The only constant in my career is that my taxes suck.

Nobody likes taxes, but at least when you have a traditional job, they aren’t painful. You don’t notice losing the money that goes toward your taxes because you never had it in the first place.

When you are a freelancer though, you have to take a portion of the money you earn out of your bank account and give it to the government in taxes. It’s a more viscerally unpleasant experience because even though you know logically that everyone has to pay taxes, your brief possession of that money makes it feel like something is being pried directly out of your hands.

Obviously, my tax advice will be most accurate to freelancers in the United States. But based on my cursory research, estimated quarterly taxes are a Thing for freelancers globally. In the US, Self employed people are at the highest risk of getting audited, since we’re most likely to make mistakes with our taxes. This is going to be less about which forms to fill out than it is about the year-long process of making sure your records are in place to avoid tax time mistakes.

Since my lawyer best friend will probably read this, let me take this time to say that I am not a lawyer and if you have serious legal concerns about taxes, consult a lawyer, not me.

Recording your business income

In a perfect world, here is how it is supposed to go:

In January, you will receive a 1099-MISC form from every person who paid you at least $600 over the course of the year. They will be completely accurate (perfect world, remember?) and you will then input those forms into your tax software, file and submit.

This never happens. Not every employer sends tax forms. For example, if somebody pays me $600 to build a website, they’re probably not going to send me a 1099-MISC. They don’t see themselves as my employer; they see themselves as my client!

Even when I do receive 1099-MISC forms, the onus is on me to make sure they are accurate. If they don’t match up with my bank statements (because of a missed payment, a lost check in the mail, or a zillion other reasons), I have to request an updated one.

The solution to this is simple but tedious: you need to track every single payment you earn. There is no alternative. You are solely responsible for keeping track of what you have been paid.

I use Quickbooks Self Employed but I could also use Freshbooks. I could even use a Microsoft Excel spreadsheet. Or, a pen-and-paper list if I’m a real masochist. The structure does not matter—keeping a close eye on every single payment you’ve received does.

All you need on the spreadsheet is the employer name, the amount of money you got paid, and the date you received it. For your April 14 taxes, you’ll want to add those up to a total for each employer, too. And if you got a 1099-MISC, it better add up to the same number as the sheet.

If you fall behind on this, you’ll have to do all of it at tax time.

Recording your business expenses

This next thing is a little easier and more fun. It’s another spreadsheet for recording everything you spent money on in order to conduct your freelance business.

Freelancing isn’t free. Did you buy a computer for writing articles? Write it off as a business expense! Take a client out to lunch? In the US, you can save the receipt and write off 50% of the total. Do you use one of the aforementioned softwares for tracking income? Write it off!

Here’s a complete list of self-employed business expenses that you can deduct from your taxes. The problem is if you don’t remember to record these expenses, or you don’t have any records of buying them. In that case, you don’t get to write them off.

Once again, the software you use does not matter. What does matter is the item or service you bought (anything from a scanner to contract labor*), what category it falls into (equipment, software, labor, advertising, etc.), and how much it cost. It’s also good to save the receipt in case you get audited so you can show the Tax Person proof of purchase.

If you do remember though, add up the total. Then, subtract that number from the total business income you earned that year (this is your gross income). The resulting number is your revenue, the amount of earnings you have to pay taxes on in any given year.

If you itemize your business expenses in this way, you will need to pay money for your tax software or else go to an accountant. (Silver lining: these are both expenses you can write off!) For my April 14 taxes, I import my records from Quickbooks into TurboTax Self Employed. Otherwise, I would have to manually enter each expense write-off line by tedious line.

*If you paid a contractor $600 or more, you need to send them a 1099-MISC!

Calculating your quarterly estimates

Since I make more than $400 a year as a freelancer, I pay what the IRS calls Self Employment Tax four times a year. These are Social Security and Medicare taxes just like everyone else pays, but since I’m self-employed I have to do it myself.

