Posted by on Jun 17, 2009 in
Uncategorized This is my first year being self-employed and the first year I’m having to pay my own taxes. If you thought having taxes deducted from your paycheck was awful, paying self-employment taxes is worse. When your employer pays your taxes for you (by withholding them from your income), you never really have the money, you just see the evidence of it being taken away from you. As a freelance writer (or other self-employed individual), you receive the money and then you have to pay it out, just like any other bill, except it’s much higher.
Self-employment taxes are 15.3% of your net business income. That is, your income minus any business expenses. If you have $1000 per month in receipts, $100 in business expenses, your net business income is $900. Your self-employment tax for that month is $137.70.
Since there is no tax withholding for self-employed individuals, you’re expected to send your estimated income tax payments to the IRS on a quarterly basis. Not only do these payments include your self-employment tax, they should also include your federal income tax payment, too. Federal income tax is also based on your income, but your tax rate goes up as you make more money. For example, if you make less than $8,350 in the 2009 tax year, your federal tax rate is 10%. If you make more than $8,350 but less than $33,950 then your tax rate is 15%.
There are a series of calculations you must do to come up with your quarterly tax payments including subtracting your deductions, exemptions, and other credits. These things lower your tax liability and the amount you have to send for estimated tax payments. Use IRS Form 1040-ES to calculate your estimated tax payment and find out where to send your payment. You could face a penalty if you don’t pay enough taxes during the year.
The IRS does allow you to take an above-the-line tax deduction for half the self-employment tax you paid during the tax year. This means you get to reduce your taxable income by that amount whether you itemize or not. In the example above, your gross income would have been $12,000 and you would have paid $1652.40 in self-employment taxes. You would be able to adjust your gross income by $826.60 leaving only $11173.40 subject to federal taxation.
Your state may also have self-employment taxes that you should send in. Check with your state’s department of revenue to find out.
For more information about self-employment taxes, consult your attorney, CPA, or tax preparer.
Posted by on Jun 15, 2009 in
Uncategorized I am doing so much better working on my book since I ditched the “just sit down and write” method and embraced the “outline on notecards” method. I’m feeling pretty confident that I have the book broken down into digestible parts - Parts, Chapters, and Sub-Topics. My next step is to go through my notecards again ( have about 150 of them) and make sure I’ve completely fleshed out the topic. Then, I’m going to start writing. How exciting!
A few days ago, I purchased a domain that will serve as a pre-launch blog to build buzz for the book and will also service as the promotional site for my book. I still have some work to do before the blog launches, but I’m keeping my fingers crossed to have everything ready by the beginning of July, maybe sooner.
I’m thinking through my publishing options for the book. I will definitely have a digital version of the book available online for download. I’d also like to have hard copies to sell. I’ve been checking out a few self-publishing options - Lulu.com and BookSurge/Amazon - and I’m leaning toward Lulu primarily because of the lower costs and absence of royalties. If you have experience self-publishing, I’d love to hear your experience. What company did you use? Would you use them again?
Posted by on Jun 13, 2009 in
Uncategorized I’m all for writers having projects independent of their client work. For example, I’m currently writing a book, plus I have this blog that I (sporadically) maintain. I know plenty of writers who have blogs and other revenue streams outside what they do for clients.
The hard part about having projects of your own is finding time to work on them. You can easily grow tired of writing if you spend all your time on client projects. That leaves you with no time for doing any outside work you have planned. (This is what often happens to me.)
Schedule time to do your own work, just like you schedule time to do client work. If you don’t make time for personal projects, you may never get to them.
What do you to to make sure you have time to work on your own projects?
Posted by on Jun 11, 2009 in
Uncategorized The clients you work with today could lead you to the clients you work with tomorrow. Your clients are likely to have friends and colleagues who also need your services. So, have them pass you around. Just drop an email to a few of your current clients letting them know that you’re available for more work and offer a referral discount if they recommend someone who purchases from you. It’s just that easy.
