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Tax Deductions Are Few for Pro-Bono Freelance Work, Get in the Know

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(Art Credit: Andrea Hernandez)

Like many freelancers who are good at what they do, you likely get approached by not-for-profit organizations (or friends who work for them) to provide pro bono services. That is, you do work and provide services without charge. This is a great way to gain exposure in a market as well as create some goodwill, however, it is important to understand that it really has very little benefit to your tax situation.

Unlike actual charitable contributions and some expenses related to performing pro bono work, such as mileage driven and supplies used in the performance of the volunteer tasks, any work you do in and of itself is not tax-deductible. This is the same rule as volunteer hours, which are generally not tax-deductible either.

For the expenses you can deduct (see the IRS guidance below), you must itemize your deductions on Schedule A of your federal 1040 tax return for them to be eligible and this practice is usually only favorable if the amount would be greater than the standard deduction which is now $12,950 for individuals and $25,900 for married taxpayers filing jointly.

To qualify, all pro bono deductions must meet two IRS rules:

They must be incurred as a requirement to perform the service for the organization.

They must primarily benefit the charity and not the taxpayer.

Any potential deductions including meals eaten with donors, printing, events and related items must be considered necessary to provide or perform the service that directly benefited the charity.

The fine line between freelance pro services and pro bono work.

The Internal Revenue Service (IRS) also distinguishes between the pro bono provision of professional services and volunteer work. In both of these scenarios, you can't deduct the standard fee for the time you donate, but you can deduct qualified expenses that you incur to provide those services unless they benefit you more than the charity you are using them for. An example of this would be the cost of equipment you continue to use, such as a printer.

Claiming pro bono deductions related to your freelance work

Any tax break you claim for pro bono work must be a legitimate charitable contribution, which would usually be claimed as an itemized deduction. That being said, you can't gain any tax benefit from claiming them unless you forgo the standard deduction. The Tax Cuts and Jobs Act doubled standard deductions beginning in 2018.

This means that many freelancers may find that the deduction is larger than the total of their itemized deductions given that you are limited to claiming overall charitable contributions of no more than 60% of your adjusted gross income (AGI).

Another limitation is that you can only make donations to eligible charities such as churches, government entities, and any organization that is listed as qualifying on the IRS website.

Work-related expenses that are deductible for pro bono gigs

The IRS clearly indicates that you can't deduct the value of your services or your time that you spend helping others. While you can’t deduct your professional time for pro-bono work as a taxable item, you can deduct tangible expenses such as paying a contractor to build a website as part of the services you provide. Travel expenses related to your pro bono work are also deductible at the same rate as the IRS standard mileage rate.

Rigorous record-keeping is critical for claiming pro bono freelance expenses

Just like any other expense or charitable deduction, you must keep detailed records of receipts to substantiate freelance pro bono work for tax purposes, especially to reduce the risk of the IRS disclaiming them.

While the tax situation may not move in your favor with pro bono work, that should not be the sole factor in your decision as to whether to support organizations you care about with your skills and services. It is an important reminder of the need to be aware of the tax implications of your freelance business activities and how they impact your total financial picture

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/06/06/tax-deductions-are-few-for-pro-bono-freelance-work-get-in-the-know/

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IRS reminds taxpayers who haven’t filed yet to choose their tax preparer wisely

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(Art Credit: Andrea Hernandez)

This article is posted with permission from our partner IRS and originally appeared on the IRS blog at: https://www.irs.gov/newsroom/irs-reminds-taxpayers-who-havent-filed-yet-to-choose-their-tax-preparer-wisely

Subscribe to IRS tax tips here.

Taxpayers who have not yet filed their 2021 tax return may file electronically when they are ready rather than wait until the October 17, 2022, extension deadline. If they are considering hiring a tax preparer, it's important to choose wisely. Taxpayers are responsible for all the information on their tax return, no matter who prepares it for them or when it's filed.

There are different kinds of tax return preparers, and a taxpayer's needs will determine which kind of preparer is best for them.

Here are some things taxpayers should do when choosing a tax return preparer

Check the IRS Directory of Federal Tax Return Preparers. This searchable and sortable public directory helps taxpayers find a tax return preparer with specific qualifications.

Check the preparer's history with the Better Business Bureau. Taxpayers should check for any disciplinary actions for credentialed tax return preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For enrolled agents, verify the agent's status on IRS.gov.

Ask about fees. Taxpayers should avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of the refund into their own financial accounts. They should be wary of tax return preparers who claim they can get larger refunds than their competitors.

Ask if the preparer plans to use IRS e-file. Taxpayers should make sure their preparer offers IRS e-file. The IRS issues most refunds in fewer than 21 days for taxpayers who file electronically and choose direct deposit.

Make sure the preparer is available. Taxpayers should consider whether the tax return preparer will be around after the filing deadline has passed. Taxpayers should do this because they might need the preparer to answer questions about the preparation of the tax return. Avoid fly-by-night preparers.

Ensure the preparer signs and includes their preparer tax identification number. All aid tax return preparers must have a PTIN to prepare tax returns Preparers must sign returns and include their PTIN.

Understand the preparer's credentials. Enrolled agents, CPAs, and attorneys have unlimited practice rights and can represent taxpayers on any tax matter before the IRS. Tax return preparers who participate in the IRS Annual Filing Season Program have limited practice rights and may only represent taxpayers whose returns they prepared and signed, and only for exams and for customer service and Taxpayer Advocate Service inquiries.

More information:

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/06/02/irs-reminds-taxpayers-who-havent-filed-yet-to-choose-their-tax-preparer-wisely/

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4 Tax Tips for First-Time Freelancers

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(Art Credit: Karen Fischer)

Many people these days are switching to a new model of work. Instead of being on payroll as a traditional employee, they are working as freelancers.

Being a freelancer has many advantages. You have more control over your hours, the amount of work you take on, and how you accomplish that work. Not to mention, many freelancers make more money for their work per hour than they did as employees.

But, when it comes to taxes, the story is a bit different. Freelancers no longer have it as easy as a traditional employee. In fact, if this is your first year working as a freelancer, you can expect major changes when it comes to managing your taxes. Here are four tips to get you started.

1. Gather all your Form 1099s.

One of the first changes includes new tax documentation. Instead of receiving Form W-2 from your employer, you can expect to receive Form 1099-MISC, Miscellaneous Income, from any client that paid you $600 or more during the year. And, unlike Form W-2, you don’t need to send a copy of Form 1099-MISC to the Internal Revenue Service (IRS) with your tax return. Your client sends the agency a copy as well.

But when it comes to completing your tax return, make sure you report the same amount of business income shown on all your 1099 forms. If a Form 1099-MISC is incorrect, request a corrected version from the sender. Reporting less total income than the total on your 1099 forms can result in receiving a letter of correction from the IRS.

