Accounting and Taxes for Freelancers



Remember in middle school when your teachers attempted to make not smoking, safe sex, and avoiding drugs cool and hip by “trying to speak the language”

That’s how I feel when I write about taxes and financial accounting.

“No guys, seriously, protection is cool! Your business will still feel just as good!

SERIOUSLY, do you know what could happen if you don’t do this!?”

Setting up financial foundations (ugh, even that phrase sounds annoying and lame) is one of the most important things you can do in your freelance business but we keep putting it off. Why?

Here’s my theory

  1. We don’t know how to get started or even what to search and the thought of doing that research does not seem like a good time.
  2. We have other, more fun things, to focus on like marketing and growing our business and figure that we’ll eventually get that part sorted.
  3. We know we’re screwing it up so it’s easier to just ignore it and put it off than to discover what we already know — we’re a mess.

So let’s remove the bandaid and go to town on our finances.

It’s the fetch thing to do, brah.

(Did I do that right!?)

Part 1: Straightforward Accounting

In the first video, we’ll cover exactly what you need to be doing TODAY if you are making money from your clients. We’ll talk about:

  • 3:55 How setting up a business bank account will force you to be legit in other areas of your business (stop putting it off, this is important)
  • 4:40 The savage way the IRS separates business and personal expenses if you don’t do it yourself. You’re in for a monster tax bill if you let them do it this way.
  • 5:21 What counts as a business expense. Are you overlooking any of these?
  • 6:49 Tracking mileage– what you can write off even if you work from home.
  • 11:30 LLC? Sole proprietor? Corporation? Finally get clarity around which one is right for you (and which one might save you on taxes)
  • 14:24 Cost benefit analysis of forming a corporation: discover how much money you should be making before the tax benefits actually pay off.
  • 14:45 How much you need to be paying yourself, according to the IRS
  • 19:09 The one question to ask an accountant before working with them. You’ll never want to hire an accountant that believes this about freelancers.
  • 20:49 The accounting and tax implications of working overseas. This is important if AirBnb, Uber, and Coworking spaces are common expenses for you.
  • 24:52 Can we write off books? The answer is yes, as long as you do this one thing.
  • 26:13 What to track so you can write off the cost of TV, movies, and even your cable bill.
  • 28:50 How to avoid or minimize payment processing fees (and what to do when they’re unavoidable)


Part 2: Taxes

If you’re anything like me, the thought of taxes means a pit in your stomach. I look disdainfully at the pile of receipts and 1099s and 568974 forms (ok, 568974 is not a thing–that I know of– but that’s how I feel). In Part 2, we’ll dig into all your fears and give clarity about taxes.

  • 00:48 How much you should REALLY be putting away for taxes
  • 2:34 Shelter up to $55K of your income, legally. Everybody knows about it, but almost nobody does it.
  • 7:08 How you’re thinking about profit completely wrong. This book will make you more profitable with less expenses
  • 8:13 Fire nasty clients and still pay your bills — the one account every freelancer needs.
  • 9:00 Quarterly? Yearly? The answer is based more on your personality type than IRS rules.
  • 9:57 The one time you can actually make money by getting IRS penalties and interest.
  • 12:30 If you think you don’t need to charge your clients sales tax, you could be in for a nasty surprise.
  • 14:31 The 1099 form — when to give, when to receive, and the surprising consequence if you don’t do either.
  • 17:13 A common audit-trigger — avoid this to stay off the IRS’s radar.
NOTE: You should watch Part I before Part II, there’s a few concepts that we talk about here that are explained in Part I.


Downloadable Guides

For more, here’s the Business of Copy Freelancer Finance Guides:

Recommended Bookkeepers

Carrie Fry Williams

Recommended by Liz Farr
From Carrie:

I have over 35 years of financial experience and love working with creatives and freelancers!! Tax planning, tax prep, creating profit roadmaps and online bookkeeping are all in my wheelhouse.

Marilyn Parham, CPA

From Marilyn’s website:

Marilyn’s clients appreciate the care she brings to their business, her “in-the-trenches” knowledge of small AND online business, and how who she is has shaped a vibrant support team of creative brains, finance + tax superstars, and online business mavens!

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