https://blog.freelancersunion.org/content/images/2021/11/Untitled-design--20-.png
(Art credit: Kathryn Sheldon) Freelancers tell me all the time that they want “better” clients. Clients who value them, pay them what they’re worth, and give them the freedom to do what they love. Clients who see them as a valuable part of their business, engage with them over and over again, refer them to other people, and think of them as part of the team. Every time a freelancer tells me this, my first question is, “How do you find clients?” And they tell me about funnels, ads, freebies, and their social media presence. When I ask them how they’ve built and leveraged their professional network, they look at me like I just time traveled from a chamber of commerce meeting in 1972. Freelancers (and entrepreneurs in general) have become lazy and brainwashed by the narrative of overnight success built from a single social media post, viral blog, or killer freebie. The internet was supposed to make networking obsolete. Why have coffee with just one person when you can make one piece of killer content (and get in front of a million eyes) and the whole world will instantly recognize your value? And it’s not just the internet, traditional marketing strategies have always been based on a needle-in-a-haystack mentality — you put your message out there to as many people as possible and a small percentage will buy what you have to offer. The most common way I see this play out for freelancers is a sales funnel. 1. Give something amazing and free away to tons of people. 2. A small group of those people will give you their email address so you can give them even more free things. 3. A small group of those people will have a “discovery” or “strategy” call with you where you’ll give them free advice and try to convince them why they should pay you to do something that they think you’re teaching them to do on their own….for free. 4. A small group of those people (at this point, it is not even a group, we’re talking single digits here) will actually pay you to do something for them. 5. Maybe 1–2 of these people will turn out to be excellent clients and you’ll work with them long-term. Solopreneurs and freelancers get fooled into thinking that this is the way to find clients — cast a wide net to find the right fish, kiss all the toads to find the frog… Here’s why that is not true: Building the right audience takes timeI’m not saying that freebies and content marketing are bad strategies, I use both of them for the passive income side of my business where I sell things “off-the-shelf” like courses, tools, and templates…but it takes a ton of time and effort to build a dedicated audience organically. Unless you already have a huge audience, you will have to 1) pay someone (most likely Mark Zuckerberg) to get your amazing free thing in front of lots of people, and 2) spend a lot of time making great (free) content and getting it out on as many channels as possible. The funnel strategy works for products (and huge companies), not solopreneursThis might be a viable strategy for someone who needs to sell lots of products to break even or has a huge sales team that does nothing but monitor the funnel and do free discovery calls. When your business is built on your skillset and the work that only you do, you need to find a small group of dedicated clients who know and value you, not a bunch of people who really just want to consume free content and never pay you what you’re worth. This brings me to the other complaint that freelancers often have, “I’m spending all of my time finding clients and not doing what I love.” Well…when you’re sifting through your funnel, having dozens of free “discovery calls,” and managing your social media accounts it’s hard to focus on your actual work. It’s also hard not to see each one of your followers or subscribers and just potential dollar signs. When you focus on actual relationships with the right people, you not only increase your chances of finding high-quality clients, but you also build a connection with an actual human which is worth so much more than the money in the bank. When you’re a freelancer, finding clients you can marry instead of just date will not only make your work more satisfying, it will remove you from the feast/famine mentality of constantly having to hustle. The answer, my friends, is networking. I hear you saying it, I’ve said it myself, “I hate networking.” I too hate old-school networking, which I define as joining groups and talking to strangers at professional events in an effort to gain something. This is just like your funnel but without the internet — you’re talking to a ton of people in a superficial way, basically seeing them as walking dollar signs, and then narrowing them down to the ones who will actually pay you. The way I’m defining networking is the process of building meaningful connections with others so that you can support each other. This means that you’re networking with people who might not actually be potential clients. When you see people as potential relationships and not dollar signs, you build a real connection which can lead to future work, referrals, and in the best cases, a person you can come to when you need advice or support. Here’s how I build and nurture my network. Identify Your Existing NetworkYour existing network is the best place to start. This doesn’t mean that you’re reaching out to everyone you’ve ever known to try and get them to hire you, it means you’re reconnecting with people you actually like, know, and respect in an effort to make yourself better at what you do (and hopefully add value for them as well). Make a list of everyone you know who 1) might be a potential client or know potential clients, 2) does something adjacent to what you do, or 3) also runs their own business. I encourage you to think outside of the box on this list. You’re not reaching out to them to say, “Hey, I’m running a ____ business now. Can I tell you more about what I do?” You’re reaching out to say, “Hey, we haven’t connected in a while. I’m running my own ____ business now and would love to catch up and pick your brain about _____ (topic).” The bottom line is that if the people you already know don’t know what you do, then they won’t know to talk about you when someone needs the type of services you offer. Rejuvenate Your Existing NetworkOnce you have this list, start reaching out. This needs to be genuine, not just a generic BCC email. Pick the people you actually want to reconnect with and send them a personalized email, text, or give them a call and ask if they’d like to catch up. Even if it seems like they wouldn’t be a potential client, you would be surprised