15 responses to “8 things I learned analyzing my yearly freelance writing expenses”

  1. Barbra @ Write a Bio

    Interesting and helpful article, Michelle. I concur with your point about the perils of working for big clients (or rather, having big contracts with just one or two clients). Even if the client is thrilled with your work, external circumstances such as a sudden budget freeze can significantly affect the freelancer’s income without warning.

  2. Susan Johnston

    Michelle, it’s interesting to see how our business strategies are alike or different. In my case, my business expenses accounted for less than 5% of my income, so my CPA suggests I shoot for a higher deduction to income ratio this year. Part of this is due to the fact that I only use the car for business-related travel a few times a year (I mostly do most of my reporting from home or use public transit) and usually for such small distances it hardly seemed worth tracking. This year, however, I do plan to track those car trips and other small expenses.

    When I travel longer distances to conferences, I deduct bus or plane expenses, but I rarely pay for a hotel because of my Yankee tendencies. Last year, I stayed at a fellow ASJA member’s apartment during the conference and this year, I’m using Airbnb (which I’ll deduct). Admittedly, getting to NYC is much easier from Boston than it is from Portland.

    I think it’s great that you’re diversifying, but I have the opposite issue. Each spring when I do my taxes, I’m amazed—and a little overwhelmed—by the number of clients I’ve worked with over the course of the year. This year I worked with close to three dozen clients. Some of them paid for one or two assignments over the course of the year, others were ongoing projects. It’s great to be diversified, but too many small projects create administrative headaches (learning their style guide and/or content management system, submitting an invoice in their format, tracking that income) and don’t lead to long-term relationships and stability. I do have minimums but sometimes I pursue a one-off assignment with a market I really love. Long-term, though, it’s better to be focused rather than scattered, and I’m trying to strike that balance where I’m continually challenged and engaged but not pulled in too many different directions.

  3. Howard Baldwin

    @Susan: my accountant is the same way — he keeps asking for more expenses.

    @Michelle: what is “media perils insurance”? And do I really want to know about it, or will it just worry me while exciting my insurance agent?

    1. Susan Johnston

      It’s likely that my real expenses are slightly higher than my reported expenses, because I focus on tracking the big items (for instance, if I bought $2 pens at the drug store, I wouldn’t sweat it). I’ve resisted taking the home office deduction because in all honesty, I don’t have a truly dedicated space and I’d rather not have to defend that deduction if (heaven forbid) I got audited. Others with similar numbers might claim more deductions, but as my CPA put it, “few people would question the deductions you did take, so you shouldn’t worry about getting audited.”

  4. Patrick

    Wow, I admire anyone who can overhead so low! But I also can envision different business models for freelance writers, based upon years of experience, the work and client mix and the relative stability of business conditions. Another big factor, I think, is the person’s aspirations. I’m kind of the equivalent of a stonemason or a carpenter with a keyboard–I take a certain amount of pride in my work, but at this point in life, I’ve got a wife who works with disabled children, a kid with a college fund, and a mortgage. It’s got to be about the benjamins. The person down the street, in contrast, may not be happy in life unless she is trying to write “Midnight in the Garden of Good and Evil” or “Seabiscuit,” or whatever. She’s going to have a tough time controlling expenses. High risk, high reward usually means high overhead, I think.

  5. Howard Baldwin

    Gee, I suppose I could make my accountant happier and protect myself all in one move.

  6. Kristi

    I love this insight. I did my taxes this year and didn’t make my goal. Perhaps next year! thanks for sharing.

  7. Ronda

    The perils of big clients are a big one. I had a big project come to a close, and two other clients get swept away in the second half of the year. That was really tough. Also, when doing taxes, I 1) Learned that I had made more than I thought I did and 2)At the same time realized that I really need to raise my rates.

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  9. Paula H

    Thanks for the tips, Michelle. I also added a much-needed new computer to my expenses for 2011, and was certainly glad to have the added business expense come tax time. I almost regret not buying the next model up!

    Isn’t it great to have a state-of-the-art computer again? Wish I’d done it sooner.

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