2. Make sure you’re really a freelancer.

It’s not unheard of for employers to pay people as freelancers who are actually employees according to IRS standards. Doing so simplifies things for the employer because they don’t have to file payroll reports and pay payroll taxes. But, unfortunately, that’s not right.

If you’re really an employee, you should be treated as one. And that includes receiving benefits and payroll taxes paid on your behalf.

Generally, you’re an employee if the company tells you how to do your work, pays for your supplies or other expenses, and more-or-less treats you as a permanent employee. Check out the IRS site for more details.

If you think a company has misclassified you as an independent contractor when you’re actually an employee, you can file a Social Security tax form. Use Form 8919, Uncollected Social Security and Medicare Tax on Wages, to calculate and report your share of uncollected Social Security and Medicare taxes as an employee.

3. Report your freelance income on the right form.

The form used to report your freelance business income and expense activity depend on how the business is organized.

If you work by yourself and haven’t organized your business another way, you likely report freelance income on Schedule C with your Individual Income Tax Return, Form 1040.

You can also choose to file Schedule C if you set up your business as a limited liability corporation (LLC), and you are the only member.

4. Don’t forget state and local taxes.

Depending on the type of work you do, you may need to register your business with your state or locality. You generally must register if you use a business name other than your own name.

If your state or locality collects income tax, be sure to report freelance income on your state return. You also may need to file state excise tax and payroll tax returns, depending on your state laws and the type of income you receive.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/06/01/untitled-5/

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A New Freelancer's Guide to Funding & Retirement

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(Art Credit: Andrea Hernandez)

Securing funding and prioritizing retirement should be parts of every freelancer’s business and life plans. But most of the time, they aren’t.

Freelancers struggle to pull in enough to pay the bills AND save. They’re funding everything out of their own pockets, which can be incredibly overwhelming.

But what if you could relieve some pressure financially and start on a path to early retirement? We’re happy to tell you that you can.

With a bit of creativity and a spotlight on good financial habits, a thriving business and retirement are within reach. Here’s your new freelancer’s guide to funding and retirement.

Explore All Funding Options

As stated above, freelancing is tough because most of us use our own money to keep our businesses afloat. It’s such a relief when you can get additional funding from other places to grow your operation. You can also use extra financial help for living expenses.

If you can get a traditional small business loan from a bank, do it. Work with your banker on suitable loan terms and the lowest interest rate you can get. When you receive your loan funds, use them wisely. It might be a good idea to draft a plan for the loan funds, whether you plan to use them to hire an employee or scale your marketing strategy.

If you have trouble landing a traditional business loan, consider creative alternatives. Personal loans and lines of credit are available to freelancers. So are alternative lenders like private online companies offering personal finance solutions. You could even get the funds you need for your business through crowdfunding or grants geared toward freelancers.

Ample research is the first step to getting any of these funding options. In addition, keep all your financial and other business documents organized and easily accessible should you need to provide information for one of these opportunities. Be sure that every application you put in fulfills every requirement. Finally, follow up until you get a final answer on each option you pursue.

When you get funding and start making money as a freelancer, it’s important to have a designated account for your retirement funds to stay on track.

Open an Individual Retirement Account

Start your retirement savings with a simple contribution each month to an individual retirement account (IRA). The most appropriate IRA for you depends on:

Your retirement savings goals

If you plan to withdraw money early

How much income you generate each month

How you want to diversify your investment portfolio

How much help you need to open and maintain your account

Whether you set up a Roth IRA, Traditional IRA, Solo 401(k), or SEP IRA, budget for the max contribution. Understand the tax benefits available to you with these accounts and how to take advantage of them. Be sure you’re aware of any penalties associated with early withdrawals. And dig into the rest of the details about your chosen account until you thoroughly understand everything about it.

When your retirement account is open, getting in the habit of saving is crucial.

Get in the Habit of Saving

When you find funding, you have to use the money responsibly. Also, you have to be diligent about saving for retirement once you get your accounts set up. Getting into the habit of saving and sticking to a budget will help.

Create a budget for your freelance business. Note all your income and add up all your fixed and variable expenses. Don’t forget to account for your salary. See what’s left over after all expenses and salary are paid. Allocate leftover money to your business savings accounts and investments.  

Repeat the budget process for your personal finances with the salary you pay yourself. You should have a line in your budget for money allocated to your retirement savings account. You should also get in the habit of setting aside money for healthcare expenses and emergency funds.

Being consistent with your budget and savings are key. Use a budgeting tool if you have to, but just stick with it.

If you aren’t totally comfortable with finances, look to a financial advisor for help.

Enlist the Help of a Financial Advisor

It’s a smart move to work with a financial advisor. Financial advisors can help you set up your retirement accounts correctly and maintain them. In addition, they can ensure you fully understand your benefits.

They’re also great people to have on your side to help you put your freelance income to work for you. Furthermore, financial advisors are great resources to tap into to learn about changes to IRS rules for retirement that affect freelancers.

Determine if you have money in your budget for a financial advisor. If you do, research potential fits in your area specializing in working with freelancers. Set up consultations with your top choices and go from there.

Conclusion

Navigating funding and retirement as a freelancer doesn’t have to be overwhelming. Having everything in your hands can be just as beautiful as it is scary. Use these tips to help you take charge of finding funding for your freelance business and achieve the retirement life you envision.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/30/a-new-freelancers-guide-to-funding-retirement-2/

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Works Made for Hire and Copyright

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(Art Credit: Andrea Hernandez)

If a work is made for hire, an employer is considered the author even if an employee actually created the work. The employer can be a firm, an organization, or an individual. The concept of “work made for hire” can be complicated. Let’s break it down and you’ll be better equipped with important knowledge to protect yourself and your work.

Fundamental Concept of Copyright

The Copyright Office has created guides on various topics: Their guide on “Works Made for Hire” is a helpful starting point. It sums up the fundamental concept of copyright nicely:

Copyright law protects a work from the time it is created in a fixed form. From the moment it is set in a print or electronic manuscript, a sound recording, a computer software program, or other such concrete medium, the copyright becomes the property of the author who created it. Only the author or those deriving rights from the author can rightfully claim copyright.

As stated in the Copyright Office’s “Copyright Basics (Circular 1),” as a copyright owner, you have the right to reproduce the work, create derivative works, distribute copies of the work, perform the work publicly, and display the work publicly.

You also have the right to transfer copyright ownership in whole or in part, license other people to use the work, and sue for infringement.

Works Made for Hire Under the Copyright Act

The person who creates a copyrightable work is the author of that work and, therefore, the copyright owner. The one exception to this rule is any “work made for hire.” Section 101 of the Copyright Act provides definitions of the key terms in copyright law. It defines a “work made for hire” as:

1. a work prepared by an employee within the scope of his or her employment

or

2. a work specially ordered or commissioned for use:

as a contribution to a collective work

as a part of a motion picture or other audiovisual work

as a translation

as a supplementary work

as a compilation

as an instructional text

as a test

as answer material for a test

as an atlas

if the parties expressly agree in a written instrument signed by them that the

work shall be considered a work made for hire.

