Freelance Tax Tips

Let’s start out with a little disclaimer right off the bat: I am in no way shape or form a tax expert. I’m just sharing my knowledge about freelancing and taxes.

Taxes are a fact of life that we all deal with, but especially as freelancers. Whether your a freelance graphic designer, web developer, dog walker, hair stylist or basket weaver, your tax obligations will be waiting for you. It’s easy for new freelancers to overlook this little gift from the government, but there are ways to keep on top your tax responsibilities and come out unscathed after April 15th.

Find an Accountant

Find one, now. Finding an accountant to prepare your taxes will put your mind at ease and help save you from being audited. Make sure to keep all business receipts and keep track of any business purchases (computers, printers, office furniture). An accountant will know how to utilize these expenses into deductions as well as your office dimensions, rent and utility costs. Yes, you can deduct all of this! Your accountant will be your new bff come tax time.

Paying Taxes Quarterly

Paying taxes quarterly (every 3 months) can help tremendously with keeping the taxes you owe in check. Instead of having one large lump sum, you can make payments through out the year, keeping your sanity and savings account in tact. Your new bff, the accountant, can help set this up as well.

1099 Tax Forms

If you’re working as an independent contractor for an extended period of time with one client, you can expect to receive a 1099 from said client come tax time. In a nutshell, a 1099 is a form/record of all the money you made working for that single client. There are no tax deductions included on a 1099 form (such as social security, federal and state taxes). Again, an accountant can explain this much better.

Save, Save, Save

Since I’d only been a full-time freelancer since June 2009, this year I opted to estimate and save enough money to cover my taxes. Some veteran freelancers set up an entirely separate savings account just for tax purposes. While this method might work for some freelancers, It’s not one I recommend, since it’s difficult to estimate just how much you’ll owe since it all depends on what you’ll make that year. I personally won’t be doing this again, however if your great and socking money away in an account you won’t touch and have a good idea of what you’re going to owe, more power to you.

In Conclusion:

Paying taxes suck, let’s be honest, but there are many avenues freelance graphic designers, like me and you, can take to make paying them suck less. This being my first year being on my own and dealing with my taxes all by my lonesome, I feel like I’ve learned a lot and definitely know that I’ll be seeking the help of an accountant the next time around. Getting help from the pros is never a bad thing, and isn’t that the motto that we graphic designers, web developers, dog walkers, hair stylists and basket weavers hinge our businesses on? Bottom line, if you’re in doubt about your taxes, talk to an accountant and leave this tax business to the professionals.

Design Instructors vs. Freelance Graphic Design

When I was in design school I always felt like the ultimate goal was to graduate and land a great job at an ad agency or newspaper. A few days ago I got to thinking about this and my initial thought was ‘why’? Why did I feel so pressured to jet out of school and immediately find a job where I’d have to dress up everyday (ew). Then it hit me, my instructors.

I always knew I wanted to freelance/run my own business. My mom and a few relatives had businesses of their own and I always admired them. After graduating from college (the first time around) with a degree in Advertising, I did what I thought I was supposed to and ran out and tried to find a great job in my field. I’m well educated, eager and highly motivated (I thought to myself) surely this won’t be hard! I was wrong, dead wrong. I quickly found out that “entry level” creative positions in an advertising agency require at least 3-5 years of experience. I wasn’t getting any interviews, no bites, nothing. I sent out hundreds of resumes to various agencies and businesses with in house advertising positions. Nothing. I had to start applying to any old job because I had to pay bills and I took a labor job watering plants in office buildings while I continued to look for work in my field. Eventually I knew I’d need more experience and knowledge in graphic design to get the jobs I wanted.

I went back to school for graphic design with high hopes. I loved my classes and even started freelancing a little in school, taking cheap projects creating flyers and whatnot. Here I started to realize that, while the freelance projects I was working on weren’t anything to write home about, I loved the whole freelancing process. I expressed this to some of my instructors, who were also freelance designers and teaching on the side. Some of their responses were very positive but some had many negative things to say. This was discouraging. They made it sound like working for yourself was just too hard and most people can’t hack it, especially young designers. I believed this and went back to gunning for more conventional graphic design positions.

