Wednesday, September 12, 2007

POST #14: 40 Days to a Successful Freelance Writing Career

PUBLISHER NOTE: If you are a regular reader of this blog, then you know about the upcoming freelance writing seminar in October. Details.

Many have inquired about what will be discussed at the seminar. So, in order to answer your questions and to get you prepared for what to expect, I've started a series of posts entitled "40 Days to a Successful Freelance Writing Career."

To start at the beginning, click here. And, welcome to the blog. Now, on to today’s post . . .

Should You Officially Register Your Freelance Business?

I’ve owned quite a few businesses in my day – some I’ve registered, some not.

Each person and their situation is different, so consider the following when trying to decide if officially registering your freelance writing enterprise is right for you.

Paperwork: Any type of business you register is going to generate paperwork from good ole Uncle Sam (ie, the IRS). The reason I didn’t register some of the businesses I’ve owned is that I just didn’t want to go through the hassle of filling out some inane form because I made $7,000 last year.

Some things you will be forced to deal with: Filing annual and/or quarterly taxes (no matter how much you made – or lost); paying business registration fees; getting an EIN number, filing more complicated personal taxes; etc.

The paperwork – for even the simplest business – can be, at best, annoying, and at worst, downright harrying. If you’re not adept at this, don’t want to deal with it and/or can’t afford to hire an accountant to handle it, then you might want to accept checks in your own name, instead of registering a business.

POST CONTINUED BELOW
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Want to learn exactly what to do to earn $100, $150, $200/day or more as a freelance writer, editor and/or copy editor? Inkwell Editorial's upcoming Freelance Writing Seminar will tell you how. Details. It's a career anyone who can read and write can start  with the right information.
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Image: This is one of the major reasons to register a business. It makes you appear more professional. Although, I know plenty of long-time freelance writers who accept checks in their own name.

On the invoice, simply put: “Make Payable to Yuwanda Black,” for example.

Depending on how you market your services – eg, high-end, blue-chip clients, as opposed to small, independent shops.

One thing I will say is, if you have a website and the name of the business listed on the site is, for example, The Writing Tavern, most clients will automatically assume that’s how checks should be made out. I’ve done both in my career – and really, once you secure a client, it hasn’t made that much of a difference because by then, they will have the quality of your work in front of them.

Registering the Right Way: What I mean by this is, if you decide to register your business, you must figure out which structure works best for you (eg, sole proprietorship, Corporation (Subchapter S, Subchapter C, LLC)); etc.

Setting up the right structure is critical to getting the right tax breaks for you and your financial situation. So, consult a professional and/or do some extensive reading on it before you decide.

When we first started Inkwell Editorial (which I discussed in Post #13), my sister set it up as a sole proprietorship. Once I officially came on as a full-fledged partner, we re-registered it as a partnership. When we opened the staffing division, we incorporated – first as a Subchapter C, then as a Subchapter S (once we hired an accountant, he advised us that this was the best structure for us).

While all the changes we made were based on the needs of the business at the time, we could have registered as a Subchapter S right from the start and saved all those filing fees and extra trips to the courthouse. And, oh yeah, every time you change the business structure, there is a fee (gotta love Uncle Sam – he has his hand in every pie you bake!).

Liability: One of the main reasons to register a business is to protect personal assets. FYI, not all business structures offer this protection (eg, sole proprietorships, partnerships and even in some cases, some types of corporations).

People sue for any and everything these days. While you may be thinking, “What could a freelance writer do to cause someone to sue,” you’d be surprised. Eg, copyright infringement, slander, not completing a project on time, etc.

While I think it’s rare you’ll be sued because of something you did as a freelance writer, I just wanted to throw that out there for you to consider.

Career Uncertainty: What I’m getting at here is, are you sure this is a career you’re going to stick with – at least for the next 2, 3, or 5 years. Why is this important?

In my opinion, you shouldn’t go through the expense of registering a business if you’re not sure you’re going to stick with it for at least a couple of tax filings. While registering a business is not all that expensive, it sets into motion a series of things that have to be taken care of if you decide to close up shop, which brings me to my last point . . .

Closing Up Shop: If you register a business, you can’t simply decide to quit and that’s it. You have to file closing papers with the government. Otherwise, you will continue to get bills from the IRS associated with your business – eg, quarterly tax fillings, annual registration fees, etc.

I’ve owned three or four side businesses that I did not register for this very reason. They were hobby businesses that generated a few thousand dollars a year. So, I just accepted payment in my own name -- and of course, claimed it on my personal tax return.

Once I no longer wanted to do the business, there was no closing paperwork.

Now, did I get all the tax breaks I could have gotten had I registered them as a business? Most probably not. But, I’ve been at this long enough to weigh the headaches of having to file this form and that one for an official business, as opposed to just quitting – and that’s it.

I abhor IRS paperwork – it’s like Chinese math to me. Not only that, it takes up space in my head because I worry if I filed the right form, sent it to the right department, calculated the right fee, etc. I’d rather use that energy for other, more productive things.

But, you may be a different personality type.

I did register my major businesses – Inkwell Editorial, and the now defunct, Ethnic Home D├ęcor. I put a lot of money into these and wanted all the tax breaks associated with running them from home and paying for supplies, materials, advertising, travel, etc.

My advice: While it may seem that I’m against registering a business – I’m not at all. I’ve just found that unless you’re going to be in this for the long haul, and plan to take full advantage of the tax breaks a work-from-home career allows, you might want to hold off on it.

You can register a business at any time. When you do, be sure to get the advice of a trusted accountant and business lawyer. They will be able to set you up right from the beginning – and you’ll be well positioned to take full advantage of all the perks associated with owning a home business.

NEXT POST: As we mentioned Career Uncertainty above, in Post #15 tomorrow, we’ll talk about how to decide is freelance writing is a good career choice for you.

What do you think? If you have questions, comments or observations about this post, send them in. Email them to info [at] InkwellEditorial.com.

Editorially yours,
Yuwanda (who is this person?)
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What's New in Inkwell Editorial’s Newsletter?

Did you get a copy of today’s newsletter? Gordon Graham, aka, that white paper guy, talked about white papers and case studies. He charges $90/hour just to edit a white paper and a minimum of $4,000 to produce a white paper from scratch.

Wanna know what he had to say? Sign up to receive your copy to read what he had to say.

Missed the last issue of Inkwell's freelance writing newsletter? The 8/15 issue featured an interview with B2B freelance writer, Meryl K. Evans. Want to break into this very lucrative market? Meryl's interview sheds some detailed light on how to go about it.

Gain clients, web traffic and brand awareness. How? Let us interview you for our popular newsletter? Full details. Read the first issue here.
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Copyright Notice: May be reprinted with the following, in full: Yuwanda Black is the publisher of InkwellEditorial.com: THE business portal for and about the editorial and creative industries. First-hand freelance success stories, e-courses, job postings, resume tips, advice on the business of freelancing, and more! Launch a Profitable Freelance Writing Career in 30 Days or Less -- Guaranteed! Log on to InkwellEditorial.com.
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