Today we welcome a guest from Kenneth Burke, marketing director at Text Request, and owner of Kenneth Burke Media. He’s helped dozens of companies, from pre-launch startups to billion-dollar businesses, accomplish their goals. Get his free ebook, How to Become a Paid Freelance Writer.
Freelancing creates a lot of opportunities that you wouldn’t get an an employee, like complete autonomy of your work and schedule. But it comes with unique responsibilities, too, the biggest of which is money management.
As an employee, the company handles your tax withholdings, retirement contributions, and more. All you do is sign your name. But as a freelance writer, you’re in charge of managing this – and more.
There’s a lot to pay attention to, and even the best freelancers pay more than needed without realizing it!
So what can you do to cut down on expenses, save money, and better prepare for April 15th?
Plenty. Here are seven ways to save money as a freelance writer (and make your life easier in the process).
Most people think accounting is black and white. They’re wrong.
A single transaction can be accounted for maybe a dozen different ways, and the way that’s best for you depends on several factors, which all change from year to year.
Unless you want to keep up with all 75,000 pages of the US tax code, find a good accountant. They’re modern magicians who can (and will) save you money you didn’t even know could be saved.
As a business owner, you’ll be charged more in taxes than if you were just an employee. Even though you can deduct most things as a freelancer, these charges can hit you like a ton of bricks if you aren’t prepared.
So prepare by automatically withdrawing a percentage of every payment you get when you get it. Check with your accountant to see how much you should set aside.
Every savings account will let you automatically transfer a certain dollar amount at an interval you choose, and many will let you set aside a percentage of every deposit.
This works well for tax prep, and is also a proven strategy for helping you build up any savings account (cash or otherwise).
It’s best for business owners like yourself to keep separate accounts for personal and business expenses. But it’s profitable for both to use a percentage cashback credit card (so long as you pay it off every month).
If a card gives you 1% or 2% cash back on purchases, and you spend $3,000/mo on living or business expenses, then you can get up to $720/year back.
It might not sound like a life-changing amount of money, but that’s a mortgage payment for many, or what it takes to fix a car.
Digital payment processors like PayPal and Stripe are great for freelancers, but they essentially charge 3% for every transaction (and more for international transactions). When you’re making tens of thousands of dollars a year, that fee really adds up!
So you either need people to pay you by check, which isn’t likely, or you can work through a platform that takes care of the fee for you. A few good options for this are ClearVoice, Upwork, BlogMutt, and Freelancer.
The caveat is that you might make less per assignment using a platform than working with clients directly, depending on your rates, because platforms often charge “project fees.”
Sole proprietors get the distinct privilege of deducting virtually everything:
They you get tax credit for classics like student loan payments, having a child, buying a home, and more. Talk to your accountant to take advantage of all your options, but my favorite is writing of “vacation” expenses.
If you travel, you can write it off so long as you conduct business in that location. Working on your computer doesn’t count (you don’t need to travel to do that), but meeting with a client in the town you traveled to does.
So whenever you travel, see if you can meet with a client or potential client. You might save yourself a lot of money.
Your value as a freelance writer is often in how many viewers you can bring clients. Case studies show blog posts that are easier to read and have helpful visuals perform better (and get more viewers).
When your work performs better, you can charge more for it.
You can also use free tools like Trello to manage all your projects. Working with lots of clients inevitably poses an organizational problem. Having one place to easily manage everything saves you time and stress, which is as good as money.
It’s always nice to get out of the house, especially when you work from home full-time. But working from coffee shops, bars, and even co-working spaces is a nicety that quickly becomes costly.
If you go out just twice a week, and spend $5 each time, that adds up to $520/year, which is the equivalent of a nice 3-day, 2-night vacation. If you go to a bar, you’ll probably spend twice that, and 5X-10X that amount if you use a co-working space.
To save money, just work from home, and get out of the house for a walk during your breaks. That value of your savings will often trump the moment’s change of scenery.
Saving money as a freelance writer ultimately comes down to financial literacy. How much do you know about your options, and how aware are you of your spending?
The more you know, the more money you can save (and make).
You’re already a step ahead by reading this article. To go further, find an accountant to help you over time, and use a free “money tracking” tool like Mint to keep tabs on everything that comes in and out of your accounts.
This will help you take advantage of opportunities, and save money as a freelance writer.