Maybe these instructors were trying to stress the importance of getting more experience working for someone else right out of school. I agree that this is a good step in the freelance direction but I know many you designers that have successful freelance business never having worked for “the man.”

In Conclusion:

Having some industry experience is important, that’s why internships and making contacts in the graphic design field is so important, but should young designers be discouraged to freelance before working in the industry? Is getting that experience always best while you put your dreams on the back burner?

My Workspace

Inspired by sites such as WorkstationSetups and posts like this one on WebDesignDev I’d like to share my humble workspace where I spend a majority of my waking hours.

The Specs (from left):

• Alvarez acoustic guitar (sometimes when I’m stuck on something, I’ll noodle on the guitar, it helps!)
• 15.4′ Apple MacBook Pro
• Apple iPhone 3G (sitting on a GoGoStand)
• Photo of my special someone
• White JBL Creature Speakers
• 360 GB External Hard Drive (A must for those Time Machine backups…I know it’s kind of ancient)
• 24′ Apple iMac
• Keyboard and Mighty Mouse
• Coffee (a necessity!)
• Tiki cup of pens and pencils
• My trusty lamp
• Space heater (under the desk, it’s freezing here)

I love my workspace, it’s not an office, just an area of my living room but it works for me. Want to share your workspace? I’d love to see it! Comment with a link or a photo of where you work.

Freelance Work Life Balance

Freelancing/working at home has many pros. Freelancing allows you to make your own schedule, work in the comfort of your own home, and select only the projects they want to work on. Sounds pretty great, but in reality sometimes the cons can out weight the pros. One major con that cannot be ignored is the fact that freelancers are always plugged in and on call, at least that’s what many clients think. This is a common thought and misconception among our clients, but it’s not hard to see where they are coming from. If you work at home, you’re just steps away from your office, meaning answering e-mails and calls at a moments notice shouldn’t be a big deal. Well, it is. Freelancers have to find a balance between their work lives and their personal lives. This isn’t easy. I know I’m guilty of answering e-mails via my iphone in the wee hours of the night.

Almost everyone has a cellphone, and a large percentage of these people have e-mail, Skype or some sort of instant messenger on their phone. When you’re always plugged in and accessible to client e-mails and messages it’s nearly impossible to enjoy time with your family, a moment alone with your spouse or dinner with friends. Turning off your phone and logging off of your e-mail can salvage many a friendships and even a relationship. Being committed to your work is one thing, but knowing when to unplug from your work life and to take a breather is so important. Set office hours, or hours when your clients know that they can reach you. I often times work a little on the weekend and might answer e-mails, but most of my time is spent working 9-5 Monday – Friday. I try to be available and work when my clients are at work.

Bottom line, don’t let your business get in the way of your relationships and find a happy medium between your work life and your personal life. Your friends and family will thank you for it.

Freelancing and Sick Days

I was sick this past week, like, really sick. I’m not talking about a sniffle here or there, I’m talking running to the bathroom every 5 minutes, laid out on the couch, death warmed over sick. I rarely get this ill so this really hit me hard, whatever this was (I originally blamed the evil taco bell I’d eaten for lunch the afternoon before this all began, but I digress). When I knew I wasn’t going to be able to sit in my chair and remain vertical in front of my Mac long enough to get any work done, I knew I’d quickly need to get the word out to interested parties that I was under the weather. This is includes, friends, family and of course, my clients. Right now I’m mainly just working with one client. Actually I’ve been work with this person and his company for awhile and the bulk of my work comes from him. I know the saying…don’t put all your eggs in one basket, aka don’t just rely on one client for all your income while freelancing. Well, this is a different kind of project that I’m actually working on with a number of writers and a web developer…so long story short, I had to notify my client/boss. Luckily this week was kind of slow so I just needed to notify him. He was very understanding and I was able to recuperate without worrying about an excessive amount of work piling up, but it got me thinking, what would I have done if I’d been working with 5 or 6 clients all with different projects and varying due dates and fallen ill?

