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(Art credit: Kathryn Sheldon) Do you use apps like PayPal, Venmo, or Square to accept freelance business payments? If so, you’ll need to pay close attention to the new tax reporting changes affecting these platforms that go into effect this month, especially if you do a significant amount of business through them. In an effort to reduce the amount of unreported taxable income from these payment platforms, the IRS is now requiring digital payment app businesses to report, on a Form 1099-K, each of their user’s business transactions (defined as a payment for a good or service). Given that the threshold for reporting was previously 200 transactions per year with a combined total of gross payments of at least $20,000, this may have serious consequences for freelancers who have not reported this income either inadvertently or by conscious choice during past tax years. To this last point, the new reporting requirements are not changing the basic tax responsibilities of every freelancer to claim all of the taxable income they receive from clients and other sources, including tips, on their tax returns regardless of whether the payer has sent the information to the IRS. In addition, this change does not affect personal, nonbusiness transactions. For example, if you receive payment for a meal you shared with friends via Venmo, you do not need to report that payment. Transparency into payment platform transactions means freelancers should be proactive in reporting their related income. The top takeaway here is that the IRS is going to have a much clearer picture of the flow of payments that freelancers and other businesses are receiving from these platforms. This means that if you haven’t been reporting all of the income you receive through these apps, you need to start now. If you use payment apps for non-business transactions and you receive a 1099 from one of these platforms, be prepared to clarify your activities with the IRS. In addition, there may be a chance that some of your activity is reported twice or inaccurately since all of these reporting requirements are new. Check carefully the 1099s you get from payment apps you use and those you receive from clients who are using them to pay you. This is another situation where you may need to explain to the IRS that the two 1099s are for the same transaction. For now, the most important thing for freelancers who are using these apps to conduct business to do is keep meticulous records of all transactions. It is up to the app providers to implement the rule change using the means they deem effective. Be on the lookout for any notices you receive from the platforms you use in case you need to provide tax information beyond what you may have done when you initially set up your account. Some other notable tax updates for freelancers include these 2022 tax due dates and changes to income thresholds for marginal tax rates and deductions: · January 18, 2022 – Deadline for Q4 2021 estimated tax payments · January 31, 2022 – Deadline for clients to send freelancers their W-2 or 1099-NEC/1099-MISC forms · March 15, 2022 – Deadline for partnership tax returns (and LLCs that are taxed as a partnership) as well as S-corporation tax returns · April 18, 2022 – Deadline for 2022 Q1 estimated tax payments. It’s also the deadline for C-corporation, sole proprietor (businesses you report on a schedule C), and individual tax returns. If you file an extension for the deadline, the Individual Tax Return Extension Form is due on April 18, too. · June 15, 2022 – Deadline for 2022 Q2 estimated tax payments · September 15, 2022 – Deadline for 2022 Q3 estimated tax payments · October 17, 2022 – Deadline for 2021 individual tax returns that received a filing extension Given the rise of the Omicron virus and potential next wave of the COVID pandemic, there could be changes to these due dates as there have been in the past several years if the IRS determines this to be necessary. Stay tuned! · The standard deduction: · For married couples filing jointly for tax year 2022 rises to $25,900, up $800 from the prior year. · For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600. · 2022 marginal tax rates: · The top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly). · 35%, for incomes over $215,950 ($431,900 for married couples filing jointly); · 32% for incomes over $170,050 ($340,100 for married couples filing jointly); · 24% for incomes over $89,075 ($178,150 for married couples filing jointly); · 22% for incomes over $41,775 ($83,550 for married couples filing jointly); · 12% for incomes over $10,275 ($20,550 for married couples filing jointly). · The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).
