush to file on time.

I’ll admit that I’m much better with words than I am with numbers, so I hire an accountant to prepare my taxes. Of course, his calculations are only as good as the information I provide, so it’s important that I keep good business records.

There are a variety of methods you can use to record your earnings and expenditures. Here are two I’ve used with great success:

Microsoft Excel—I paid for this software that was included with my Microsoft Office suite. It uses a spreadsheet format that you can customize to fit your business model. I set up two pages—one for income and one for expenses.

While many of your writing jobs may be through just a few companies that will provide a W-2 or 1099 at the end of January, I like to keep a running record of every job I do and my earnings. I generally compare my Excel income statement to the tax forms I receive, including my PayPal statement that identifies every payment transaction. This gives me peace-of-mind that I’m reporting all my earnings and haven’t missed any.

The Expenses tab is used to note everything you’ve spent throughout the year to keep your business running. I’ll break down what those items are in a minute. I categorize like items in separate columns and set formulas to total them, so my accountant can quickly find what he needs to fill out the Federal and State tax forms.

QuickBooks—This powerful software program makes documentation a breeze. Created by accounting professionals at Intuit, it intuitively and accurately tracks your business expenses all year to make sure you get every deduction you’re entitled to at tax time.

This is also a fee-based service, but they offer a free trial to help you get started. It syncs all your entries across all devices, so you’ll never miss a charge when you’re away from your office. 

You can easily record every purchase (even online transactions) manually or download them directly into QuickBooks. Even attach receipt images to the specific expense for future reference. It’s the perfect program at tax time too. All expenses are organized into categories such as Marketing and advertising, Travel and entertainment, or Office expenses and utilities; so your accountant will have everything needed to prepare your tax returns.

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Deductions

The IRS allows numerous expenses for running a business that you may never have thought of, so let me give you a list of items you need to start assembling now:

  • Software programs (especially those used to track your income and expenses like Excel or QuickBooks.)
  • Education—whether you attend seminars, take some online classes or attend a traditional classroom setting, you can take the tuition or fees as a deduction.
  • Cell phone data charges—if you use your smartphone to access the internet, communicate with clients or even write articles, you can expense a portion of your cell phone data charges.
  • Printer ink cartridges—if you’re like me, you print out your work for proofreading and red-lining before submitting to your client. Those ink cartridges are pricey but luckily, they’re also deductible.
  • Stationery supplies—the same goes for the paper, pens, planner and any other office supplies you need to perform your work.
  • Books—whether you need them to improve your craft or for reference materials, you can claim them.
  • PayPal fees—I do some business with clients who reside outside of the U.S. PayPal charges fees to exchange the foreign currency to USD, so I was able to claim those fees as a business expense.
  • Mileage and transportation—while I generally don’t travel for business, many freelancers do to meet with clients, do interviews or collaborate with a team. The mileage and transportation costs are deductible.
  • Office equipment—did you buy a laptop, desk, desk chair, lamp, cordless phone, filing cabinet, bookshelf or other assets for your business? Yep, you can deduct them too.

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Home Office

Now, this may come as a surprise, but if you have a room set aside in your home where you perform your freelance writing work (not just a corner of the kitchen table), you can claim it as a home office. To qualify, it should be a dedicated space with a desk, a chair, a filing cabinet and a computer.

Your tax accountant can give you a clearer understanding of how this works, but a percentage of these house expenses can be deducted and depreciated based on the size of your office as it relates to the overall house square footage.

These are the details I provided so my accountant could complete the proper tax forms:

  • Overall square footage of my home
  • Square footage of my office
  • Age of home
  • Purchase price
  • Annual utility costs—gas, electric and water
  • Annual homeowner’s insurance cost
  • Annual internet cost

You may be more adept at tax preparation than I, but my accountant (the amazing number man) did an itemized breakdown of all my business earnings and expenses plus depreciation for a home office to calculate my freelance writing business taxable income.

My Advice

Who knew that running your own small business could be so complicated?

I was unsure (and a little nervous) the first time I had to pull all of my business tax information together. It was amazing to actually earn money from my writing skills, but then I remembered that Uncle Sam always wants a portion of it. You’ll want to keep as much of your hard-earned money as possible. In order to do that, you’ll need to keep detailed records.

Luckily, I had some really smart people help me compile the information in my first year. They wisely suggested that I track everything from January 1st so I wouldn’t have panic attacks the following April 15th.

