5 Smart Things to Do Before 2014

Are you ready for 2014? Let me tell you, I've had somewhat of a "craptastic" year and I am more than pleased to welcome in 2014! But while you're celebrating the New Year, I'd suggest you do the following before January 1 arrives, or shortly thereafter: 

1. Get a jump on your taxes. I never wait until April to do my taxes. I like to figure out my gross income and calculate a rough estimate of my net income before the end of the year. Then I send that number to my accountant for an estimate of what I'll owe. Sometimes the number is scary, but I'd rather know that going into the new year than wait and be surprised sometime in 2014. And besides, I use that tax figure to help determine how much I put in my SEP, or self-employment plan, at year's end. 

2. Invest in your career. You can write off legitimate business expenses before the end of 2013, so this is the time to upgrade your computer, purchase software, buy writing-related books (like, gosh, I don't know, Six-Figure Freelancing, Second Edition or Goodbye Byline, Hello Big Bucks, Second Edition! ), and other work-related products. I just stocked up on printer cartridges and paid for my annual membership to ASJA. Every work-related expense reduces your tax liability come 2014. (And see below for the half-price offer in Improvise Press' first two titles.)   

3. Review your year. Every year, I clarify where my money came from. I usually send a holiday card and/or gift to my "whales," or most important clients. I also look for "lessons." Did I take on any projects that turned out to pay a lower hourly rate than I expected? Are clients asking for me to do work I need to gain more experience with? Did I have a steady stream of work, or was I facing a "feast-or-famine" scenario much of the year--like this one? What was the most worthwhile work I did? Which work paid the best? Which seems to have the most potential? Is there any kind of work I want to cut from my roster? 

4. Set goals for the coming year. If, like many serious freelancers, you set an annual income goal, don't forget to calculate your daily nut. My goal in 2014 is to make $60,000, which means an average of $250/day. Average that figure throughout the year of 2014 and you'll meet your new income goal. Think about the other objectives you have as well. Do you want to branch into content marketing this year? (That's one of my goals.) Do you want to become an e-book author? Is this the year you get serious about writing fiction? Should you spend more time on social media--or at least use it more effectively? Decide what your goals are, and put them in writing. 

5. Take time off. Every year, I take the week between Christmas and New Year's as vacation. Before I had kids, I used this week to sleep in, spend time with my husband, watch movies, and set goals for the coming year. I even read for pleasure! Gasp! Now with the kids much of my week is spent entertaining small children, but I do take some off during this week--and just as important, I'm planning when I'll take time off in 2014. 

Too often as freelancers we wind up working all the time--nights, weekends, first thing in the morning--and that's a recipe for burnout. I know I'm more productive when I get away from my computer, so I give myself at least one day (usually Saturday or Sunday) where I do no work at all except for checking my email first thing in the morning. Unplug yourself on a regular basis. I promise it's worth it.  

Readers, I hope 2013 has been a successful, productive year for you. If not, focus on 2014, and tune in next year for more practical, proven advice about how to make more money in less time as a freelance writer. And comment below to tell me what topics you'd like to see me cover here in coming posts!  

Finally, there's less than 48 hours left on my half-price offer on print editions of Improvise Press' first two titles: Dollars and Deadlines: Make Money Writing Articles for Print and Online Markets or Six-Figure Freelancing: The Writer's Guide to Making More Money, Second Edition. Until midnight on December 31, 2013,  you'll get half off both titles when you order directly through ImprovisePress.com and use the discount code CHICKENS. 

Talking Taxes: Tips for Freelancers

If you've read Six-Figure Freelancing, you know I divide writers into two groups--those who write because they love it, and those who do it for the money. If you fall into the latter category (and I bet you do if you're reading my blog), you should be tracking your writing-related expenses as well.

According to Uncle Sam, you must report—and pay taxes on—any income you receive. When you operate as a business, not a hobby, you're entitled to deduct legitimate business expenses, reducing your tax burden at year's end. If you’re writing with the intention of getting paid for your work (and I hope you are), you have a profit motive in mind. You don’t have to be freelancing fulltime nor writing solely for the bucks to have a profit motive—the fact that you get some kind of psychic reward from your work doesn’t count against you. Going for the green is a factor the government considers when deciding whether you’re a legitimate business.

In fact, having a profit motive (and treating your freelance career like you have one) is more important than actually making a profit to the IRS. In other words, ending up in the red doesn’t mean your deductions will be disallowed. However, if you don't make a profit and you're audited, the burden will be on you to prove that you're conducting a business, not pursuing a hobby. So, what can you deduct?

According to the IRS, all "ordinary, necessary, and reasonable" expenses that relate to trying to make a profit in your business. For freelancers, that typically includes:

• PC or Mac used for business;


• Software/programs used for business;


• Office supplies (i.e. paper, business cards, pens, envelopes, and the ubiquitous Post-Its);


• Phone line used exclusively for business (your first or home line is not deductible);


• Membership fees for professional organizations;


• Postage and mailing expenses;


• Internet access; and


• Travel expenses related to business.

You may also be able to take a home office deduction if you use a section of your home solely and exclusively as your place of business. Having a home office still allows you to work in other locations—say at Caribou Coffee—but you most only use your home office for your writing work. Then you can take a percentage of your rent or mortgage interest and utilities as an expense at the end of the year as well.

Even if you're making little money, it's smart to keep track of your writing-related expenses and maintain receipts for them. Once you do start collecting nice fat checks, those receipts can help reduce your tax liability. Keeping track of them helps supports the fact that you're in the writing business, not a hobbyist, should you get audited. And if any questions arise about deductions, you’ll have proof of what you spent, and when, and why.

You may want to talk to a tax professional about how to set up a record-keeping system. Just remember it needn’t be anything fancy—I keep my expenses in a notebook and then store the receipts in a folder in my office. I don’t necessarily need a receipt for $5 worth of mailing expenses, but if I ever get audited, I should have no problem backing up my deductions.

And remember, you've got two weeks until your 2010 taxes are due, on Monday, April 18, 2011. I hope that 2010 was a great year for you and that 2011 is even better!