Becoming a freelance writer can be a very rewarding career choice but it does come with a lot of responsibility. A major part of that responsibility will come in money management and keeping your finances in order. A lot of this includes keeping track of your taxes, managing your expenses, and making sure you’re getting paid what you’re worth. Being a freelance writer doesn’t have to be a side job or something you do in-between jobs. It can be a good business if it’s treated like one. Below are some steps to keeping finances well organized.
1. Treat freelancing like a business
Most freelancers get into the wrong mindset when it comes to what they do. Most treat it like a typical job and either work for one or two clients or keep their income streams limited. This type of attitude can have a big impact on financial management. A freelancer has to get into that business mindset because they are much more responsible for not only what they make but also what they owe in taxes. Getting the right mindset is the first big step to good financial management as a freelancer.
2. Learn how to manage your taxes
It’s very common for most self-employed people to make mistakes on their taxes during the first or even second year of business. Most freelance writers are considered to be self-employed. Self-employed people are sometimes subject to the self-employment tax and almost always subject to the income tax. This change from having a job to being self-employed also affects what forms have to be filled out. Most self-employed people fill out the 1099 form.
Deductions are a big deal concerning taxes. A freelance writer can deduct many things from their monthly internet and electric bills. This even includes money spent on software related to running their business. Keeping track of deductions will have a major impact on your financial management. This will help keep taxes low and make more money available for reinvesting or putting it away for a rainy day.
3. Keep overhead expenses to a minimum
A major part of financial management is keeping spending to a minimum. Having out of control spending is a very fast way to kill a business. This is true for the freelance writer and even for the big corporation. A writer doesn’t need a lot of overhead. Most likely they would need to pay for is the internet, a computer, and some software.
Anything else past typical expenses, like bills, should be kept to a minimum. If you don’t need that high price PC or digital camera, then don’t get it. Some freelancer writers get self employed loans to cover some basic start-up cost and this is fine. A small loan is a good way to get things going.
4. Managing different income streams
Being a freelance writer is very different from working a typical job. A typical job pays on a set schedule. A freelance writer has the flexibility to charge what they want and get creative to how and when they get paid. It’s a good practice to set up a payment schedule that pays out before bills are due.
Since a freelancer can control how much they get paid, it’s a good idea to justify whatever rate is set a goal. This can be done by maintaining a portfolio that can communicate value to potential customers. By doing this a freelancer can get what they are worth and avoid a lot of problems.
This flexibility also allows freelance writers to make money in different ways. A freelance writer can also sell digital courses, have ads on their blog, or even take up coaching. By keeping these potential revenue streams organized a freelance writer can balance money coming in and what has to go out much easier.
5. Conclusion
Being a freelance writer is a great career choice for some people. Not managing finances well in the first year or two is very common for self-employed people. Some freelancer writers may have some startup cost and self employed loans can be a good solution. Taxes are a typical thing that is mismanaged in the first or second year, but it’s an easy fix. Determining things like rate and revenue streams helps to balance what’s coming in and what goes out. Following these steps can make managing finances for freelance writing much easier