Obviously, if you didn’t document all of these details in 2016, things are going to be a little challenging for this tax season. Don’t let it get you down. Print out a copy of this post and start compiling the information. 

Once you’ve got 2016 closed out, get started on tracking information for 2017. Don’t forget to keep all your receipts. Why not give Excel or QuickBooks a try?

You’ll be really glad you did!

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So, was this helpful? Did I miss anything or do you have extra tips that may be helpful to other freelance writers? I’d like to hear your thoughts. Just click “Comments” below.


Giving Your Vision a Voice. Let me help you express your message.

Offering Business Writing and Blog Services. Visit my “Contact Me” page to get started today.

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5 Most Effective Ways to Run a Business While Working a 9-to-5

Nicole Duggan has touched on some real solutions to a problem I have encountered myself. Working a day job and a night job (freelancing) doesn’t leave much time for anything else.

If you struggle with being in two or three or more places at once, I think you’ll find this post helpful.

http://startupmindset.com/5-most-effectively-ways-run-a-part-time-business-while-still-working-9-to-5/

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47 Unusual But Effective Blogging Tips You’ll Love

Janice Wald at Mostly Blogging has done it again, captured my attention with a new take on an old subject.

I highly recommend checking out her interesting tips. They’re all FREE and some will even make you laugh…Get a plant anyone?! (Yep, it’s in there.)

https://www.mostlyblogging.com/blogger-tricks/

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How to Be Successful Bloggers: 6 Warning Signs That Your Mindset Needs Improving

Ryan Biddulph hits the nail on the head with his post on why bloggers are unsuccessful. 

It’s all about commitment for me (and sooo many other bloggers.)

Isn’t it time to make a change toward improving your future?

https://www.mostlyblogging.com/successful-bloggers/

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What to Do When You Have Too Many Story Ideas

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While too many ideas may not seem like a problem if you’re a writer, but staying focused enough to settle on one idea can be tough if there’s too much to sift through.

Kate Colby provides some excellent tips on how to narrow down the best ideas and keep writing. Give them a try and never run out of ideas to write about again.

What to Do When You Have Too Many Story Ideas


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6 Positive Mindsets That Give Your Dream Its Best Chance To Soar

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Kathy Caprino, from Women@Forbes, provides amazing insight into why women don’t pursue their career dreams with the same vigor and drive as men. 

It’s critical to incorporate these positive mindsets into your daily routine. Only then will your path be clear to moving onward and upward.

6 Positive Mindsets That Give Your Dream Its Best Chance To Soar


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Why Women Entrepreneurs Hold All the Aces

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Kerry Hannon hit the nail on the head with her post on the advantages 50+ women entrepreneurs have over those younger business owners.

She makes some excellent points:

  1. They have more time and energy in midlife.
  2. They have no special obstacles.
  3. They have more working capital of their own.
  4. They often have experience working in a male-dominated field.
  5. They have confidence in their own abilities.

If you’ve been waiting on the sidelines because you think you’re too old to start a new business, take a look at Kerry’s post, and then, take the leap.

Why Women Entrepreneurs Over 50 Hold the Aces

 

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How to Avoid Plagiarism-Especially For New Writers

Janice Wald tackles a tricky topic and provides some great insight into this age-old issue.

Thanks, Janice, for helping writers keep their work “honest.”

https://www.mostlyblogging.com/avoid-plagiarism/amp/

“Giving your Vision a Voice” DebbieDeyWrites

You’re Smarter Than You Think You Are

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Starting your own business and becoming an entrepreneur (especially a woman entrepreneur) can be a terrifying prospect.

While we’d all like to use our talents to earn money, actually finding the motivation and time to sift through all the billions of gigabytes of digital information available can make even the most committed individuals want to hide under the covers.

I started this journey five years ago, and although it’s been a little scary at times, it’s also been invigorating. If you have a dream of sharing your passion with others, then it’s time to start now. 

Here’s my story. I hope it inspires some of you to take the leap and be the best you can be.


I’ve always considered myself a little above-average when it came to communication skills.

I like to talk—probably a little too much at times. I like the interaction with people and really enjoy sharing experiences.

But I really love to write. Like many before me, my love of the written word started with my first pad of paper and ballpoint pen.

I’d write about anything and everything. I was definitely teacher’s pet in every English class—not because I needed the help with my grades, but because I wanted to learn as much as I could about creating stories people would want to read.

