How to Financially Handle Freelance Writing

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Making a living as a freelance writer is both exciting and has the potential for lucrative earnings. But how do you, as a starting, struggling writer, prepare for tax time, when no easy W9 will be coming through the mail? It's up to you to prepare--and make sure you claim all of your deductions!

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Instructions

Difficulty: Easy

Things You’ll Need:

(Recommended) Microsoft Excel or bookkeeping software

Step1

First, keep an honest ledger. Write down everything that gets paid in to you, from whom, and what for. Keep dates and especially with freelance writing, contact information.

Step2

Second, time your "payments". Often with programs like adsense or other revenue gathering programs, you can stall your payments to receive larger, bulk payments, which are both easier to keep track of and also easier to parcel off--like a regular paycheck, you can receive it at predetermined intervals, portion off roughly 30% for taxes, and separate the rest to savings, spending, and utilities.

Step3

Third, if your income sources are fairly scattered (as is the nature of freelance writing) I recommend starting a new and separate checking account with your bank. Hook this up to adsense, paypal, and whatever else you need to. If you let your deposits accumulate in there, and then pay yourself once a week out of it, it's very, very easy to keep track of AND to demonstrate at tax time. Not only that, but it's a commitment to yourself--if you have your own separate bank account for it, it means you're taking your writing and your freelancing career very seriously.

Step4

Fourth, keep excellent records of write offs. Your computer and home office space definitely count--keep those receipts! Any conferences definitely count. Classes count. Anything you do to further your craft absolutely counts. Anything you must have to keep your business going on a daily basis counts.

Step5

Fifth, let me know if you have any other bright ideas! I've been self-employed for a year and this is what works for me, but I'm always grateful for new ideas and new information!

Tips & Warnings

Pay attention to how much you save for taxes. I strongly recommend saving the recommended 30%--tuck it away in a high interest savings account so it works for you, but save it, because the last thing you need is to be called out a thousand bucks come April.