Posted on: 30 October 2015Share
Freelance writing can be a rewarding way to get paid for being creative. However, from time to time you will be responsible for accounting tasks in order to handle your taxes properly and to keep your finances in order. Here are a few accounting tips that can help you if you are a freelance writer who is just starting out.
Separate Business and Personal Finances
Because freelance writing may be a different kind of work than you are used to, it can be easy to forget that you are running a business. To make things easier for yourself at tax time, it is smart to separate your personal and business finances apart whenever you can.
For example, you might choose to open a business checking account that is only used for depositing payments from your clients and business expenses such as computer repairs and printer ink purchases. When you need to estimate deductions and make other calculations for your taxes, you will have an easier time if you keep your business and personal finances separate.
Get Your Files Organized
You might keep your receipts and invoices in random places around your home when you are just starting your freelance writing business. However, that can be a headache when you need to locate an invoice for a client or receipts that you need for tax purposes.
Therefore, as soon as you can, come up with an organized way of keeping your documents. It can be very simple; for instance, you might choose to keep writing course receipts, equipment repair bills and unpaid invoices in separate colored folders. That way, you can find the information you need quickly because it is all in one place.
While you may use your computer to print out client invoices and store files, also consider printing financial records out so you can more easily track those documents. You can also put financial reports and files on a portable flash drive.
Make Quarterly Tax Payments
When you do freelance work, you are considered to be self-employed. That means that you must pay local, state and federal taxes on a quarterly basis when your income is more than $400 per year. You are responsible for making those payments on time to avoid high fines.
In order to know how much money in taxes you must pay, it is a smart idea to consult a small business accountant who can help you figure out what your tax burden is. You may be reluctant to pay an accountant to do this work, but professional assistance can help you prevent errors that ultimately cost you more money after the IRS has examined your documents. Your accountant can also assist you with local and state taxes.
Keep the above tips in mind as you begin your freelance writing career. Talk with a few small business accountants in your area so you can get the help you need to build a strong new business. For more information, contact a professional like those at Hy Appelbaum CPA.