Through each school year, I was the geeky one.When the other kids moaned about the essay portion of the final exam counting for 50% of their grade, I rejoiced. As long as I had the chance to write out my answers, I had it made!

Well, I took business classes in high school to learn the fundamental skills I’d need to work in an office, but my dream was to become a journalist AND someday write a book.

Like a lot of childhood dreams, mine got derailed by an overly critical Creative Writing teacher I had in my senior year of high school. While I was accustomed to reading the rave reviews about my work from teachers throughout my school career, this one was different. Every single short story, every poem, and every assignment I turned in was met with harsh criticism and disinterest.

I was mortified! “Had all my teachers been lying? Were they just praising my work because I was their favorite? Now, what was I supposed to do?”

I decided to put “Ms. Creative Wrong” to the test. For a writing assignment, I submitted an award-winning poem I wrote in fifth grade. It had been a class assignment when I was 10, and my teacher liked it so much, she submitted it to the school magazine. I won $50.

Fast-forward to my twelfth-grade recycled poem…and I got my one-and-only “A” of the course. I was convinced I HAD a gift and LOST it, so I gave up on my dream of becoming a writer.

Have I lost YOU yet? Or does my story sound something like your own?

As you may have guessed, that dream was resurrected (even if it was 35 years later.)

“People become really quite remarkable when they start thinking that they can do things. When they believe in themselves, they have the first secret of success.”       -Norman Vincent Peale

I went on to become an administrative assistant (see, those business courses did come in handy!) I never stopped writing, only I was invisible when I did it. For years, I’d been ghostwriting articles for my company’s marketing and advertising campaigns—I just never got credit. I thought I was okay with that, and I was until “I wasn’t.”

My nephew, a brilliant millennial who took a leap of faith, moved to NYC without a job or a place to live, and who is now a wildly successful videographer, came home to visit. He also composes music, plays in a band, and spent some quality time writing a graphic novel.

He’s read some of my “stuff” and has always encouraged me to pursue my dream of becoming a professional writer. After years of staying in the background, my confidence really took a hit. I actually heard the words, “But I’m not smart enough to write a book” come out of my mouth when he questioned why I hadn’t followed my passion.

While I didn’t realize it at the moment, a few days later, I started remembering some of the things my nephew mentioned. One word, in particular, stood out…FREELANCE.

Finding Motivation:

I honestly wasn’t even sure what a freelance writer was. I’d heard the term before but had no clue just how big the industry had gotten. I really was more curious than anything when I sat down at my computer five years ago and started to see what was out there. I hadn’t intended to launch my second career at that moment, but that’s what happened.

This is what started me on my way to becoming a successful freelance writer…

google-search

Yep, my first Google search for “freelance writing opportunities” gave me:

2,570,000 results!!!

I thought I hit the “Mother Lode!” I was not prepared for such an unbelievable number of opportunities from one simple search. Obviously, this was a “thing,” and I needed to start learning immediately.

The wonderful thing about being a freelance writer today is that the tools of the trade are at my fingertips. Anything and everything I want to learn about can be found online. I’ve got to admit that in the early stages of my career, with so much information available, I quickly became overwhelmed. I had no idea where to start, what I was getting myself into, or who to trust.

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Educational and Business Tools:

The best advice I can give you is that you can’t start a business alone. I’m not suggesting you take on a partner or hire employees (yet.) I believe it’s important to seek out reputable companies that offer the services and tools your start-up business needs.

Technology can feel like a runaway train where you’re always trying to catch up. In the five years I’ve been freelancing, I’ve often struggled to understand how to manage social media, cyber-security,  and digital marketing.

Working with amazing companies like HP Business Solutions and HP Life, I’ve had opportunities to learn the fundamental skills I needed to start my own business through coursework, such as Basics of Finance, Business Communications, Social Media Marketing, Selling Online, and even Setting Prices. The best part…It’s all free of charge.

In addition, they have developed an initiative to bring together groups of global entrepreneurs to “share ideas, issues, and solutions to make businesses more successful.” This provides worldwide networking opportunities to grow your business.

While HP Life is getting you up to speed online, HP Business Solutions can provide the equipment and accessories you need to get the job done. Their state-of-the-art technology and reputation for high-quality products were all the reassurance I needed when I bought my HP laptop and printer, and I’ve never been disappointed.