at how peripheral connections can turn into solid client relationships. Plus, it is just nice to have an excuse to reach out to someone you haven’t seen in a long time and reconnect. When I first did this, it took a couple of follow-up emails for some people, but ultimately, I didn’t find anyone who wasn’t willing to connect and everyone I talked to gave the most amazing advice and support. The worst thing that can happen is that someone doesn’t email you back. Find the NodesI know, cold outreach sucks. I hate doing it too. But this is the best way to broaden your network and build connections. Instead of finding individuals who might be your ideal audience, look for “nodes.” Nodes are people who already serve your ideal audience in another way, the people that your ideal clients go to for advice and referrals. For example, if you’re a graphic designer who specializes in logos for dentists in Tampa, you don’t want to reach out to every single dentist office in Tampa. You want to find the Tampa dental association and connect with the person who handles communications. If you’re an environmental designer who creates expo spaces, you don’t want to reach out to individuals who go to expos, you want to reach out to the organizer of the expo. If you’re a graphic designer who specializes in book covers, you don’t want to reach out to individual authors, you want to build a relationship with a book editor. Find the people adjacent to your work, who already know your audience and build a relationship with them. This will give you a referral network that keeps going and going, instead of just one new client. Most importantly, every time you have one of these meetings end with asking, “Who else should I talk to?” Then you don’t have to cold call/email, you can get an introduction from someone, which goes a lot farther. Keep Up With Your NetworkOnce you’ve done this initial outreach, keep up your network regularly. There are lots of ways to do this. You can establish a regular email newsletter that keeps them engaged in your work. This is a fine strategy but can also feel salesy and leads to people getting burned out on you trying to sell them. For the people I’m most interested in keeping in touch with, I make sure that I reach out every few months and grab coffee or just have a Zoom check-in with them. You can also send over “thought of you” emails when you come across an article or opportunity that they might be interested in. Don’t use the check-ins to sell them, just talk about life and catch up…ask how you can be helpful. Since starting my business, I have reconnected with so many people including former colleagues, business partners, and friends who I haven’t seen for years. I’ve also connected with new people from all over the globe who have found me through my blogs and recommendations from other awesome people I work with. Did some of these connections lead to work? Of course. Several of these amazing people have referred me to clients, brought me in on their projects, and even passed on entire projects to me. But more importantly, I’m cultivating relationships with people that I can now reach out to for advice, a recommendation, or an introduction in the future. Likewise, I never turn down a request for a chat in an effort to pay it forward. No matter how you approach client acquisition, networking is a must. Building a network of clients, partners, and colleagues is what will create sustainable income, differentiate you from other freelancers, and give you a place to go when things get tough, and margins get tight. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/30/no-more-funnels/
0 Comments
https://blog.freelancersunion.org/content/images/2021/11/Untitled-design--19-.png
It’s a great feeling to be able to help others — and it’s even better if you get some added benefit, too. This is the kind of win-win situation that the Taxpayer Certainty and Disaster Tax Relief Act of 2020 made possible by allowing taxpayers to deduct up to $600 of charitable contribution, regardless of whether they itemize their taxes or not. What does it mean for year-end freelance taxes? Essentially, this new law made it easier to deduct up to $600 in donations to qualifying charities on your 2021 federal income tax return. This applies even if you don’t itemize your freelance taxes, which is what makes this provision different than in the past when it would be necessary to itemize in order to claim charitable deductions. There are some key thresholds to note: · For individual tax filers, including if you are married filing separate returns, you can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. · The maximum deduction is increased to $600 for married individuals filing joint returns. What type of charitable contributions qualify for the deduction? According to the IRS, “Any cash contributions including those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with their volunteer services to a qualifying charitable organization” will qualify. However, keep in mind that cash contributions don’t include the value of volunteer services, securities, household items or other property. In addition, be sure that you are donating to a recognized charity, otherwise you can’t claim the deduction. To check the status of a charity, use the IRS Tax Exempt Organization Search tool. Other exclusions to this rule to be aware of: contributions made either to supporting organizations or to establish or maintain a donor advised fund. Contributions carried forward from prior years do not qualify, nor do contributions to most private foundations and most cash contributions to charitable remainder trusts. Make sure you obtain and retain a receipt for your contribution. Be aware that before claiming a charitable contribution deduction, you’ll need to have a receipt. Usually, this includes obtaining an acknowledgment letter from the charity, and you should also retain a canceled check or credit card receipt for contributions of cash. Beyond charitable contributions, you may be able to take advantage of these year-end freelance tax deductions: Measure up your home office. If you work at home, like many freelancers do, calculating the size of the space you use exclusively for business and claiming $5 for each square foot (to a maximum of 300 square feet) on your tax return can save you money. This is the simplified home office deduction allowed by the IRS, which encompasses deductions and the business expenses associated with your office space, such as rent, mortgage, and utilities. If your home office is larger or your associated expenses are higher, you can opt instead for the regular method, which requires you to track your actual expenses