Even though I need to pay taxes four times a year, April 14 is the beginning of a new year and end of an old, fiscally speaking. So that’s when I calculate my quarterly estimated taxes. For federal, I can use IRS Form 1040-ES to calculate this. Virginia has its own calculator for my state taxes (and I guarantee your state has this, too).

In April, June, September, and January, I pay taxes to the state of Virginia and the federal government. Each time, I pay 25% of the total I determined on April 14 using state and federal forms, but if I had a really good (or really bad) quarter, I could redo the estimate based on my new higher (or lower) total income prediction for the year. If I predicted I was going to earn $60,000 for 2018 in April but it’s December 2018 and I’ve only earned $40,000, I would pay a much, much lower amount for my final January estimated tax payment.

What to do on Tax Day

For John and I, Tax Day usually comes in March simply because my taxes are so much more complicated than average. We want to give ourselves room to deal with them.

Honestly, my 2017 taxes were the best yet. I automatically imported the data (business income and expenses) from Quickbooks to TurboTax. After that, I just had to confirm that the income I reported matched the 1099-MISC forms I received, add any additional income for which I didn’t receive a 1099-MISC, and input the date and amount of each quarterly tax payment.

(Oh, and then we had to put in John’s W2, because we file jointly as a married couple. But it’s clear that John’s job is more of a footnote to the tax nightmare than the main attraction!)

It only takes a few days after that for TurboTax to notify me that my tax return has been approved. And then it’s time to start all over again! I calculate my estimated taxes for federal and state, and then because I live in a county with special rules for doing business as a self-employed person, I pay an additional yearly tax there, too. You will have to check at the county website (or at the local courthouse) in order to learn if you have to do this as well.

In conclusion: Taxes suck

I used to think it was cool that my tax money goes toward schools and parks and public services, but as my local library languishes and my idiot representatives spend my taxes on a $1 million bus stop (no joke), the appeal has worn off for me. That said, everybody has to pay taxes so you might as well lay the groundwork so you can pay them accurately.

This blog post ended up being a short novel, but the book chapter I’ll base on it will be even longer. If you have a question about freelance taxes, leave it in the comments, please.

When people ask me about why I freelance, I’ve been known to talk about everything except freelancing itself. “I love setting my own schedule,” I’ll say. Or “I don’t have a commute.”

Those things sound great, of course. But they’re the facets of my life outside of freelancing. This comes into focus each March when John and I do our taxes together. I do my taxes four times a year, but spring is the real test of whether I did a good job the rest of the time. And every year, for five years now, turning my records into a tax return is a day-long effort.

I became a freelancer because I love writing, designing websites, and experimenting to create high traffic blogs. I did not become a freelancer because I’m a good boss or bookkeeper. But because this is the career I picked, I have to learn to be better at those things.

My book Otaku Journalism is about the practice of freelance writing (especially for geeks and niche topic specialists). But there are a bunch of freelance aspects that Otaku Journalism doesn’t really cover, the parts of being a freelance writer nobody thinks about.

Over the next few weeks, I’ll be writing a blog series that I hope to turn into a book. Every week I’ll pick a topic about the other side of freelancing that feels timely to me. That’s how I’ll motivate myself to keep going, but it probably won’t be the final order of the chapters.

This post is going to be the table of contents, but the first chapter is already up.

Table of Contents*

• How to do your taxes as a freelancer
• How to establish your freelance business from Day 1
• How to invoice and keep financial records
• My guide to creating a reliable client experience
• Developing a daily routine with structure
• How to adapt and improve your professional skills
• How to market your skills to potential clients
• Networking 101 when you never leave your house
• My guide to taking vacation or sick leave as a freelancer
• How to outsource and work with contract employees
• Metrics to measure your career success

*Want to know about another topic? Email me to suggest it!

Lead photo by Simon Hattinga Verschure on Unsplash

The hardest paycheck you’ll ever make in your freelance business is the first.

Going from $0 to $100 is a lot harder than going from $1,000 to $10,000 because you’re making something out of nothing. It involves a new mindset. When you’re employed by somebody else, your only job is to do well at the assignments you’re given. When you’re self-employed, you suddenly have two jobs: to do good work, and to find work to do in the first place.