Find Your Niche:

As I said at the beginning, I didn’t think I was smart enough to be a freelance writer. What I quickly discovered was that I had many unique work and life experiences that I could share through my writing.

By establishing a niche (or several) for topics I was familiar with (mine has been in the home improvement industry, and now, freelance writing), you’ll be better equipped to target your specific audience and create a following.

Build Your Brand:

This involves establishing a platform through website development, blog and content creation, and a social network presence. This is no easy task.

After a lot of stops and starts, I discovered that WordPress offered a package of tools to fit every branding requirement. With pre-packaged themes, tutorials, and a blogging community willing to answer any question, you’ll have a website up-and-running in no time.

Blogging for fun or for financial gain will give you the best opportunity to practice your craft and improve your writing. Initial packages are free, so you’ll have the time to learn how things work before committing to significant expenditures.

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Social network sites like Facebook, Twitter, Pinterest, and Instagram can all drive traffic to your website. If your ultimate goal is to monetize your blog or other services, you must be active on social media. It’s impossible to keep up with this ever-changing world, so pick just a few sites and schedule posts in advance. This will save you the time and frustration of daily posting.

WordPress Plug-ins also allow you to link your website to your social media pages, so your published post is automatically sent to your network. Pretty cool, right?

Getting Your Feet Wet

Even though I’d been writing for most of my life, I wasn’t really prepared for how different it was to write for the web. Everything has a unique format that takes some time to learn. Blog posts, for example, have a more conversational tone and short paragraphs. (My apologies to my fifth grade English teacher who taught me that there was no such thing as a single-sentence paragraph. There is now.)

You may be surprised, but my first 100 posts were done through a content mill. Not always known for having the best ethics, content mills offer an inexpensive option for companies to obtain articles, blog posts, and website content. In turn, they take a commission for every order and pay writers extremely low per-word fees.

I thoroughly researched content mill companies before finally jumping into the game. I chose Textbroker to start my freelancing career and will be forever grateful for the experience.

There is no charge to become a member, but you are required to take a test to gauge your writing abilities. A “star rating” is used from 2 to 5. The higher the rating you achieve, the more writing opportunities will be available and the more money you’ll earn per word. While 1.8 cents per word may not seem like much, the first time you get paid to write, you’ll feel like you made a million bucks!

The open order topics are varied, so you’ll be able to write about things you know or test your research capabilities as you try to find your niche.

Unlike some unsavory mills, the Textbroker team truly cares about their clients and their authors. The first few orders you produce will be reviewed for grammar, punctuation, and content. They’ll give you suggestions on how to improve (there are specific rules you must follow), and they even provide free classes to help increase your star rating and earning potential through direct client orders.

Sales and Marketing:

If you’re going to be a professional “anything,” you need to develop a sales and marketing plan. For freelance writing, this involved learning how to sell my skills through pitches.

Much like the old-fashioned, face-to-face interview, those skills must now translate into a digital footprint. Many jobs are done remotely where employers and employees never meet. It took me a while to learn the new rules for finding clients. I enrolled in courses that taught me how to pitch clients, build a portfolio of sample work, and even establish price structures.

Online job boards are often the best places to find work that matches your niche. To get the first shot at higher-paying opportunities, you may need to pay for a membership, but the return on investment can be significant.

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Getting Paid

You may not always have a say on how you’d like to be paid, but when you do, the easiest way I’ve found is through PayPal. Establish a free account with an email address and password. It’s a safe system that protects your privacy while allowing you to transfer funds to your personal bank account. International payments are no trouble—for a small fee foreign currency is exchanged for USD. You can even create invoices right in the PayPal system so you can get paid quickly.

Are you afraid to take that first step? Don’t be. You can move as fast or as slow as you want. This is your business, so you’re the boss!

It’s taken me several years to break into the freelance writing business, and I’m committed to being a life-long learner. The industry is constantly changing and evolving, and when it does, I want to be ready.

“It’s not the destination, but the journey that matters most.” -Wizard of Oz

A plaque on my desk reminds me of this every time I sit down to write. So far, my journey has been life-altering. How about yours?

You really are smarter than you think! Get started today.

Has my story inspired you to start your journey? Have you already taken those first steps? I’d love to hear where your path has taken you. Won’t you share your experiences in the comments section below?

Enthusiastically,

Debbie


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#ItsNeverTooLate                                                                                              #AgingWithAttitude