Even though the parties may call it a work for hire, this does not mean the employer or hiring party is the author.

Employees

For employees, other factors like the relationship of the parties and the true scope of the employment are considered.

Employee or Independent Contractor?

Courts are carefully scrutinizing arrangements to determine if individuals are employees or independent contractors. As addressed in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 109 S. Ct. 2166, (1989), some factors to consider include:

the hiring party’s right to control the manner and how the product is accomplished

who provided the necessary tools

whether the hiring party may assign additional projects to the artist

what control the hiring party has over the artist’s schedule

how the artist is compensated

Independent Contractors

For independent contractors, if the work is specially ordered or commissioned for one of the nine specific uses and the parties expressly agree in a signed writing that it is a work made for hire, the hiring party will be considered the author and, therefore, the copyright owner. Establishing the relationship may include determining whose “instance and expense” the work was created, as discussed in Marvel Worldwide, Inc. v. Kirby, 777 F. Supp. 2d 720 (S.D.N.Y. 2011). If the work does not fit in the exception, the artist is the author and, therefore, the copyright owner.

Best Practice Approach

Parties may agree in writing that the artist owns the copyright in a work made for hire or the hiring party owns the copyright in a work that is not (or may not be) considered a work made for hire under the Copyright Act. However, because it isn’t always clear, it is best practice for the parties to sign an agreement which (1) states whether it is a work made for hire, (2) clearly states who owns the copyright, and (3) assigns the independent contractor’s rights to the work to the hiring party (if appropriate) if the work is not considered a work for hire under the Copyright Act.

Moral Rights

The Visual Artists Rights Act of 1990 (VARA), found in section 106(A) of the Copyright Act, gives authors of visual art the rights of “attribution and integrity” of a given work. Under the act, the author has the following rights (with some conditions):

claim authorship of the work

prevent the use of the author’s name on work they did not create

prevent the use of the author’s name on any work that has been improperly distorted, mutilated, or modified

prevent the intentional distortion, mutilation, or modification of their work

prevent the destruction of a work of “recognized stature”

VARA does not protect works made for hire. But because a work may later be determined to be outside the work for hire construct, the author should decide whether they want to waive their “moral rights” to the work—and such a declaration should be included in an agreement.

Termination Rights

If a work is not a work for hire, the author can still assign the copyright but will keep the right to cancel the assignment after 35–40 years (note: the notice of termination must be served before the time elapses). The Copyright Office has more information about the Termination of Transfers and Licenses.

Disclaimer

The information in this guide is not legal advice and is not intended to be relied upon as legal advice. The guide highlights some essential concepts; it does not cover all the related rules, exceptions to the rules discussed, or the many different ways courts interpret them. Contracts law is very fact-specific. If you have a legal issue, you should not rely on this information and instead speak to an attorney.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/26/works-made-for-hire-and-copyright/

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10 Money Management Tips for Freelance Writers

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(Art Credit: Pedro Gomes)

As a freelance writer, you're probably juggling a lot of balls - writing articles, pitching new clients, attending networking events, and more. In the middle of all of that, it's easy to let your finances fall by the wayside.

Plus, many freelance writers don't have the luxury of a regular paycheck, which can make it difficult to budget and save for the future. You never know when a client will suddenly decide to cancel a project or when you'll have a dry spell in terms of new work. Most of the time, you're probably just used to living paycheck-to-paycheck.

But for those very reasons, it's even more critical for you to take control of your finances. If you want to succeed in this business, you need to be proactive about money management.

If you're not sure where to start, read on for 10 essential money management tips to put into practice starting today.

1. Keep Track of Your Income and Expenses

This may seem like a no-brainer, but it's essential to keep tabs on your finances on a regular basis. Set aside time each week (or at least each month) to update your records and review your bank statements and credit card bills.

Track how much money you're bringing in from clients and any other sources of income. Then, list out your expenses - both business-related and personal. Include things like website hosting, rent, groceries, and any other bills you have to pay regularly. This will help you better know where your money is going each month.

You could even set up a simple spreadsheet to help you keep everything organized. Once you have a clear picture of your income and expenses, you can start working on a budget (more on that later).

2. Set a Budget and Stick To It

A budget is a crucial part of any financial plan, and it's especially important for freelance writers. Without a budget in place, it's easy to overspend or undersave - which can put you in a difficult financial situation down the road.

In contrast, having a budget can help you make ends meet, save money, and reach your financial goals.

The best way to do this is to be as specific as possible when setting your budget. Include all of your income and expenses from the previous tip, then break down how much you need to spend in each category.

But creating a budget is only half the battle - you also have to stick to it. This may require some lifestyle changes, but it'll be worth it. Also, make a point to review your budget regularly and make adjustments as necessary. And if you find yourself overspending in one area, don't be afraid to cut back in other areas to make up for it.

3. Build an Emergency Fund

When you're self-employed, it's always a good idea to have some money set aside in case of an emergency. This could be anything from a last-minute client project to a medical bill or car repair.

Ideally, you should aim to have at least 3-6 months' worth of living expenses saved up. This may seem like a lot, but it's worth striving for. If you can't swing that much, start with $1,000 and increase your savings goal as you go.

That way, if you ever find yourself in a pinch, you won't have to rely on credit cards or loans to get by.

4. Open a Separate Bank Account For Your Business

One of the best ways to manage your finances as a freelance writer is to keep your business and personal expenses separate. The last thing you want is to mix up your spending and end up with a jumbled mess.

The easiest way to do this is to open a separate bank account for your business. That way, you can deposit your client payments into one account and use another account for your personal spending. You could also get a business credit card to keep things even more organized.

Just make sure you're diligent about only using the business account (and credit card) for business expenses. Otherwise, you'll defeat the purpose of having a separate account in the first place.

5. Hire an Accountant

If managing your finances sounds like more trouble than it's worth, you can always hire an accountant to do it for you. This is a great option if you're not confident in your money management skills or simply don't have the time to keep track of everything.

An accountant can handle all aspects of your finances, from bookkeeping to tax preparation. They can also offer valuable advice on saving money and making smart financial decisions for your business.

Of course, hiring an accountant does come at a cost. But if it means peace of mind and improved financial health for your business, it could be worth the investment.

6. Get Everything in Writing

When you're working with clients, it's important to get everything in writing. This includes the scope of work, deadlines, payment terms, and anything relevant to the project.

Having a written agreement in place will help prevent misunderstandings and miscommunication down the road. It’ll also protect you if a client tries to back out of the agreement or doesn't pay you for your work.