With the changes made by the IRS to payment app reporting requirements, the continuing crypto currency crackdown, and the above changes to marginal tax rates, and other tax thresholds, 2022 is shaping up to be a year where freelancers need to pay close attention to keeping their reporting up to date and being aware of new tax obligations coming this year. Checking in with your tax professional now can help you navigate these changes and make sure you are on track with your current and future freelance business taxes. Jonathan Medows is a New York City-based CPA who specializes in taxes and business issues for freelancers and self-employed individuals across the country. He provides tax, accounting, and business articles for freelancers on his website, http://www.cpaforfreelancers.com, which also features a free newsletter, blog, and comprehensive freelance tax guide. via Freelancers Union Blog https://blog.freelancersunion.org/2022/01/11/whats-new-for-freelancers-in-tax-year-2022/
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(Art credit: Andrea Hernandez, "Vinyl Bliss") Most small businesses struggle with relationship management. Many don’t know how to deploy the right systems, and those that do often make use of the wrong tools or software, spending precious money on things that don’t really help them. You want to be among the small minority that gets this right, because that will put you way ahead of the competition. As a smaller business that does not have access to the same resources as most larger competitors, every inch of land you can capture matters. Focusing on customer interactions and customer relationships is the right way to boost growth - you can pat yourself on the back for reading this, because you’re already walking in the right direction. Keep reading to discover what customer relationship management (CRM) is and how you can use it together with email marketing to boost your business productivity. What is CRM?CRM stands for customer relationship management, which typically involves a business using specialized software that allows them to store and access important data related to their clients. This consists of compiling data from multiple sources, including previous interaction history between the customer and business, phone calls, emails, social media, and live chats. Getting to know the customer better can help businesses provide better services, retain more customers and boost sales as they provide support throughout the entire customer journey. To better understand why you would want to use a CRM system for lead management and marketing campaigns as a small business, put yourself in your customer’s shoes. As a small business, you want to make your customers feel special, like your entire product or service was built, designed, and made for them specifically. You can only do this if you know your customers intimately, and for that, you need to store information relevant to them and use it whenever you communicate with them. Here’s where a good CRM platform or CRM software comes into play. It allows you to store relevant data and contact information of potential customers for better contact management. You can use this data in targeted marketing campaigns to ensure that your marketing efforts are fruitful. How does CRM go hand-in-hand with email marketing?Imagine if you had to manually dig through all the interaction history of each customer in order to properly craft an email that you think would make an impact. Not only is this process tedious, it’s also time-consuming. By pairing your email marketing campaigns with a great CRM solution, you will be able to craft more personalized emails that target your potential customers better. Not only will you begin to see the difference in traffic to your site, but also in sales as customers begin to feel like your products are aimed at them. You might even realize that it’s possible to market all kinds of content solely via email. It’s also helpful if you’re trying to ask for a review, as customers are more likely to take time out of their day to fill a survey if they feel it’s for someone who knows them or cares about them. A great way to do this is with a poll builder, which you can send to them through a personalized email based on the data you have. Good CRM software helps make a huge impact in your email marketing campaigns. This is because it provides premade templates for email marketing that you can use to simplify the process and save time. The other benefits that good CRM software helps provide are: Syncing customer data with other systems for easy useCustomer data is the key to your entire strategy. But data that isn’t categorized and well collected can be extremely hard to use. You want all your data in a single location, easily accessible from whatever other service you are using to give you some spectacular results and make the marketing process far more efficient. Helping you spot potential customers within your sales funnelSometimes you may not realize someone is a great potential customer unless you let the data paint the picture for you. A good CRM software will help you identify people with the potential to be customers within a sales funnel. This works for identifying potential clients for your business as well if you’re a service-based business. These are people you may have otherwise skipped or overlooked, costing you a potential sale. And with the right email marketing tool, you can easily schedule an automated email that your new customer might find useful. Recording and tracking customer interaction historyYou don't want to forget issues that a customer previously had. Not only does this give your customers the feeling that you don’t really value them as individuals, it also makes you look uninterested. However, when you record and track customer interactions, it makes it easier to target more customer-specific emails to the right customers. Not only does this increase your odds of a sale but it also makes customers feel like the products you send their way are useful specifically for them and it makes you seem thoughtful. This gives the appearance that you care and value your customers and drives long-term loyalty. Remember that doing business or hiring by relationship building is more beneficial for everyone involved. Automated alerts and reminders for scheduled eventsWhile it may be almost impossible to remember specific events or to send