Freelancing is more popular than ever. Some estimates suggest over 40 million Americans will be self-employed by 2020. Many of these people will be employed in the arts, particularly in writing. Businesses need content, and they want to pay great writers like you to create it.
If you’re thinking about self-employment or you’ve made the leap to blog writer, you know there’s more to it than writing. You’re going to be running your own business, after all, and that requires some skill and savvy.
One of the tasks you may not have thought much about is your finances. Many self employed workers act as their own bookkeeper or accountant. This is particularly important in tax season, since you’ll handle your own filing with the IRS.
Whether you’re starting out or you want to make sure you do a better job with the records, these tips will help.
What to Record as a Self Employed Writer
The first and most important tip we have is to keep good records. This may be your goal anyway. You’re looking for some practical advice on how to go about record keeping.
The first suggestion here is to keep everything. You probably know you want to keep records of what your clients paid you. You’ll also want to keep records of things you bought for the business.
There are some other expenses you’ll want to record. For example, if you met a client for lunch, you may be able to write off a part of the bill. You should keep the receipt.
There are other business expenses you may not realize you can write off. Some of these include:
- Travel expenses for business trips
- An IRA
- Marketing and advertising expenses
- Educational expenses for extra training
If you’re not sure if what counts as self-employed tax deductions, consult with the IRS.
You should also keep records of checks, bank deposit slips, and more. Personal loans for self employed people also need to be tracked carefully. Keep track of the payments you make, as well as how much you owe and the interest you pay.
Creating and Keeping Records
The next question you have about financial records is how to create and maintain them. You can keep a folder of receipts and invoices, but this isn’t always the best way to track your income and expenses.
A better plan is to keep digital copies of receipts, invoices, and the like. If you want to make things simple, you can use software like Quickbooks to record and track expenses.
Bookkeeping software isn’t meant to replace your records. You want to have paper and digital copies of your receipts so you have undeniable proof of an expense. If the IRS ever decides to question the expenses you claim, you can show them the receipts.
Using Bookkeeping and Accounting Software
We already mentioned Quickbooks and other bookkeeping software like it. These programs don’t replace a paper trail, but they can help you keep better financial records.
A ledger can help you reconcile your books, showing what’s coming in and going out of the business. It can also help you tally expenses and track self-employed tax deductions.
It’s also useful for helping to calculate your taxes. The right program may even be able to help you track when you need to make payments to loans or remit to the IRS.
An accounting program pulls the information from your records together into one location. It also helps you record financial information in a standard way. This makes it easier for you and to figure out what your business finances actually look like.
Determining Taxes for Self Employed Writers
When you think of financial records, you probably think of paying your taxes. This is the primary reason most people try to keep track of their expenses and income. Tracking your finances is a good idea any which way, but it’s more important when you know you need to report to the IRS.
If you earn under $400 from your freelance business, you won’t need to file for this income. Many writers earn much more than this, so you’ll need to file taxes.
Depending on how much you earn, you may even need to remit to the IRS on a more regular basis. Many self-employed writers pay their taxes quarterly. You’ll want to keep good track of when your quarterly payments are due.
Some people see quarterly payments as a bit of pain, but this is how you pay into programs like Social Security and Medicare. It also improves your visibility. It’s also easier to make smaller, more regular payments than one massive lump sum.
Get Help from an Expert
If trying to calculate your self employed taxes has your head spinning, don’t fret. Many self-employed workers believe they need to do everything themselves. This couldn’t be farther from the truth.
There’s a reason you’re a writer, not an accountant. If you need a hand keeping your financial records straight, you can reach out to an expert in this area. A bookkeeper or accountant can help you manage your business finances and make your tax payments on time.
You don’t need to employ this person full-time either. Many bookkeepers and accountants can work part-time or even on an as-needed basis. You may decide to only visit them for tax preparation.
Working with an expert can help you keep better records, though. It also means you get back to what you’re best at: writing.
Keep Your Business Running Smooth
Being self employed as a blog writer has many perks, but keeping your financial records straight isn’t one of them. These tips can help you manage this aspect of your business with ease.
Are you looking for more great advice about how to run your own blog writing business? You’re in the right place. Check out informative articles for more tips and tricks.