So before you start any project, make sure you have a solid contract in place. And if you're ever unsure about something, don't hesitate to ask your client for clarification.

When you do the work upfront and get everything in writing, it'll save you a lot of headache (and money) in the long run.

7. Send Invoices at a Set Time Each Month

Sending invoices can be one of the most tedious aspects of being a freelance writer. But it's also an important part of running your business and getting paid for your work.

One way to make the invoicing process easier is to set up a system whereby you send invoices at the same time each month. For example, you could send all of your invoices on the first Monday of the month. Or you could send them out on the last day of the month.

Whatever system you choose, just make sure you're consistent with it. That way, your clients will know when to expect your invoice, and they can budget accordingly.

8. Follow Up on Past-Due Invoices

Even if you have a system in place for sending invoices, there will be times when clients don't pay on time. When this happens, it's important to follow up and make sure they received the invoice.

If they have indeed received the invoice but haven't paid yet, gently remind them of the payment terms and ask when you can expect to receive payment.

If they claim they never received the invoice, send them another copy (either by email or regular mail) and give them a specific date by which you need to receive payment.

Most clients are honest and will pay their invoices as soon as possible. But there are always a few bad apples out there who will try to take advantage of you. By being proactive and following up on past-due invoices, you can minimize the chances of this happening.

9. Don't Forget to Pay Your Taxes

When you're self-employed, it's your responsibility to pay your own taxes. This includes both federal and state income taxes, as well as self-employment taxes.

If you're not used to paying taxes, it can be easy to forget about this important task. But if you don't pay your taxes on time, you could be subject to late fees and interest charges. Even worse, you could end up being audited by the IRS.

To avoid any problems, make sure you set aside money each month to cover your tax bill. That way, you'll always have the money on hand when it's time to pay your taxes.

And if you're ever unsure about how to file your taxes as a freelance writer, again consider hiring an accountant to help you out, but don't risk doing them yourself and getting into trouble.

10. Leverage Software

There are plenty of different software programs that can help you manage your business. From invoicing to time tracking to project management, there's a tool out there to help with just about everything, so it can be helpful to leverage a few of them to stay organized and save time.

For example, if you find yourself sending a lot of invoices, you might want to use a tool like FreshBooks or QuickBooks to automate the process.

By using software to automate some of the more tedious aspects of your business, you can free up time to focus on other things, like writing and marketing your services.

You've Got This!

As a freelance writer, you'll need to wear a lot of hats. In addition to writing, you'll also need to handle your own finances, marketing, and administrative tasks.

With so many balls in the air, it can be easy to lose track of things. But if you're organized and have a system in place for tracking your income and expenses, it'll make your life a lot easier.

By following these money management tips, you can avoid financial problems and keep your freelance writing business on track.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/25/10-money-management-tips-for-freelance-writers/

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Four Ways to Spring Clean Your Business

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(Art Credit: Andrea Hernandez)

Spring is finally here, and with it comes that age-old desire to refresh things. Cleaning up something that may be a little dusty, letting things go that no longer serve you, refreshing things that might be slightly stale — all of this applies to your business the same way it does to your body or house.

Here are four ways to spring clean your business to get a fresh start.

1. Purge Your Inbox

Our inboxes own us. Everyone I know has a different strategy for managing the never-ending stream of emails — the “never delete anything” approach, the “zero inbox” method, or the “barely keep your head above water” technique. No matter how you tame your emails, taking some time annually to rethink that strategy or just clean out old items can be helpful.

For instance, I have a ton of folders where I keep messages that I may need to reference later. Every once in a while, I like to go through these folders, archive things I may want to reference later, and delete items don’t need anymore. I also go through the bottom of my inbox and delete or archive things that I am just keeping there because I am unsure what else to do with them.

If you’re ready to revamp how you manage your inbox, here are a few strategies for that.

2. Refresh Your Space

The physical work space looks different for everyone — for some people it is an office at home, some might have a coworking space, and some might have a van down by the river. No matter what your space is, taking the time to clean it up can be a big change for your mental health and motivation.

Get rid of paper: There is no more incredible feeling than going through my paper files and sending a big stack to the shredder or recycling bin.

Clear out that work bag: My work bag holds a lot: notes, printouts from meetings, chapstick, pens, tea bags, etc. Take time this month to dump it out and throw away all of that old stuff.

Go through those desk drawers (bins, baskets, shelves, etc): Many things accumulate here throughout the year. Get rid of those five pens that don’t work anymore, that silly prize from that team-building exercise, and the thousands of used sticky notes. Once things are clear, maybe treat yourself to a fresh new pen, notebook, or set of file folders to start the year off right.

3. Update Your Business Model

In reality, many of us get trapped doing what we’ve always done, how we’ve always done it, even if it is no longer giving us what we need financially or emotionally. One reason for this is that solopreneurs are so used to the feast/famine mentality when it comes to revenue that, when we find something that works, we keep doing it, even if we don’t actually like it anymore. On the flip side, something might not be working anymore, yet we keep doing it because we’re not sure how to make a change.

When you work for yourself, by yourself, you can reinvent what you do whenever you want. Whether you need more money, more time, or more interesting work, here are four ways to reboot your business model and bring back the passion that made you go out on your own in the first place.

4. Go Through Your Backlog

A backlog is a common project management strategy where you keep a list of things (products, business ideas, blog posts, etc.) that you can’t do yet but want to tackle at some point in the future. Other common strategies like this are the “pickle jar” from productivity guru David Allen or a “parking lot,” a meeting facilitation strategy where you “park” questions or ideas that are important but can’t be addressed at the moment.

Whatever you call it, having a place to keep your great ideas that aren’t yet possible, is a strategy that I use with all of my project management and coaching clients. It is a great way to prioritize things that need action now without losing great ideas for the future. When you spring clean your business, go back through your backlog of great ideas and think about which ones should be dusted off and incorporated into actionable plans for the now.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/23/four-ways-to-spring-clean-your-business/

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Basic Steps for Creating a Not-For-Profit Organization in New York State

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(Art Credit: Sisi Recht)

Let's cut to the chase, you are interested in forming a Not-For-Profit organization in New York State and you're not sure where to begin. Here is your basic checklist with additional resources.

Draft a business plan.

Draft and file the Certificate of Incorporation with the New York Department of State (Fee: $75.00 +$25.00 for expedited handling).

Draft and adopt the bylaws (and applicable policies related to conflicts of interest, records retention and destruction, whistleblowers, and investments). Here are sample bylaws to give you a sense of what they entail; consult an attorney for up-to-date information and guidance specific to your needs.

Draft and submit an application for an Employer Identification Number.

Draft and submit an application for tax-exempt status with the IRS (Fee: $275.00 for form 1023-EZ).