such as utilities, mortgage payments, rent, home repairs, home depreciation, etc., and then calculate your deduction based on the percentage of your home devoted to business. The key to claiming this deduction is that the area of your home you claim must be used solely and regularly for the purposes of trade or business. This generally means that you have a separate room or space in your home that is clearly defined as an office. Additional supplies, office furniture, or new technology. The end of the year is the perfect time to make investments in these areas and use the expenses as a deduction on your 2021 taxes. For start-ups, you could also elect to use the bonus depreciation deduction, which allows for an immediate first-year deduction on the purchase of eligible business property. This is a method of accelerated depreciation which allows for an additional deduction of 100% of the cost of qualifying new property in the year in which it is put into service in the tax years 2017-2023. Advertise your business to set the stage for a successful 2022. Spending on end-of-the year marketing now can help your business grow next year. Marketing-related deductions you may be able to take, especially in the last few months of the year include updating your website, doing an email marketing push, or designing a new logo. Pay your estimated taxes now. While your fourth quarter estimated taxes aren’t due until January 15, if you pay them before the end of the year you can deduct the expense and potentially lower your tax obligation. Tax reform limited the state and local tax deduction to $10,000 for non-business taxes but certain state and local governments have separate business taxes that are not limited. These taxes are reported as business expenses. Be strategic on collecting payments. Be aware of where you are in the income tax brackets and be sure to accelerate or slow down collections based on this information. If you are going to be in a higher tax bracket, try not invoicing clients until late December so the payments aren’t collected until 2022. Retirement contributions. Contributing as much as possible to a qualified retirement account such as a solo 401(k), SEP IRA, or an individual retirement account (IRA). This will allow you to defer the taxes on these monies and also save for retirement. Evaluate your business structure. If you own a business and you haven’t changed your entity type for several years, you may want to consider if another entity type may offer you tax advantages. This is one tip that should likely be done in concert with a tax professional so that you are certain that any entity changes you make will be beneficial to you. Show your clients some appreciation. Another expense you can deduct from your 2021 freelance taxes, if you make it before December 31, is that related to business gifts. If you purchase gifts for clients during the holidays, you will be able to deduct up to $25 per person this tax year. You could also take them out for a nice meal if they are in the same area — as long as the meal is at a restaurant and substantive business is discussed, you can deduct 100% of the expense for the 2021 tax year. This is another bumped-up deduction bonus from the IRS related to COVID relief. With the holiday season just around the corner, now is the time to consider making a tax deduction or putting in place some of the other deductions noted above. In most cases, they can, dollar-for-dollar, reduce your tax bill come tax season 2022, while providing benefits to others and potentially your business, too. 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 a comprehensive freelance tax guide. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/23/end-of-year-tax-deductions-you-cant-afford-to-miss/
https://blog.freelancersunion.org/content/images/2021/11/Untitled-design--18--1.png
(Art credit: Andrea Hernandez, "Stay Safe") This post is provided by our partner, MetroPlusHealth. Find affordable health plans for New Yorkers of all ages from MetroPlusHealth. COVID-19 has hit the mental health of New Yorkers hard. So found MetroPlusHealth, New York’s affordable health plan, in its 2021 Survey of Behavioral Health. The study was done 18 months after COVID-19 started. It found that the pandemic had harmed the mental well-being of more than half (55%) of city residents, higher than the national average of 48%. New York City is one of the cities hit hardest by COVID-19. The MetroPlusHealth study compared the impact locally to the whole country. It found that the city's shutdown made more people: · lose sleep (54% NYC vs. 48% U.S.); · feel lonely (49% NYC vs. 41% U.S.); and · feel anxious (63% NYC vs. 54% U.S.). Nearly two-thirds of people 18 to 34 years old said that getting mental health care would make their lives better. Here’s how MetroPlusHealth has your back. COVID-19 put new stress on many of our members who are most at risk. This is why we recently decided to bring our behavioral health (BH) services in-house. Now, our staff works with our primary care physicians to identify BH issues upfront. Putting both types of health issues in one place makes for better care and use of services. We know that behavioral health care is key to our health plan. It lets us give members care that is complete and that works together. It all comes FREE with your MetroPlusHealth coverage: virtual visits, urgent care, online therapy, initial online psychiatry visits, and follow-up visits! via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/22/more-than-half-of-new-yorkers-less-healthy-due-to-pandemic/
https://blog.freelancersunion.org/content/images/2021/11/PedroGomes_9.jpg
(Art credit: Pedro Gomes) Given that the new infrastructure bill mainly allocates funding for public works projects, you may not be aware that the bill also puts in place new reporting requirements for individuals trading and using cryptocurrency, which begin January 1, 2023. While cryptocurrency (crypto) investors were expected to meet the same reporting standards when it came to paying tax and reporting profits and losses to the Internal Revenue Service, the passage of the Infrastructure Investments and Jobs Act (IIJA) shows that the IRS is serious about enforcing, strengthening, and standardizing these requirements. You can find the reporting requirements stated in section 80603 of the Infrastructure Investments and Jobs Act (IIJA). Here is a synopsis: Summary of the New Reporting Requirements for Cryptocurrency Exchanges1. All cryptocurrency exchanges are now considered “brokers,” similar to traditional investment brokers. 