out emails to each customer based on important days or events, you can always automate this function, making it far easier to keep in touch with your customers, especially on important days. For example, you can send out an automatic email to your customers on their birthday with a special coupon or discount code giving them a one-day discount. While trying to manually remember everyone’s birthday would be nearly impossible, it only takes a few clicks to automate it. You can also automate your emails to go out on a specific day or at a specific time, no matter what you're doing at that moment. Knowing your customer base in great detail can help pick the best time to send emails. Integrating CRM with email marketing can be invaluable for your business if done right. Now that you know the various ways it can boost your business function, it’s time to get the process rolling! via Freelancers Union Blog https://blog.freelancersunion.org/2022/01/06/how-to-use-email-marketing-and-crm-tools-to-win-business/
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(Art credit: Karen Fischer, "Everything Under My Wings Prospers") It goes without saying that the last two years have brought about drastic changes in how and where people work. Whether you worked in clients' offices, co-working spaces, or just your local coffee shop, you're probably spending much more time working from home these days. Now that you've got a WFH routine set up, it's time to get serious about making positive changes to bad habits you've been holding on to. 1. Winging Your DayWe've all heard the saying "If you fail to plan, you plan to fail." Imagine starting your workday without a list or schedule set up. Distractions are going to easily slide into your day, like mindless social media scrolling, binge-watching shows, or household chores. Before you know it, your day is over, and you didn't get much work done. Try doing that day after day, and you can see how it can hold you back. When you're at home, a daily plan is even more important because you need to stay self-motivated. Set a schedule for yourself: think about lunchtimes, break times, deadlines, meetings, and setting aside hours to accomplish specific tasks. Use a calendar (paper, digital, whiteboard, doesn't matter what kind!), set reminders, and schedule everything, including personal tasks like exercising, organizing, walking the dog, or meditating. 2. Making Poor Meal ChoicesHelp yourself out by adopting meal prepping habits. With time-saving appliances like instant pots, air fryers, slow cookers, rice cookers, and even egg cookers, you can have several meal options cooking at once. Then, place meals in containers for the next few days so they're ready to go. This will help when you wait so long to eat that you will devour anything in sight. Sound familiar? Some great options to avoid mindless snacking on junk food are: ● Precutting some veggies and keeping them in the fridge for quick, healthy snack options ● Boiling eggs, so you have a quick, protein-filled option ready to go ● Keeping fruit in a visible spot, so you reach for that instead of a bag of chips Rather than cooking every day, you can meal prep once a week and reap the benefits by having several days worth of meals ready to go. If that's even too much for you (we're not judging!), get a rotisserie chicken and throw some into a salad, soup, casserole, tacos, or add some veggies to the side. The point is, stop eating junk because you're used to rushing or skipping meals based on your learned eating behavior from your previous work environment. You may have been conditioned to grab fast food on the way to work, at lunch, and on the way home for dinner. You're not that person anymore, and that's no longer your routine. Let your updated work hours and environment work to your advantage. 3. Not Drinking Enough WaterYou no longer have the excuse of forgetting your water bottle or that the vending machine only had soda. Cut out the soda or caffeine drinks, and replace them with healthier options like green tea, flavor-infused water, or just plain water. You now have access to your fridge at all times. Keep a supply of filtered water handy so that you can continuously drink it throughout the day. If drinking water is not currently a habit for you, there are apps and even water bottles that can prompt you to drink water. You have to start somewhere; there's no shame in using technology to help you stay hydrated. 4. Not Taking Time to Slow DownYou've probably heard of the benefits of meditating but may feel like you're too busy to fit it in. Stop putting up roadblocks to self-improvement. Meditating doesn't have to be a long, drawn-out process. You don't have that heavy traffic commute that would zap the life out of you, so use some of your time to be in the moment, allowing your body and mind to just breathe. If you're new to meditation, you may find that sitting still in silence is difficult. You can start with as little as 3-5 minutes and use a meditation app or a free guided meditation online to follow. Make it fancy with a unique meditation cushion you can sit on - it could encourage you to sit in your spot and unwind for a few minutes. 5. Ignoring Your FinancesLet's face it: Reviewing your finances can take time. It can be a task that gets pushed to the side out of sheer avoidance for many. If you're trying to save money or pay off debt, a budget is crucial to this goal. The word budget may make you squirm, but it's just a way of you telling your money where to go. To do that, you need to know your actual income and what your necessary expenses are, such as home, auto, electricity, and water, to name a few. That means scheduling some time into your day (as we discussed in the very first point. See how important it is?) to review your finances. Don't assume your bank account is fine without regularly checking in either. Mistakes and fraud happen and can have a domino effect on your money. Not to mention, financial institutions often have a time limit to claim items as fraudulent to get your money back. 6. Sitting For Too LongYou may have heard the saying "Sitting is the new smoking." Yes, it's that serious of a health risk. Exercising for as little as 15 minutes is enough to reap positive health benefits. Be honest with yourself; without a daily commute, you've surely freed up at least 15 minutes, right? Many fitness wearables have reminders to nudge you into walking or standing every hour. Or, set a timer on your phone or computer. 