Draft and submit registration with the New York State Attorney General.

Draft and submit applications for tax-exempt status with the New York State Department of Taxation and Finance (sales tax exemption) and, if appropriate, the New York City Department of Finance (property tax exemption).

Additional Resources:

Disclaimer

The information in this guide is not legal advice and is not intended to be relied upon as legal advice. The guide highlights some essential steps; it does not cover all the related laws and regulations. The guide was last updated on May 5, 2022, and some of the information may have since changed. If you have a legal issue, you should not rely on this information and instead speak to an attorney.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/19/untitled-2/

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5 Surprisingly Easy Ways to Protect Your Freelance Writing Business

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(Art Credit: Karen Fischer)

This post was provided by Dinghy. Freelancers Union partners with Dinghy and NSM Insurance Group to help freelance writers say hello to peace of mind with liability insurance crafted exclusively to meet their needs. Get a free quote in minutes here.

Whether you’ve been at it as a freelance writer for some time or recently made the switch, protecting your business is vital for building and maintaining your success. Unlike a traditional 9-to-5 job where churning out killer content is priority numero uno, you’re wearing many hats — which means dealing with additional responsibilities like finding work, managing contracts and taking care of cybersecurity (just to name a few). It can be daunting, no doubt, but there are some easy measures that can help you effectively safeguard your business without turning your to-do list upside down.

Incorporate as a company

Operating as a sole proprietor is the simplest way to get your freelance hustle on, but it can come with serious risk given that there is no distinction between you and your business. If you incorporate — either as a limited liability company (LLC) or an S Corporation — your personal assets are separated from your business assets and are better protected should your business encounter any legal issues, like being sued. Incorporating also lends professional credibility and may offer tax benefits.

2. Always use a reputable marketplace for sourcing assignments online

It can be difficult to build your client base, especially when you’re launching your business. Freelance marketplace platforms can open the door to new work (and much-needed income!) but beware of websites that seem too good to be true — they may be fraudulent. Be sure to do your due diligence and only source work from established, recognized marketplaces.

3. Take the proper online security measures

Hackers are out there and getting more and more clever by the day. Invest in antivirus software to shield your business from viruses, spyware, malware, phishing attacks and other online security threats. Don’t default to your childhood dog’s name for your password (no matter how cute Shadow is.). Instead, use complex passwords; if you are worried about remembering them all, you can use password managers to create and store unique passwords for each login. You should also set reminders on your calendar to change them regularly. Most experts recommend changing them quarterly but bonus points if you do this every month.

4. Make sure indemnity protection is included in all contracts

Reviewing contracts can make your head spin. Before you sign on the dotted line, there are a few non-negotiables you should ensure every contract includes, like indemnity protection. When it comes to media outlets, many contracts use default language stating you will indemnify the publication when it should be the reverse. They should agree to indemnify you, meaning they would pay your legal bills and support you under their liability insurance, should anyone come after you for something you wrote for their outlet.

Similarly, if your client is another organization, make sure indemnity protections are baked into your contract to ensure you’re held harmless for claims arising from content that was crafted, reviewed and approved under their purview. If your client refuses to provide indemnification to you, then the second-best option is to remove the indemnification clauses altogether so that neither of you are indemnifying each other.

4. Get freelance writer insurance

Libel, slander, defamation, copyright infringement, and errors and omissions are some of the biggest professional liability risks freelance writers face. You can be sued for these types of claims, regardless of if you’re at fault — and a legal dispute could lead to tens of thousands of dollars in legal fees plus any compensation you may have to pay. Enter freelance writer insurance, which can defend you and provide coverage for those crushing costs. Getting covered is now easier than ever with Dinghy, the world’s first insurance provider exclusively for freelancers. For less than one dollar a day, you can buy $100,000 of coverage, providing peace of mind and allowing you to focus on what you love to do.

You’re working hard to build your freelance writing business and you can minimize many of the risks you face with just a few easy steps. Trust us — putting up a few safety nets will be time well spent.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/16/5-surprisingly-easy-ways-to-protect-your-freelance-writing-business/

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New Survey: 60% of NY freelancers not being paid for work performed

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A new survey conducted by Freelancers Union in partnership with the Authors Guild, Graphic Artist Guild, American Society of Media Photographers, National Press Photographers Association, American Photographic Artists and National Writers Union found that sixty-two percent of freelance workers based in New York had lost wages at least once in their career from their employer’s refusal to pay them. Fifty-three percent reported losing as much as $10,000 to nonpayment from completed work.

The three advocacy organizations conducted the survey as part of their efforts to persuade the New York State Assembly to pass the Freelance Isn’t Free Act (FIFA) (S8369/A9368) this session. FIFA was introduced by Senator Andrew Gounardes of the 22nd State Senate District and Assemblymember Harry Bronson of Assembly District 138, with an additional twelve co-sponsors in the Senate and fifteen in the Assembly. If the bill passes, New York will become the first state in the nation to provide legal protections to freelance workers who live and work in New York state and out-of-state freelancers who work for New York-based companies. Freelancers currently account for approximately 35 percent of the U.S. labor force and yet have none of the protections that employees have long had – even when doing the exact same job as an employee.

“In the five years since we helped secure the passage of New York City’s version of Freelance Isn’t Free, the law has helped freelancers recover $2,144,198 in owed compensation for their work. But freelancers don’t only work in New York City. From Buffalo to Albany, Montauk to Plattsburgh, companies use freelance workers for everything from manufacturing, construction and warehouse work to website developers, writers and graphic designers and they deserve the same legal protections as their NYC colleagues,”said Rafael Espinal, Executive Director of the Freelancers Union.

Additionally, the survey found that :

91% of survey respondents reported experiencing late or overdue wages at least once in their career with 54% reporting experiencing delays of 3 months or longer.

79% of respondents attempted to recoup lost wages through their own demands (i.e emails or phone calls). A majority of respondents claimed they had to communicate their demand to a client on multiple occasions (three times or more) with 76% of respondents reporting that they spent 1-2 hours a week trying to recoup payment. Less than one percent of respondents used  through the legal system.

39% of respondents said non or overdue payment affected their ability to pay bills or rent.

“Freelance journalism was hit especially hard during the pandemic. Loss of freelance journalism jobs was consistently cited as the first or second main reason for the decline in income by respondents to the Authors Guild’s Covid19 surveys,” said Mary Rasenberger, CEO of the Authors Guild. “Forcing freelance writers to spend weeks or months chasing down earned wages further cuts into their wages because it takes time way from other paying work, and often forces them to accrue debt. It pushes people that are already struggling to earn a sustainable living to the brink, and is deeply unfair. Publications who refuse to make payments on time should be held to account. And thanks to FIFA they will.”