2. The term “digital asset” is defined by the law as “any digital representation of value which is recorded on a cryptographically secure distributed ledger or any similar technology as specified by the Secretary” (H.R. 3684, p. 2421). 3. Digital assets are considered the same as securities, similar to stocks, bonds, and certain types of commodities in the eyes of the IRS. Therefore, the tax treatment of digital assets is essentially the same as before: you must pay taxes on capital gains. Keep in mind that securities are also subject to the Securities and Exchange Commission (SEC) and this legislation does not address the SEC. 4. Reporting requirements are now more stringent for cryptocurrency exchanges, which must now report information to both the IRS and to their customers. Currently, there are no reporting requirements for cryptocurrency exchanges, although some exchanges may send you tax forms such as Form 1099-MISC, which only covers the payouts received, not capital gains related to your crypto activity. The new law states that the following information is now required to be reported to the IRS and to customers: (1) name, address, and phone number of each customer; (2) the gross proceeds from any sale of digital assets; and (3) capital gains or losses and whether such capital gains or losses were short-term (held for one year or less) or long-term (held for more than one year). The legislation does not state what IRS forms cryptocurrency exchanges must send to their customers, but Form 1099-B (“Proceeds from Broker”), would seem reasonable. 5. Penalties for failure to report cryptocurrency activity will cost you. The law lays out that exchanges which fail to report the information above will be subject to a $250 penalty per customer, up to a maximum $3 million penalty. How the new cryptocurrency tax law may affect your freelance businessAnother important development in the IIJA is that digital assets valued at $10,000 or more are now treated as “cash” received for any person engaging in a trade or business The law states that, “Any person engaging in a trade or business that receives more than $10,000 in cash must file IRS Form 8300 (''Report of Cash Payments Over $10,000 Received in a Trade or Business”).” With this form you are required to report: (1) the name, address, and TIN of the person from whom “cash” was received; (2) the amount of “cash” received; and (3) the date and nature of the transaction. This new reporting requirement takes effect January 1, 2023. This means that exchanges are not required to send you Form 1099-B until 2024 (for 2023 taxes). Trading crypto or accepting it for your freelance business payments? It’s time to get prepared to report your activity! The fact that this new cryptocurrency legislation was tucked conveniently inside of the IIJA indicates that the Biden administration is putting a priority on regulating virtual currencies from a tax perspective. As long as you keep your crypto activity well-documented and work with reputable dealers and platforms, you should have no issues keeping in compliance with these new tax laws. 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 a comprehensive freelance tax guide. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/19/the-irs-is-cracking-down-on-crypto/
https://blog.freelancersunion.org/content/images/2021/11/Webp.net-resizeimage--16-.png
(Art credit: Kathryn Sheldon) This post is sponsored by our partner ZenBusiness. Freelancers Union members can save up to 20% off ZenBusiness' easy-to-use LLC formation service when they use this link. Deciding on a business structure, planning for the future, managing finances, and work-life balance are just a few of the tasks that can cause stress out small business owners. But hearing how other freelancers conquer these hurdles and learning which tools they use can be a game-changer. We were excited to be able to chat with writer Marie Duke, the owner of Duchess Marie’s Quill, LLC, and a Freelancers Union member. Here’s what Duke has learned over the past year and a half as a freelance writer. ZenBusiness: What do you like about freelancing? Duke: I can do it in my own time. I can decide my schedule. I have a 5-year-old with special needs. She has Down syndrome and she's often sick, and we're looking at maybe needing to do another surgery by the end of the year. If I don't want to work or I can't because I'm focusing on her health, I can do as much or as little as I want to do, and it just works well with my schedule. ZenBusiness: Are there any challenges that come with freelancing? Duke: It's not steady money. It's hard to budget my paycheck. Luckily with my husband’s job, we don't need my paycheck in the sense we need to pay bills. Those major bills he can handle. It can be difficult to freelance and to work part-time because it's harder to budget, but that comes with any part-time job. ZenBusiness: How long did it take you before you felt like you were really getting your business going? Duke: A few months. I started with Fiverr taking freelance jobs, I guess, gigs, since it is a gig economy, and I started off as cheap as I could. I didn't want to outprice myself and wanted to make sure that I got plenty of customers. And as I started to build customers and build a rapport with certain customers, I found I could charge a little more. ZenBusiness: Why did you decide to operate as an LLC? Duke: Once the money started coming in a little more steadily, I figured out that I needed to protect myself, and that when I got ready to do my taxes I would need to have a business established. When I set up my business bank account, my bank suggested I do an LLC. They said, "If you set up a tax ID and you do an LLC, there are more legal protections, especially if you're writing for someone else." With a DBA you could lose personal money, rather than if you have it as an LLC. With an LLC, they're not going to come after your house if you have an issue with being sued by a customer. ZenBusiness: Do you feel like having an LLC made you feel more legitimate? Or able to provide better service? Duke: It does make me feel a little more legitimate, especially with so many MLMs out there. And not that multi-level marketing is the worst thing in the world, but a lot of small businesses these days are related to multi-level marketing. I want people to understand that this is me and I am representing myself. I'm not representing another company. And so it did make me feel a little more legitimate like I have an actual business. ZenBusiness: How did you start to narrow down your choices for registered agent services? Duke: My husband and I basically made some spreadsheets and said, "OK, this is what this service offers, and this is what another service offers, and this is how much each thing costs." We