First, I would contact them letting them know the situation. Most of my previous clients would have responded positively with well wishes, even if a looming deadline was in sight. If a deadline fell on the day I was sick, I’d respectfully ask to push it back, but if this wasn’t an option, I’d try to power through the pain to get the project done. I don’t recommend this, though, because I would worry about the quality of the final project.

Second, If a deadline was near and work could just not cease, I’d think about handing off the project to another designer to have them finish it and give them a cut of the payment for doing so. Sounds simple, yes? But for me finding a designer I trust to ensure the quality of the final project would be tough. Luckily for me I know some great designers that I could notify in a pinch and would do their best to help out a friend in need.

Third, I might consider writing something in my design agreement (more on the importance of this later) to state that in the instance of an illness or other unforeseen emergency, I have the right to seek assistance from another designer or respectfully ask for an extension on the deadline. This is sounds like a nice idea in theory, and I’m all for full disclosure, but does a client need to know that I required help getting the project done? Or could this just be explained in an e-mail? This point in a contract might confuse the client and could just be left out and disclosed when needed via e-mail or phone…or not at all.

I think honesty is the best policy when dealing with clients so at least contacting them and giving them the skinny on what’s ailing you is the best place to start.

A Day in the Life

When I first started freelancing/working from home my first concern was my uninhibited coffee intake. Is a pot of coffee an acceptable serving size for one person? My second concern, and possibly more imporant than coffee related issues, was my productivity. If I have a project to complete or a task on a tight deadline, 99% of the time I can get what I need to done in a timely fashion. I was worried about the 1% that I get distracted and find excuses to procrastinate. I knew I couldn’t be the only designer to be bitten by the procrastination bug occassionally so I started reading other great design blogs like Blog.Spoongraphics.com and cmdshiftdesign.com that delve into how to be productive and the day to day “schedules” of graphic designers.  I loved reading these blog posts when I was first starting out so here are my day to day graphic design operations:

• I rise around 7:30 or 8:00, depending on my schedule for the day, and I get ready, grab myself a cup of coffee (yes, I set my coffee maker so it brews the sweet nectar I thrive on before I’m even awake) and I seat myself at my desk infront of my iMac and start reading e-mails. Sometimes I check my e-mails on my phone before I even leave my bed. Obsessive? I call it prepared.

• After checking/returning e-mails I start working on projects. Exciting right?

• Around 11:00 or 12:00 I grab something to eat and usually have lunch at my desk. I would recommend taking a break for lunch, maybe checking Twitter or Facebook, or watching some TV. Sometimes I walk my doggie or take a minute to clean or workout. I find that getting away from your desk a few times through out the day helps productivity and fights off burnout.

• When 2:30 or 3:00 rolls around I warm up what’s left of my morning coffee for a much needed pick me up. By this time I have an idea how my next day will look so I start to compile my to do list. Thank you Evernote.

• I usually try to quit working around 4:00 or 5:00 PM. At this time I switch to working on personal projects, like this very website, or reading design related books or blogs.

• By 6:00 I can’t stare at a computer screen anymore and usually make dinner or go out with friends. I still check e-mails through out the evening (not something I encourage) because I like to stay on top of things at all times. I really like to know what I’m going to be doing the next day.

Of course, there are days where this schedule is all out of wack, but that’s the beauty of being able to make your own schedule, and that’s one of the reason I really love what I do. There are times I work on the weekends but that’s in rare cases. I think having set hours (at least as far as your clients know) is a healthy way to balance your work life and your free time.

Establishing a relatively set schedule is a great way to improve your productivity.