Among the protections that the New York State law would provide are mandatory written contracts for work valued at $250 or more; payment within 30 days of completion of the work, unless otherwise agreed in the contract; and the ability to collect double the amount owed, as well as attorney fees for violations. The law will be enforced by the New York state Department of Labor, and repeat violators could face penalties of up to $25,000.

“Freelance journalists and business writers rarely make enough money to afford a lawyer, so it didn’t surprise me to see that less than one percent of respondents sought a legal remedy, “ said Larry Goldbetter, President of the National Writers Union. “This reinforces FIFA’s need. Very few freelancers know what legal remedies are available or understand how small claims court works. If FIFA passes, the state will assume some responsibility for helping to make sure the freelancer gets paid or can fine repeat offenders until they get the message.”

About the Survey Sponsors

The Authors Guild is the nation’s oldest and largest non-profit professional organization for published writers. With more than 12,000 members, it advocates for working writers to protect free speech, freedom of expression and authors’ copyrights; fights for fair contracts and authors’ ability to earn a livable wage; and provides free educational programming about the business of writing for authors and translators of fiction, nonfiction, poetry, and journalism.

Freelancers Union is the largest and fastest-growing organization representing the 57 million independent workers across the country. It gives its 500,000 members a voice through policy advocacy, benefits, online resources, and educational and community-building events in nearly two dozen cities.

The National Writers Union is the only labor union that represents freelance writers working in all genres, formats, and mediums. With the combined strength of more than 1,300 members in 12 local chapters, the NWU works to advance the economic status and working conditions of writers.

The Graphic Artists Guild is a membership organization of creative professionals working in the graphic arts fields.

The American Society of Media Photographers (ASMP) is a professional association of imaging professionals, including photojournalists, architectural, underwater, food/culinary and advertising photographers as well as video/film makers and other specialists.

American Photographic Artists (APA) is a not-for-profit association for professional photographers.

The National Press Photographers Association is an American professional association made up of still photographers, television videographers, editors, and students in the journalism field.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/12/over-60-of-ny-freelancers-report-not-being-paid-for-work-performed/

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How to Turn Your Hobby Into a Business

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(Art Credit: Andrea Hernandez)

This article is posted with permission from our partner Lili and originally appeared on the Lili blog at: https://lili.co/blog/how-to-turn-your-hobby-into-a-business

Get the digital bank account designed for freelancers with Lili and manage your business expenses, estimate your taxes, and save for a rainy day all with zero account fees. Start a Lili account today.

The era of the freelancer is here, and you can literally make money doing anything — so why not do something you really love? Whether you’re looking for a new side hustle or are hoping to take your hobby full-time, here’s what you need to know to get started.

Make It Official

The most important thing to do when you decide to start a business is keep it above board. Look into state laws and start by registering a DBA to give your business some legitimacy. If it becomes more serious later on, you may consider an LLC. Start familiarizing yourself with the concept of self-employment taxes now to get your accounting in order.

Get Paid

Have your invoicing and payment processes streamlined before those first customers start rolling in! You’re going to need a place to send payments and a way to ask for them. Luckily for you, Lili’s got you covered on both counts!

Decide how you want to price your products or services by doing some market research. How much do your competitors charge? How much do you need to make for your needs? Since you’re a new business, start your prices out a little bit lower than your competition until you’ve established a bit of a reputation.

Advertise

Once the legal stuff is taken care of and you have your product or service ready, it’s time to get the word out! The easiest place to start is with social media.

You don’t need to spend money on ad space in order to successfully promote your hobby-turned-business. Research the best ways to promote in your niche, whether that be flyers in local stores, selling at art shows or markets, or leveraging different social media platforms. When promoting on Instagram, use local, niche, and thematic hashtags and tag your location to reach people in your area. On Facebook, check out different Groups in your niche or where your target market might be hanging out (but be sure to follow any rules the group has about self-promotion). Collect testimonials and reviews from your first several customers, and even from family or friends who have benefitted from your hobby in the past.

If you’re selling a product and want to reach beyond your local area, you can start out by setting up a seller account on Etsy, or you can open your own storefront with Shopify.

7 Hobbies You Can Make Money From

Before you get into all the nitty-gritty of running a business, make sure you really love your chosen hobby. Turning it into a business means mixing work and pleasure, which can be a good thing so long as the pleasure is enough to make it all worth it.

Need some inspiration? Here are some popular hobbies you can turn into a business with ease:

Antiquing or Thrifting

Love finding hidden treasures and giving them a refresh? Resell your best-thrifted finds and vintage antiques on Etsy, Ebay, or even Facebook Marketplace. For reselling clothes, try Poshmark or Depop.

Reading

Yes, you read that right — you can get paid to read! Online Book Club will pay you for book reviews, which can be a great way to start out as you build up an audience on Booktok or with your own blog.

Writing

Prefer to make your own words rather than reading someone else’s? Start by posting your writing on Medium, and look for opportunities to write for local or digital publications.

Gardening

Take your hobby beyond your own yard and start offering landscaping services locally, or start a gardening coaching service to teach others how to create beautiful gardens like yours.

Cleaning

Cleaning might not be everyone’s cup of tea, but you love it! Start a business as a housekeeper or even a home organizer to embrace the Cleantok fanatic within you. Handy or Taskrabbit are great places to start promoting your services.

Baking

Start sharing mouth-watering photos of your baked goods on social media, and offer catering for weddings, birthdays, or other local events. You can also sell at your local Farmer’s Market or festival.

Dogs and Other Pets

Are you a pet lover? You and 70% of the United States! There are always people looking for dog walkers or pet sitters, and you can easily start your own business in this niche with Rover.

Ready to Start Making Money?

If you really love your hobby and want to get paid to do it, then it may be time to monetize it. Start a blog sharing all about it, turn it into a product or service you can sell, or teach a course on how to do it. The possibilities are endless!

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/12/how-to-turn-your-hobby-into-a-business/

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Suddenly Self-Employed? Key Tips for Combining W-2 & 1099 Income

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(Art credit: Kathryn Sheldon)

Given the focus in May on National Small Business Week, (May 1 to 7) and the end of the tax filing season, if you find yourself transitioning from regular wage-earning employment income (reported on a W-2) to self-employment (tracked by those who pay you on a 1099), or a combination of both income streams, you need to understand how to handle your income tax and other taxes to avoid problems later.

If you are not a full-time freelancer, and you have a side job such as consulting, writing, or selling ecommerce or other products, you will have to handle your taxes differently and separately for both your W-2 and your 1099 income.

How do you do this if you have been an employee of a company at some point this year? First, you should do a quick check to make sure your tax withholding is correct. The same goes for freelancers who pay quarterly taxes. Now is the perfect time, right after tax season, to look at making any changes to your tax payments to make sure they are in line with your actual obligations.

The basics of tax obligations for self-employed vs. employed workers.