weren’t just looking for the least expensive companies, because sometimes the least expensive doesn't offer what you need. The goal was to find what's going to give us the most value for our dollar and provide the services we need. Of course, we don't need as many services as a larger business. But we do need registered agents and we do need to be able to complete paperwork — and maybe I don't understand all of the paperwork. Somebody else can do that for me and it takes a little pressure off. ZenBusiness: What was the process of working with ZenBusiness like? Duke: Once we decided that ZenBusiness had what we needed for a decent price, we went ahead and went online and set up the account and chose a business name. We went through the process of setting up a tax ID. Then I took my LLC and tax ID paperwork to the bank and set up a business checking account. ZenBusiness: What’s your favorite part about using ZenBusiness’ services? Duke: For me, it's just that peace of mind that I don't have to deal with compliance. I don't have to worry about whether someone needs me available during business hours. I don't have to worry about when I want to take time off. I don't have to worry about missing a deadline. It's just one less thing to deal with; one less thing to worry about. ZenBusiness: Did you hear about ZenBusiness through Freelancers Union, or was that just a coincidence? Duke: It was just a coincidence. I joined them about the same time. I think there was probably some influence from the Freelancers Union providing some information about ZenBusiness. But it just so happened that I also located them as I was looking for opportunities to have a registered agent. ZenBusiness: Would you recommend ZenBusiness to other types of gig workers? Duke: I would, especially if you're making enough to be taxed throughout the year for things. I actually have a friend who DoorDashes. I suggested that she look into forming an LLC, since she does have to separate expenses such as gas for deliveries, or wear and tear on your car, car maintenance, and other things related to her business. ZenBusiness: What other tools do you use to manage your business? Duke: I use electronic calendars through Google, to remember what's due and when. Fiverr is also nice because everything is kept in one place. And I use QuickBooks to keep up with my day-to-day accounting. ZenBusiness: Do you have any advice for gig workers or freelancers who might be wanting to start an LLC? Duke: I think a lot of things are going to a gig economy right now. A lot of people are leaning that way because of insecurity with jobs during the pandemic. People didn't know what was going to happen with their jobs, and I think it did open a new world for people to try something new. My advice: Don't be afraid — put yourself out there! As a gig worker you don't want to feel like you have to take every gig that comes along. It's okay to say no, but the more you offer good quality service, the more people are going to come to you. Don't be afraid to try. If you’re ready to take your freelancing to the next level, ZenBusiness can help. Start your own LLC in a matter of minutes, and save up to 20% off, here on our website. Freelancers Union members can also learn more about LLC formation in our Freelancer’s Guide to LLC Formation. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/18/from-freelance-to-llc-one-freelancers-journey/
https://blog.freelancersunion.org/content/images/2021/11/Untitled-design--18-.png
(Art credit: Karen Fischer, "Viva") This article is posted with permission from our partner TaxAct. File your freelance taxes with confidence using TaxAct’s easy-to-use tax software. Freelancers Union members get 25% off the cost of federal and state tax filing. Working as a freelancer or independent contractor is like riding a roller coaster. One month you’re flush with cash and the next you’re wondering how you’ll pay the bills. Sometimes you wish you still received a regular paycheck. How can you smooth out some of the financial bumps in the self-employment road? Here are five ways to manage your finances as a freelancer. 1. Create a budgetThe most basic — yet critical — task of managing your finances is to understand your income and expenses. You can use software or an ordinary spreadsheet to help. Expenses. List all your regular monthly recurring expenses, such as:
List the expenses you incur irregularly, like:
Create a monthly budget by starting with the recurring expenses. Categorize these costs and add them to your software accounting program or spreadsheet expense tracker. Next, take the totals of the irregular expenses, divide by twelve, and add the result to each month. The end result is how much you need to set aside to cover your average monthly business costs. Income. After you’ve calculated your expenses, estimate your gross income for the year. Start by using last year’s figures and adjust for any changes you anticipate this year. Divide by twelve and record the amount on your budget spreadsheet as your monthly income. As your income rolls in, the temptation is to spend it. However, you should reserve enough cash to pay several months’ expenses, particularly when a large bill is looming. 2. Anticipate your taxes as a freelancerTaxes are often your biggest expense. And as a freelancer, it’s likely you make estimated quarterly tax payments to cover your share. These payments are due in the middle of April, June, September and January each year. Make sure you set aside enough cash each month to pay your taxes on time. Although you don’t want to pay any of your bills late, paying your income and self-employment taxes on time is critical. If your payments are overdue, the Internal Revenue Service (IRS) could charge you underpayment or late payment penalties. Additionally, don’t delay paying your quarterly taxes just because you think you’ll get a big refund when you file your annual return. The IRS expects you to pay taxes on income as you receive it. 3. Get better payment termsWhen you work for yourself, your number one goal is to get paid by clients as quickly as possible. Standard payment terms are net 30 days, which means the client has 30 days to pay you in full after receiving your product or service. However, as the business owner, you have the right to adjust your payment terms as you see fit. Try asking your clients to pay in fifteen days instead of the standard 30. If they agree, include those terms in your contract. This change should help your cash flow if they comply. Depending on the type of work you do, you might ask for a deposit in advance. For example, an event coordinator doesn’t want to get stuck working for free for months. If your client pays in advance, they might be more motivated to get the job finished and consequently pay you the remaining balance. Your contract should also include late fees for clients who don’t pay in a timely manner. They might make more of an effort to process your payment on time if they have to pay more. 4. Raise your ratesIt’s inevitable that over time your business expenses will increase. If your income remains static, those increased costs will push your finances backwards. And that’s when it’s time to raise your rates for new clients. If you’re performing well, ask your regular clients for periodic rate increases. Make sure you can substantiate your request. A client is less likely to approve a rate increase if you can’t show how you’re adding value for them. For any new clients, adjust your starting rate to meet your needs and make sure it’s crystal clear what services they’ll receive for their money. 