Running Your Freelancing Business

Let me open this article by making a few things clear: I’m not an economist. Nor am I a virologist. And I don’t have a crystal ball.

However, given what I’m hearing from people much smarter than me, along with the recent losses in the stock market and the impending job losses, we’re headed toward another recession.

I wanted to write this article because when I started freelancing, it was right before the last recession hit in 2008. And, if you’re at all like I was, you were really worried about your business and your ability to financially survive.

It’s not uncommon for freelancers to think that we’re always just a missed invoice or lead away from collapse. That your business is built on a house of cards. So, understandably, when corporate financials sliding and lay-offs are imminent, you probably start doubting your ability to stay afloat.

In part one of this two-article series on freelance business finances, we will focus on businesses that are just starting out.

If you’ve been in the game for a while, feel free to skip to the second post when it becomes available.  No matter what stage your business is in, improved financial record-keeping and great habits can save you time and stress while opening the door for growth.

Today, we’ll look at why records are important, how to build your war chest, and how and when to hire an accountant.  We’ll also discuss the criteria you should use when selecting software for invoicing, receipt storage, and accounts management.

Breaking up with a client is like breaking up a romance.

It needs to be handled gently with the least amount of damage done to the person receiving the bad news.

If you’ve reached the point where you feel the relationship isn’t going anywhere, and your goals aren’t aligned, that means it’s time to move on. But there’s a tugging feeling of obligation that can make you feel trapped.

How do you end it without burning bridges or closing yourself off to future opportunities?

Well, there is a way.

Back in March I needed to step away from a lot of my freelance writing clients.

90% of my income came from a niche I hated. I had anxiety about going to work. I couldn’t sleep. And I put on 15 pounds through comfort eating.

Something needed to change. I became a freelance writer to escape doing work that I hated. But now my business was as bad as my dead-end job.

In order to grow my income through work I enjoy (and improve my overall health) I needed to find a way to let go of my existing clients without hurting my business.  I had to maintain my income, my reputation and their results.

I spent the next weeks listening to podcasts, reading articles and consulting mentors to learn how to delicately handle these crucial conversations. This helped me put together a simple formula for effectively breaking the bad news with minimal repercussions.

Using the six steps I’m about to show you, I was able to step away from these clients, maintain a good relationship with them, and prevent any negative outcomes for their business or my reputation.

This guest post is brought to you by Francesca Geens, a UK based technology and productivity strategist, who loves nothing more than simplifying and untangling the way people do their work.

The problem with most articles on productivity is that they do one of two very annoying things.

They either list ten million ‘essential’ apps, or they prescribe the author’s own ‘system’.

Unfortunately, neither of these approaches results in the reader becoming more productive.

Why?

Because reading about and playing with a ton of new apps is one of the greatest productivity sucks around! You probably already have the right tools but you are not using them well.

The prescribed methodologies only work for a lucky few. Everyone else ends up more stressed because their new ‘system’ is not working for them.  That’s because everyone is different.

Isn’t there another way?

How about we look at what successful independent consultants do to be their most productive and effective selves?

No list of essential tools coming up folks. And plenty of different approaches.

Read on to build your own productivity toolbox.

This article is somewhat specific to the needs of freelancers who live in the United States, but I’ve tried to make it useful no matter your country.

I remember when taxes used to be relatively easy.

I’d get my paycheck, my employer would withhold estimated tax payments, and at the end of the year I’d file a relatively simple tax return and get a refund for any withholding overpayments I made a bit later.

Easy, right?

And then I started my own business.

…And the IRS went from being a faceless organization that mailed me checks every year to an archnemesis, who I felt was always getting in the way of me, my clients, and even my ability to create jobs.

I dug myself into a hole more times than I’d care to admit, especially as I grew my agency and brought on employees and significant overhead. Early on, I thought of my taxes in a very laissez-faire way: “yeah, I’ll owe some taxes probably, but hopefully I’ll have the money to pay them. And if not, I’ll get a payment plan worked out. What’s the worst that can happen?”

To be honest, it wasn’t doom and gloom.

I did end up taking up the IRS on a payment plan, and it was easy to do. (If you owe less than $50,000, you can usually do this without even needing to talk to an agency. If you’re like me and don’t like needing to tell someone that you screwed up your taxes, that’s a very welcome featured.)

But don’t be like me and end up mucking around with IRS payment plans.

If you take one thing away from anything I do here at Double Your Freelancing, it’s this: Learn as much as you can from those who’ve already forged the trail.

So today I’d like to introduce you to Luke Frye of Timber, an accounting firm that specializes in working with freelancers. He’s helped me prepare this article (since I’m woefully ill-equipped to talk authoritatively about taxes or legal things), and his firm has also produced a really good email course that goes deeper than what we’re able to cover in this article—I’ll link you to that at the end of this article.