As a self-employed individual you are responsible for paying income tax on all revenue that you generate from your freelance business. If you have at some point during the tax year derived W-2 income, then you must report that as well. Your employer will provide a W-2 ahead of tax time and they will (by law) have withheld taxes on your behalf based on the withholding amounts you selected during the employment process.

If you made accurate withholding elections through your employer, you should be relatively even when it comes to the need to pay tax on those wages. However, if you have also received freelance income, regardless of whether you receive a 1099 form from your clients or not, you must set aside money to pay income tax on that revenue.

Keep up on expenses, estimated tax payments and withholding thresholds.

It is likely that your W-2 withholdings are not enough to cover the income tax on your Form 1099 income, which means you will need to make estimated tax payments each quarter to the IRS using a Form 1040-ES, Estimated Tax for Individuals to make sure you are paying enough tax. Before you cut that estimated tax check, you will want to make sure that you have taken all possible self-employment deductions including:

Home office deduction

Phone and internet bills

Health insurance premiums

Business insurance premiums

Business travel and meals eaten at a restaurant, during business.

Mileage driven and actual vehicle expenses

Interest on business loans

Business-related educational expenses

Commercial rent

Startup costs

Qualified business income

The list above is a guide to the deductions you may be able to take on your 1099 income. Remember that the business expenses deducted must be “ordinary and necessary” in the eyes of the IRS. Your income tax is paid on your profit so the more qualified expenses you have, the lower your tax bill will be. It is vitally important to keep track of these expenses and make sure you have a receipt, (either digital or in hard copy) in case you become the focus of an audit. You should keep these records for at least three years.

Payment on self-employment income is made to the IRS and your state taxation department (and, potentially, your municipal tax department) on a quarterly basis. These are commonly known as “estimated taxes” and it is imperative that you make these payments each quarter (usually January 15, April 15, June 15, and September 15) to avoid fines and penalties.

As noted above, for your freelance earnings, you do not receive a W-2 form at tax time like an employed person would. Instead, you will receive a 1099-MISC or 1099-NEC from your clients and a 1099-K from any online platforms (such as Etsy, Shopify, etc.) on which you made more than $600.

Regardless of the proportion of income that you derive from self-employment versus your W-2 job, you will need to report both streams of revenue on your next tax return via Schedule C on Form 1040 if you have a limited liability company or on Form 1065 if your business entity is a partnership and Form 1120 or 11-20S if your entity type for taxation is a C-corporation or S-corporation.

Freelance FICA rules are critical to understand for W-2 vs. 1099 income.

In addition to income tax, as a freelancer, you also need to pay the employee and employer portions of the self-employment tax, under the Federal Insurance Contributions Act, or FICA.

For freelancers, here are the FICA rules in a nutshell. When you earn any form of taxable income, the IRS is owed 15.3% of it under the Federal Insurance Contributions Act, or FICA. This represents the 12.4% Social Security tax and the 2.9% Medicare tax. For any self-employment income, you are responsible for paying all this tax (as both the employee and the employer). On W-2 wages, your employer pays half, and the remainder is deducted from your paycheck.

There are also some key FICA thresholds to take note of:

As an employee if you earn $147,000 prior to the end of the year, you no longer pay into FICA because this is the cap instituted by the IRS.

However, if as an employee, you earn more than $200,000 you are subject to an additional 0.9% Medicare surtax applied to your gross earnings.

If you earn both W-2 and 1099 income, you are responsible for the self-employment tax only on the money you earn through self-employment.

Remember to check your local tax obligations, too. It is important to remember that you may have to pay income tax and business or other taxes on a local level to the county and/or city where you live. For example, New York City has an unincorporated business tax, while New York State has the Metropolitan commuter transportation mobility tax which applies to New York City and the surrounding counties. Both taxes apply to self-employed individuals.

Use proper tracking and regular payments to help you maintain control.

While being in transition between full-time or part-time W-2 work and full-time freelance (or a new side hustle) can be stressful, it is not insurmountable from a tax perspective. The most important thing is to be clear on how you are classified as a worker (independent contractor versus employee) and keep close tabs on all your income, tax obligations, and related expenses while also making regular tax payments.

Doing so should make balancing your employment income and cash flow much easier and help you keep a sense of control as you navigate your new normal.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/11/suddenly-self-employed-key-tips-for-combining-w-2-1099-income/

[antwanrmurphy]

How to Find Your Target Audience

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(Art Credit: Andrea Hernandez)

This article is posted with permission from our partner Lili and originally appeared on the Lili blog at: https://lili.co/blog/how-to-find-your-target-audience

Get the digital bank account designed for freelancers with Lili and manage your business expenses, estimate your taxes, and save for a rainy day all with zero account fees. Start a Lili account today.

This question is actually never possible to fully answer, no matter how long you’ve been in business. Not to get too philosophical (we’re more about action than contemplation around here), but it’s good to ask yourself this pretty regularly.

You know this: our world never stops changing and evolving. This includes everything from the platforms and technologies available to us at a macro level, to what’s on your playlist as you read this article. We live in a time of flux and change, and so do our customers. So as your business and brand evolves, never get complacent when it comes to knowing who your customer is.

Why define a target audience

This is one of the big differences between running a real business, and just chasing a hobby. Once you get serious about scaling your freelance work into something full-fledged, focusing your time and attention becomes critical. And this starts with defining who it is you’re serving in the first place. In other words, defining a target audience helps to:

Attract people more likely to become customers

Spend marketing and advertising dollars more effectively

Build a stronger brand voice that sets you apart

Get more creative with your marketing

Develop a relationship with a core audience that offers you better feedback, creates deeper bonds, and lays the groundwork for community growth

Target market vs target audience

These terms sound the same. Yet understanding the difference can open up doors for your business, in many ways. It can have implications not only for your marketing strategy, but also for your product development and brand.

Your target market is the full set of end consumers who could become customers of your brand. Your target audiences are the people you focus on in advertising, based on a set of common characteristics. These are also referred to as “segments”. Your target market is who your brand must appeal to on a universal level, and your target audiences are like chunks of that audience that you reach through specific marketing channels and campaigns.

Let’s look at an example.

Nike’s target market is famously defined within their mission statement as “every athlete” – which they define as anyone with a body. So, a pretty broad group of people. When you have a global $3B marketing budget, you can afford to go after every person with a body. But even a global leader needs to break down their market into specific audiences, and you can see on their website this is split between men, women and children. Breaking it down further, their products are organized by sport and occasion. Runners, basketball players and general fitness seekers are targeted with different messaging, in different places, for different products.

Nike’s Target Audiences

Men

Women

Parents

Players of specific sports

Fashion-oriented

Performance-driven

Cost-conscious

Below are some examples of this in action. Notice how each ad is targeting a unique audience through its messaging and imagery.