5. Reduce your expensesAs a freelancer, you should never stop examining your budget to see where you can cut costs. This is a smart exercise no matter what level of success your business is at. Perhaps you can find a cheaper co-working space, or switch to using a coffee shop or library for free. You could also barter with other freelancers. For example, offer to edit a web designer’s promotional copy in return for a reduced rate for design work. Use do-it-yourself (DIY) tax preparation software like TaxAct to file your annual tax return rather than trying to calculate it manually. The software might catch some deductions you missed, or it might keep you from making a costly error. Plus, online DIY tax programs are often more economical than going to a professional. You might not need to overly obsess about your business finances. But, it’s always imperative to balance your accounts each month to ensure you’re on track with your income and expenses. It can be a bit nerve wracking to manage your finances as a freelancer – especially when you first start out. However, with a bit of effort and creativity, you can even out your cash flow and eliminate unnecessary expenses. Ultimately those decisions can help you reduce your financial stress and have more time to concentrate on your flourishing business. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/16/5-ways-to-manage-your-finances-as-a-freelancer/
https://blog.freelancersunion.org/content/images/2021/11/0621-Dinghy-Blog-Ban.jpg
As a freelancer, you not only need to build your own business, but also build your own business protection. Benefits you’d have available to you if you were on staff somewhere — like health insurance, life insurance and disability insurance — are all important safeguards you should have in place. But what about liability insurance? How do you know if it’s something you need and what to look for in a policy? To answer these questions and more, our team at Dinghy together with Freelancers Union, recently brought together a panel of industry leaders to offer freelance writers key advice. If you missed the event, don’t sweat. This blog series recaps our panelists’ insights. Read on for expert perspective (and also check out our blogs on rates and negotiating, copyright protection and contract standards.) Robert Hartley, Co-Founder of Dinghy, on Freelancer Insurance After establishing Dinghy — the world’s first insurance provider exclusively for freelancers — in the U.K. in 2017, the Dinghy team recognized a gap in the freelancer insurance market in the U.S. They discovered many insurance companies were unwilling to offer media liability as part of their policies, leaving freelance writers to manage crucial industry-related risks, like libel, slander and copyright infringement, on their own. On top of that, the application process was arduous, often requiring manuscript reviews and taking weeks to produce a quote. Dinghy launched in the U.S. in October 2020 with a goal of offering comprehensive, affordable freelancer insurance online in a snap. What Is Freelancer Insurance and What You Should Look for in a PolicyWhen shopping for freelancer insurance, Rob says there are two main coverages available to you: professional liability insurance (including media liability) and general liability insurance. Professional Liability For freelance writers, it’s very important that media liability is included as part of your professional liability coverage. This covers risks specific to writers, like libel, slander and copyright infringement, but many insurance companies do not offer this. “Some companies may offer what they call ‘writers insurance,’ which would defend you against a financial loss to a third party — but would exclude other fundamental coverages writers really need.” Rob notes it’s vital to do your homework to know what to look for when researching insurance options to ensure you get a comprehensive policy. General Liability Another good piece of coverage to have as part of your freelancer insurance policy is general liability insurance, which would cover you when you cause injury to someone else or cause damage to their property. “If you spill coffee over a computer in a client’s office and damage that computer, that could be covered by your general liability insurance,” he says. You’d also be covered if someone slipped and fell on a wet floor in your office or tripped over your laptop cord. What Happens When You Need to File a ClaimSo, what happens when you need to file a dreaded claim with your insurance provider? “The first thing is not to panic. It’s likely to happen at some point in your career,” says Rob. “Then reach out to your insurer. At Dinghy, we have a self-service area of our website so you can file a claim any time of day or night. It then gets picked up by our claims experts. The worst thing is to think you can just manage it yourself…or pass it to a friendly lawyer you know. If they’re not experts, you’ll end up regretting it.” Rob says it’s best not to acknowledge the claim yourself, but rather to pass it straight to your insurance carrier and let them start talking directly with your claimant. “Because they have the experience, they know the questions to ask and will make sure you’re not admitting to any liability unless you’ve actually done something wrong,” he adds. As a freelancer, you often need to put yourself forward as the expert or figure it out yourself, but when it comes to protecting your business, it’s best to let the professionals handle it. Shopping for insurance can be overwhelming and confusing. The good news is that freelancer insurance — brought to you by Freelancers Union in partnership with Dinghy and NSM Insurance Group — provides the coverage you need, and it starts at less than $1/day. Learn more and get a free quote online in minutes. To hear more from our other panelists — which include Wudan Yan, Independent Journalist and Co-founder of The Writers’ Co-op; Umair Kazi, Director of Advocacy and Policy at The Authors Guild; and Ryan Goldberg, Freelance Journalist and Organizing Committee Member of the Freelance Solidarity Project — view the recorded event. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/15/issues-facing-freelance-writers-in-2021-liability/