7. Allowing Clutter to Take OverSometimes it can seem so overwhelming to organize or tackle clutter that you avoid it because you don't know where to start. It involves making decisions, which at the end of the day you could be all decision-ed out. Yes, decision fatigue is real. If you’ve been ignoring the pile of paper that has grown so high that it's in danger of falling over like the Leaning Tower of Pisa, it’s time to tackle the clutter. To get into the groove, start small. If you try to take on everything at once, you're likely to burn out and go right back to avoiding it. While you're in your home office, start with one drawer of your desk-not the whole office. You may find that you have the momentum or interest to tackle another drawer or area of a room. Add one specific area you want to tidy up on your calendar (see how point #1 in this list comes up again?), so when it's time to declutter, you know exactly where to focus. If it's too big a task, assign a time limit so you know when to stop, and you can work on it the next day. Summing It UpBy having steps to follow and making your environment conducive to your goals, you can change the poor habits you've adopted over the years. When you were working outside of your home, you were required to adapt to the time and needs of others, not your own. Now, it's time for you to adjust your ways to match your needs and daily demands. Be kind to yourself; it can take time to adapt to new changes in your routine. After all, you didn't develop bad habits overnight, did you? via Freelancers Union Blog https://blog.freelancersunion.org/2022/01/05/7-poor-work-from-home-habits-you-can-change-today/
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(Art credit: Pedro Gomes) Working as a freelancer is incredibly exciting. You don’t have a boss and you can control your own schedule. The more you work, the more you earn — no more unpaid overtime! Instead, you’re in control of your destiny. Unfortunately, some pitfalls come with freelancing as well. It’s important to protect yourself legally as you get started, to avoid significant issues that can sink your business before it even gets going. What steps can you take to prevent legal issues? Here are four to consider. Always Use ContractsContracts are essential to protect yourself and your business as a freelancer. Your contract should include the following information: ● What’s included in the job ● The pay and payment schedule ● Expectations for both sides of the contract Having the client sign a contract before you begin work ensures that if they don’t pay, you’ll have legal recourse against them. It’s a sad fact that many people online feel like they can take advantage of freelancers and get work with little or no payment. You can also protect yourself by requiring 50% of the payment upfront and the rest when the work is completed. Beyond the contract, always watch for red flags for any job. For example, a job that’s too good to be true or pays far more than expected may be a scam. If you don’t know exactly who you’re working with, including the business name and a contact person, it’s a good idea to pass. Don’t let money or fear of failure blind you to the warning signs of a scam. Keep your eyes open and make sure you work with the right kinds of clients! Consider a Business EntityAnother important way to prevent legal issues is to form a business entity, like an LLC. This allows you to separate your business finances from your personal assets. If something happens and the business goes bankrupt, creditors won’t be able to pursue your personal money to settle debts. This is also important in case your business is involved in a lawsuit. For example, let’s say you create a blog post that goes viral on social media, and the blog post has some criticism of a specific company. The company might sue you, saying your post had inaccurate information that damaged their reputation. Even if it’s not true, it takes a lot of money to defend yourself in court. If any damages are assessed, an LLC will help ensure it’s against your business and you will not lose your home, retirement, or other savings. Understand Your Tax ObligationsFiling taxes as a freelancer is not the same as when you were an employee. You have to set more money aside and make sure that you track your business expenses so you can use them as write-offs to reduce your tax burden. What are some of the expenses you can write off? Anything that is a normal cost of doing business counts. For example, you can write off a room in your home that’s used exclusively as an office, along with a percentage of your utilities. If you have an office outside the home, you can write off the rent and utilities for that office space. You can also write off expenses related to ongoing education in your industry, professional memberships, and more. The fact that so many more people are freelancing is part of why the demand for accountants is growing. Working with an accountant can help you file your tax returns correctly and pay what you owe. Protect Intellectual PropertyIf you’re a freelance writer or designer, it’s important to avoid using other people’s work as part of your projects unless you have permission or paid for the rights. At the same time, you need to protect your creative work from theft by others. Intellectual property laws for freelancers can be confusing. There are several types of intellectual property, including copyright, trademarks, patents, and trade secrets. If you sign a non-disclosure agreement with a client and then share their processes with someone else, you’ll violate trade secrets property law. If someone takes your design and passes it off as their own, that’s a violation of your copyright. While you may use a variety of other works as inspiration for your own, what you create has to be different enough that it’s clear you didn’t steal it. You can’t use something word-for-word without attribution or permission, and the same is true for graphics. To protect your work, be sure you understand how copyrights work and when you might need to purchase a trademark. Keep Your Freelance Business Legally SafeBeing a freelancer can be lucrative and incredibly satisfying. However, to make your business successful, you need to protect yourself from common legal issues that freelancers face. Using contracts, forming an LLC, staying up to date on taxes, and understanding intellectual property laws are all essential for new freelancers. The law will protect you if you understand how to use it. Make sure your business is protected so you can work freely and enjoy your freedom. via Freelancers Union Blog https://blog.freelancersunion.org/2022/01/04/preventing-legal-issues-for-first-time-freelancers/
