I’m a freelancer. I think freelancing is a fantastic way to express yourself and get paid for it. BUT there are some things you should know. Things that I wish I knew long ago.
Before you begin freelancing, make sure you’re smarter than whoever spread these major misconceptions…
Tax Deductions
Want to go to Bali?! You’re a freelancer – just find some silly conference going on and get that trip as a tax deduction. Bali, here we come, baby!!!
Not.
First off, don’t give the middle finger to Uncle Sam. Furthermore, things don’t really become tax deductible until you surpass your standard tax deduction. Yes, that means you must spend at least this much out of your own pocket before you can justify itemizing your expenses and using those above-and-beyond expenses as tax deductions. And remember, these are tax deductions, not tax write-offs. So you only get a small discount off the price of what you buy.
These were the standard tax deductions for 2015:
- Single: $6,300
- Married filing jointly: $12,600
- Married filing separately: $6,300
- Head of household: $9,250
This means if you’re a single freelancer, you must spend more than $6,300 before anything can be deducted. So your Bali trip can be paid for but you have to spend a serious amount of money before you can get there. Plus, I’ve itemized my taxes and it’s a bit of a pain. It took me probably 3 hours to tally up everything. And I’m pretty organized. Though you can keep track of everything throughout the year but that means you must consider whether or not you can expense each item to the business at the point of purpose. That can get a little tricky if you’re a rookie in a hurry. “Can I expense this latte?” “Does fuel to the airport count? Could I expense the whole tank or just the amount it took to get there?” “Can I deduct my dogs expenses since walking him in the park helps get clients?”
Keep these things in mind before overusing the excuse of a tax deduction. In general, don’t spend money just for the sake of saving money on taxes. It doesn’t make sense.
Setting Your Own Schedule
Freelancers can work whenever! How awesome!
Untrue. Yes, we can work really flexible hours but we cannot become nocturnal or decide skip random weeks of work on a whim. Not if we are serious and successful anyway. For the most part, it just makes sense to keep regular working hours. That’s because you are mostly working with people who aren’t freelancers. These people need to communicate with you during normal business hours.
Plus, things get done faster this way. If you only work late at night, it can be frustrating when you want a quick reply to an email. Most people won’t respond for many more hours. Though working late at night is convenient if you do a lot of overseas correspondence… So a freelancer in the US who hires help from the Philippines can have a nice thing going when they work odd hours since their assistants will be working at the same time.
Good if You Don’t like Dealing with People
Even in the age of the internet – relationships is where money is made. Please do not think that if you become a freelancer you can ignore relationships. Rather, I’d say freelancers must be even better at building relationships than a salaried employee. Freelancers are always needing to wear many hats and therefore meet many different people. Even if you’re a freelance writer in the tech space, you will still need to interact with people. And the better you do this, the more money you will earn.
But Freelancing Is Pretty Awesome…
You don’t even need to worry much about healthcare costs nowadays. Even finding the best health savings account is relatively easy. Freelancing is fantastic. I absolutely love it. But there are some things that would be awesome but fall short of reality. Be aware of them and then look to the positives. Of which there are many more than three…