https://blog.freelancersunion.org/content/images/2021/11/SisiRecht_Growing.png
(Art credit: Sisi Recht, "Growing") Unlike a nine-to-five job, working as a freelancer means more financial turbulence – sometimes, clients don’t pay on time or disappear when bills have to be paid. That’s why, to ensure you keep your cash flow stable to pay for project expenses, receiving upfront payments is key to your success as a freelancer. Some clients might not be happy to pay upfront, especially if they are working with you for the first time. However, there are a lot of ways you can motivate them to do it. Also, an upfront payment doesn't necessarily have to be the full amount of your fee. Before we dive deeper into the tips to help you get paid upfront, let’s first clarify what an upfront payment is. What is an upfront payment?Think of an upfront payment as a deposit. It can be the full project cost or just a fraction of it – for example, 20%. In both cases, a client pays it before you start a project. You can ask for an upfront payment before the project starts or whenever you have finished a milestone and are about to start working on the next one. Create a good contractCooperate with a law firm to create a contract you can send to clients before you start working together. Specifying exactly how the work is performed, when payments are made, and when the client gets a refund is key to protecting your interests. Most freelancers would avoid signing contracts as they want to start work right away and, as a result, get paid faster. However, without a good contract, your clients might not pay you at all. That’s why it is so important to have some (even the simplest) contract in place. Before you enlist a lawyer to help with creating a contract draft, you should outline the main points you want to include in the contract. Make sure you include a mention about upfront payments – the deadlines for the payment, how it should be sent, and the situations in which upfront payment could be returned (refunded). Set up recurring invoicesIf you work with clients on a retainer basis and want to send recurring invoices upfront every month or so (depending on your arrangement with a client), use invoicing software. It will help you automate the tedious task of creating a similar invoice to the one you have created in the past and sending it to clients. Also, you don’t have to remember about creating an invoice – the software will make it for you and send it to your client’s inbox automatically. So what’s the best invoicing app to use? There is no one answer, as your invoicing needs are unique. To choose the right software, check out these invoicing apps. If you are using Wordpress and want to send invoicing directly from where you do work, check out this comparison of Wordpress invoice plugins. Offer a Money-Back GuaranteeOne of the most common reasons why clients don’t like paying upfront is the fear a freelancer won’t perform a service on time or the work outcome won’t satisfy them. To break through this fear, you can offer a money-back guarantee. However, make sure you specify the exact situations when the return of funds is possible. For example, you would want to keep the money if there are just minor project mistakes that can be corrected. Offer a money-back guarantee only in the situations when your client is not satisfied at all and nothing can be done to make corrections or improve the results. Send payment requestsSome payment services such as Payoneer make it easy for freelancers to send a payment request to clients. You can ask clients to pay in the preferred currency using their credit card, by making a local bank transfer, or via their Payoneer account. By using this solution, you can also send reminders if your clients pass the payment deadline. Thanks to this solution, you spend less time requesting a payment and your client uses much less effort to send you the money. Send an estimateBefore you start working with a client, send an estimate describing how much the service will cost. If you work on a per-hour basis, you can mention the number of hours you think will be needed to finish the project. If your preferred method of work is a flat fee, make sure you provide an estimate that is as accurate as possible and based on the project information you have managed to collect from your client. By sending an estimate, you make it clear how much the client will pay in the end. Avoid being in a situation where you are communicating the full project cost after the project is over, as it can lead to arguments. It’s worth setting up the right expectations from the very beginning of your cooperation. Once the client accepts the estimate, you can send a request for an upfront payment. Offer a discountAnother way to motivate your clients for upfront payments is offering a small discount. You could offer anywhere from 3% to 15% off (depending on your pricing policy) if clients opt to pay upfront for the project. Online invoice generators help you add discounts to a final price, as well a description of why you add such a discount and when a payment should be made. Last resortWhat if your clients don’t agree to pay you upfront, no matter what incentives you create for them? Don’t give up! If you've just start working with a client and haven’t gained their trust yet, make sure your first project fulfills the requirements your client has set up. If your clients don’t agree to pay upfront, you can build in a small extra sum to your final invoice to account for all costs related to borrowing money in those cases where you need to buy materials or any kind of app or software. Wrapping upGetting paid upfront is beneficial for freelancers as it helps keep your cash flow stable and avoid situations when clients run away without paying you once the project is finished. It also gives a sense of safety that can help you focus on the project (instead of worrying of not being paid). However, clients won’t always want to pay upfront. As a freelancer, you have to create the right incentives for clients to pay you before the project is finished. Remember, if they don’t work for you for any reason, don’t give up! via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/11/7-tips-for-getting-paid-upfront/