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(Art credit: Sisi Recht, "Stacked") There are as many types of solopreneur business models as there are solopreneurs. When you work for yourself, by yourself, you can reinvent what you do whenever you want. That’s true…in theory. In reality, many of us get trapped doing what we’ve always done, how we’ve always done it, even if it is no longer giving us what we need financially or emotionally. One reason for this is that solopreneurs are so used to the feast/famine mentality when it comes to revenue that, when we find something that works, we keep doing it, even if we don’t actually like it anymore. On the flip side, something might not be working anymore, yet we keep doing it because we’re not sure how to make a change. In many instances, this leads to getting burned out and, in some cases, going back to working for someone else because you don’t know how to update your business model to give your life what it needs. Whether you need more money, more time, or more interesting work, here are four ways to reboot your business model and bring back the passion that made you go out on your own in the first place. Find a PartnerBy definition, solopreneurs do what they do primarily alone. Running a one-person show has its pros and cons — you can be more nimble and flexible than a larger company, but you’re also limited to offering things that only you know how to do. Incorporating a partner, either as a primary part of your existing business or as a new venture, can add service offerings that diversify your work and attract different types of customers. Working with a partner will also expand the professional network of potential clients you have access to. Working by yourself can also be lonely. Finding a business partner means you have a person to bounce ideas off of, or just commiserate with when the struggles of entrepreneurship get you down. Entering into a partnership is a huge commitment. Consider working together on a few projects as a trial period before deciding to embark on a full partnership. And always make sure to create a partnership agreement, even if you’re not creating a legal entity together, because life changes constantly and you always want to be prepared for the partnership to change or end. The best advice I got on this front was from an attorney who told me, “A good partnership agreement plans the divorce before it happens.” Do MoreExpanding the services you offer can be a great way to update your business model. Start by listening for things your clients always need that might be adjacent to the type of work you already do. For example, if you’re a social media manager, your clients might need help with social media ads, graphic design, or copywriting. Once you’ve identified some possibilities think about the ones that sound the most interesting and have the highest earning potential. First and foremost, make sure you’re going to like doing this new skill by testing it out. Then think about earning potential by doing some research on what other people are making with that skill set. Earning potential will also depend on how fast it will take you to get good at the new skill because you’ll make the most money on things you’re an expert on and can do faster than anyone else. Do LessMany seasoned freelancers get to a place in their career where they’re making more than enough money to facilitate the life they want to live, but they’re still taking on more work because they’re addicted to working. If money isn’t a primary driver for you right now, consider doing less. I know it seems counter-intuitive because, as freelancers, we’re conditioned by the feast/famine mentality — many of us remember times when there wasn’t enough work, so we hoard work and say yes to everything, even when we don’t actually need the money. Consider reevaluating what you do based on what brings you joy and go from there. Doing less might mean outsourcing things, letting go of clients, or removing certain services from your list of offerings. Create Passive IncomePassive income is a myth. There is nothing that makes money for you without you doing anything. With that said, there are ways to introduce income streams that are more passive than one-on-one client work. Most freelancers work with clients individually with “done-for-you” types of services, where you’re directly delivering what your clients need. This means that there is always a one-to-one relationship between your time and money. Establishing passive income streams changes the time/money relationship. Consider teaching other people how to do what you do best with a course, blog, or newsletter. You can also create off-the-shelf products like templates, which allow people to get similar results without engaging directly with you. Another passive income model is working with groups instead of individuals. Think about ways to work with more people simultaneously, which means that one hour of your time now helps many people instead of just one. You could start a membership group where you’re telling people “how” to do what you do but not doing it for them. Groups also allow you to answer the same questions for multiple people simultaneously in a group forum and enable other members to help each other. Different versions of this business model include group coaching programs, masterminds, and boot camps. Being your own boss means that you get to make changes to your business whenever you want to. Many of us went out on our own, so we could do what we love. If your business is no longer giving you what you need, don’t wait another day to make a change. Life is too short to do things that don’t bring you joy (or pay the bills). via Freelancers Union Blog https://blog.freelancersunion.org/2022/01/03/4-ways-to-reboot-your-business-model/ |
AuthorI have 5+ years experience working as a medical transcriptionist. When I am not working, I enjoy sports like playing basketball or judo. I love making friends and connections. Archives
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