If you’re at $0 in your freelance career, I’ve listed a few places you can start your search.

Get the word out

You might already know your first client. The best way to find out is to write an introductory email to your social circle outlining your product or services. Frame it as an announcement: “Friends, I wanted you to be the first to know about my new web design business,” include your new website with a list of ways to work with you, and show people where they can contact you if they or anyone they know might be interested.

This might seem like surprising advice from me considering how outspoken I am against multi-level marketing stuff like Mary Kay. The reason is that they force you to make constant sales pitches to your friends and family in an unnatural (and unfriendly) way. By treating your friends as nothing but marks, eventually you’re going to be left with no friends.

Your friends don’t want to be your regular income stream, but they do want to see your business succeed. That’s why I think one initial email to people who care about you is perfectly fine, and in fact something you’d be remiss not to do. I always ask prospective clients how they heard about me, and some of them are friends of friends, or know one of my college professors, or a previous client suggested they work with me. There’s a world of difference between pitching your social circle just once and endlessly exploiting it, and you’re smart enough to recognize it.

Embrace social media

I started working at the Daily Dot after then-editor Owen Thomas read an article I wrote and offered me a job on Twitter. (This is also a good example of why guest posting works.)

In 2017, I got several clients simply by checking my inbox on LinkedIn. One of my biggest mistakes early on was ignoring LinkedIn because I thought that just because I didn’t have a traditional job, LinkedIn was no longer going to be useful for me. I completely underestimated how many employers use LinkedIn searches to find freelance contractors like me.

Right now, I get the majority of my writing jobs through a Facebook group for freelance writers. My favorite group is women-only, but it can get even more exclusive than that—I’m in groups for just video game writers, or just finance blogs. Editors post what they’re looking for and invite writers to pitch to them. In my experience, this can lead to regular, recurring work.

Join a freelancer community

I joined Solopreneur Circle DC in order to meet “coworkers” and get out of the house. Twice a month, we gather for knowledge sharing and/or brunch. I’ve met business owners who do all kinds of work, from graphic design to real estate to styling hair to styling Instagram photos. Some of them make a lot more money than me, which is highly educational in its own way. All of us have stories about dealing with clients, dealing with taxes, or which bookkeeping software to use, so being in a community has helped me refine my business a lot.

It’s also grown my business through new income. Since we all have different lines of work, it means that we frequently pass clients to one another. I had a web design client who needed a print pamphlet designed, so I forwarded her to one of the entrepreneurs I know. A logo designer was asked if she did website maintenance, and since she didn’t, she recommended that client to me. I still do regular web upkeep for that client today.

Local communities are great because what we have in common is our location instead of our profession. That means I have a local network of business owners who know to recommend me, and I always have a specialist to recommend to clients who want a service I don’t do.

In the meantime: Passive income

Later, when your freelance business has taken off, you’re going to reflect fondly on those days you had so much free time. I think this is the perfect time to work on something that requires a lot of initial unpaid work, but then generates income for years to come. I’m talking products like my Niche Journalism Workbook, or books like Build Your Anime Blog.

The workbook took me a week to build; the book took me two months—and it’s not like that was the only thing I worked on during that time. I didn’t get paid while I wrote either of them, but I still sell copies of both years later. And since both of them include a call to action in the back about other products I sell and other ways to work with me, they sometimes lead to repeat customers who, after reading, decide to work with me as a web designer or copywriter.

Sometimes your passive income product can also serve as a portfolio. If you’re a writer, your ebook can prove your impeccable grammar. If you’re a web designer, a downloadable theme (like my free Asuna) can prove you can actually code. It may feel like you’re doing it for nothing at the time since you’re not getting paid, but it’ll be something you can sell forever.

I started freelancing full time in January 2013. It took until April 2013 for me to be able to pay my bills with it (instead of just drawing from my savings). I know you can turn that $0 into a sustainable source of income. You just need to know where to look.