https://blog.freelancersunion.org/content/images/2021/11/PedroGomes_19.jpg
(Art credit: Pedro Gomes) The Infrastructure Investment and Jobs Act is heading to President Biden’s desk to be signed, and when it is, it may mean that the Employee Retention Credit (ERC) will be terminated earlier than the original guidance issued by the IRS. This means that the infrastructure legislation ends the ERC early, making wages paid after Sept. 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business). While there are not many tax provisions in the infrastructure legislation (expect more extensive changes coming in a fiscal year 2022), a budget reconciliation bill remains under consideration by Congress. Those would include extensions of recent changes to the child tax credit and the earned income tax credit; an expanded premium tax credit; relief from the $10,000 state and local tax deduction cap; corporate and international tax changes; and limits on the interest expense deduction. Employee retention creditThe ERC was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and amended by the Consolidated Appropriations Act, 2021, P.L. 116-260. The American Rescue Plan Act, P.L. 117-2, enacted March 11, 2021, made the ERC available to eligible employers for wages paid during the third and fourth quarters of 2021; however, the latest infrastructure bill would repeal the fourth-quarter extension. The IRS issued guidance on claiming the credit in the third and fourth quarters of 2021 (Notice 2021-49), but noted in that guidance that it is watching this legislative development. The IRS recently provided some additional guidance on claiming the Employee Retention Credit, which may impact your freelance business for the the third and fourth calendar quarters of 2021. As a reminder, if you have employees, you are considered an eligible employer for the ERC by the IRS if you engage in “a trade or business (1) whose trade or business’s operation is fully or partially suspended due to orders from a governmental authority limiting commerce, travel, or group meetings due to COVID-19; (2) that experiences a decline in gross receipts (as defined in Notices 2021-20 and 2021-23); or (3) is a recovery startup business.” In the eyes of the IRS, a recovery startup business is an employer that (1) is not otherwise an eligible employer under conditions (1) or (2) noted in the preceding paragraph; that (2) began carrying on a trade or business after Feb. 15, 2020; (3) with average annual gross receipts for the three tax years preceding the quarter in which it claims the credit of no more than $1 million. The key changes to the ERC under the American Rescue Plan Act (or ARCA) which may impact your freelance business for the third and fourth quarters of 2021, include: · The required year-over-year gross receipts is reduced from 50% to 20%; · A safe harbor is provided that allows employers to use prior quarter gross receipts to determine eligibility; · Eligible employers can claim the credit against the employer’s share of Medicare tax rather than, as previously stated, against the employer’s share of Social Security tax (or its equivalent Railroad Retirement Tax Act portion). · It increases the limit on creditable wages from $10,000 in total to $10,000 per calendar quarter (i.e., $10,000 for first quarter 2021 and $10,000 for second quarter 2021); · A separate credit limit of $50,000 per calendar quarter applies to recovery startup businesses, after application of the $10,000 wage limit. The limit on the maximum ERC in the first half of 2021 of 70% of up to $10,000 of an employee’s qualified wages per calendar quarter (i.e., $7,000) continues to apply to the third and fourth calendar quarters of 2021. · The new guidance does not specifically indicate that start-up businesses can be eligible employers simply due to being a recovery startup business. Your business must meet the IRS and U.S. Treasury requirements to be considered a recovery startup. · In addition, the new statute does not specifically state that recovery startup businesses may be treated as small eligible employers (expanding the coverage to those businesses with 500 employees or fewer). The notice provides that Treasury and the IRS have concluded it is appropriate to read the small eligible employer rule of the original ERC guidance as if it applies to recovery startup businesses. Given some of the complexities related to the ERC for small businesses, and particularly businesses that were started during the pandemic, it is a good idea to make sure your business is entitled to claim the ERC under both the original and the new updated guidance to avoid any tax issues later on. 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 a comprehensive freelance tax guide. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/10/the-employee-retention-credit-may-be-ending-early/
https://blog.freelancersunion.org/content/images/2021/11/FU_Blog_FreelancersLetGo_Index.png
Over the summer, we put out a call for artists in the Freelancers Union community to share their work here on our blog space. The response was incredible! From more than 100 amazing submissions, we have selected our initial lineup of five artists. They each received a grant of $2,000, and their work will be featured atop our daily blog posts for the next year. At the end of their one-year term, they’ll have the opportunity to display their work in person in a group exhibit that we will sponsor in Brooklyn, NY. Over the next few months, each of these artists will use this space to share more about their freelance journey, their artistic influences, and how they stay inspired and connected to their work. For now, a brief introduction: Karen Fischer, a writer and collage artist in Gallup, New Mexico, who has been freelancing for just over a year. Pedro Gomes, a freelancer for six years currently based in Lisbon who explores traditional drawing mediums such as graphite and ink and digital techniques. Andrea Hernandez, a digital artist based in Miami who has been freelancing for a year. Sisi Recht, a Brooklyn-based artist who works in pen and ink, acrylic, digital, and clay and has been freelancing for 12 years. Kathryn Sheldon, a Brooklyn-based freelancer for over 10 years who works in 35mm film, gelatin prints, inkjet, and collage. Be sure to come back to the blog every day to see the work of these fantastic artists alongside the same valuable information we’ve always shared. via Freelancers Union Blog https://blog.freelancersunion.org/2021/11/09/announcing-the-2021-2022-freelancers-union-artist-lineup/ |
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
April 2023
Categories |