Fashion-savvy women:

Source

Cost-conscious consumers:

Source

A range of audiences are included, from parents to serious athletes:

Source

It’s best to start big and identify the broadest definition of someone who could be interested in your product or service. From here, you can sharpen the definition to go after a particular subset.

Common ways to define a target audience:

There are many different ways to slice and dice an audience, and these may shift over time. Below are some of the major categories to consider when thinking about how to expand your target audience definitions.

Demographics – Age, location, marital status, household income, children, gender and occupation are some of the most basic ways to define an audience. It’s good to start with a general understanding of your audience in these terms, but some are more important than others depending on your brand. It can also be tricky when lumping people together in this way, depending on the product or service. For example, millennials and GenZ make up over 50% of the US population, so are an attractive audience for many brands. Yet, they’re also the most diverse population in US history, which means their belief systems, attitudes and behaviors are not one-dimensional. For example, ideas and norms around gender are shifting and expanding, which require a different way of thinking about how to cater to a male versus female audience. Demographic information is useful, but it’s not enough to paint a full picture of your future customers.

Psychographics – Here’s where things get a bit more interesting. Thinking about the psychological situation and needs of your audience puts things into a much more useful frame, especially in terms of product development and marketing. This requires having a sense of empathy for your audience and their mental state. Are they worried or anxious about something? Or are they seeking adventure and novelty?

Interests – This may seem obvious to some, but knowing the interests of your audience (beyond your product or service) can yield useful insights, especially around marketing placement and messaging. For example, Red Bull targets those interested in adventure and adrenaline-fueled activities which is why it sponsors athletes and Formula 1 teams.

Behavioral – Behavioral targeting looks at specific actions taken by an online audience, to determine what ads and messaging will be the most effective. For example, you can target people who have visited your website with an ad on Instagram reminding them about your product or service. That’s known as behavior-based targeting; it has nothing to do with who they are beyond the fact that they indicated an interest by visiting your site.

Media – Some brands focus their energy on understanding how their audience spends their time consuming media. For example, if you’ve focused until now on Instagram and Twitter, but your audience spends a lot of time on YouTube or TikTok, this could be an opportunity for you to tap into a new segment and attract a new source of traffic.

Pulling this together, here’s how a brand like Nike might segment its target audiences:

Each of these groups would be researched and analyzed to determine the size of the opportunity, their motivations and pain points, their media habits (to understand where/how to reach them) and how this impacts creative messaging.

Nike can afford to spread its marketing budget across many different audiences, over a long period of time. But now let’s shift our focus and think of how an independent business owner can identify target audiences to make better marketing decisions.

How to identify your target audiences

Now that you know some of the ways you can describe your audience, let’s look at how to figure out who these people are.

Write down what you already know! Odds are you have a good sense of who a typical customer for your business could be. Perhaps you were inspired to start your business based on this knowledge – you discovered a particular unmet need and went after it. But have you taken the time to focus on who they are as people, not just “customers”? This is a useful exercise for even the most experienced business owners. Using the above categories, see how much you can write about your audience as if you were describing them for the first time.

Google Analytics. Assuming you have a website for your freelance business, there’s a world of insight to gain from Google Analytics. Seeing where your customers are coming from can tell you something about their interests and where they spend their time online. Do they visit you from YouTube or other social platforms? Are they on mobile devices or do they visit from a desktop computer? What pages do they spend the most time looking at? All of these are clues that help you understand who your audience is, and how to best communicate with them.

Social media followers and comments. Have you spent time looking at who is already following you online? Browse through some of the profiles of your more active followers, and get familiar with what makes them tick. What do these people seem to have in common? Are there any common interests or pain points you may have missed? Taking time to regularly review your social media engagement is critical to scaling a business. For more information on social media marketing, check out our blog post on the topic.

Social media analytics. Facebook, Instagram and Twitter all have what’s called “native analytics” right inside the platforms themselves. There can be a treasure trove of information about the demographics and interests of your visitors, sitting right there waiting for you. Social media data is particularly useful because you can quickly see what’s resonating based on engagement.

Reviews and ratings. If you’re already in business and have garnered a few reviews on sites like Google Business or Yelp, be sure to read what past customers have said about you. Hopefully, it’s only good things — but either way these comments can reveal hidden nuggets and insights into what people value the most, or would like to see more of.

Customer interviews. No better place to go than the source. Ask your existing customers who they are, how old they are, what they’re interested in and where they spend the most time online. This can be done by sending out surveys via email, or just taking a poll on social media.

Competitor research. Visit the websites and social profiles of your competition, and try to see who they’re going after. Often you can see what segments are most important simply by looking at the menu, or reading a few blog posts. On social, check out their followers and look at their bios for common traits.

Tips for defining your target audience

Once you have some research and insights around the different possibilities for defining your target audience, it’s time to find them! Social media is a good place to start because it’s where your audience probably already is, it’s relatively easy to get set up with an ad account, and you get feedback pretty quickly.

Think of it as an investment. Spending money on a target audience is a defining moment for any small business owner or independent freelancer. It’s about making a commitment to the long term, by placing some money on the table in order to learn more about your audience and use those insights to scale your business.

Pick one channel to start. You don’t need to be everywhere at once, and you also don’t need to force people to change their media habits. In other words, where is your audience already spending their time online? Instagram is a good place to start for most audiences, and it’s relatively easy to set up campaigns.

Have a “test-and-learn” mentality. This will make all the difference in the world. You don’t need to know everything about your audience from the get-go. But the sooner you start promoting your business, the sooner you’ll get familiar with them and the more comfortable you’ll be with describing who they are.

Set a testing budget. It can help to create a designated budget just for target audience testing! Say the first month or two you are focused purely on understanding who your audience is, based on what ads work better than others. From there, you can adjust. While it’s possible to run campaigns for $10/day, they likely won’t be shown to enough people to generate any interesting results, and you won’t get much data from which to draw any real conclusions. Start with at least a week-long campaign, if not a month, bearing in mind that it’s an investment in your business.

Create personas. A “persona” is a fictional profile meant to represent your target audiences. It’s a great way to humanize your audience by assigning them a name and a brief description of their story or situation as it relates to your business. For instance, if you’re a nutritionist you might have a persona for someone who is overweight and interested in weight loss, and another for someone in good shape but looking to simplify their diet. Giving them names and personalities creates a stronger connection to who they are as people – not just random internet users. This builds empathy and can be a great tool for understanding an audience.

Figure out who your audience is NOT. This can be just as important as identifying who they are, and a good way to do this is through testing. You can also get a general feel for this the longer you’re in business – and make a note of it. Knowing who you are not interested in can illuminate new ways to think about who you are going after!

Don’t go overboard with segmentation. Especially as a small business owner, you can easily drive yourself nuts isolating every aspect of your potential target audience. This often leads to an unwieldy volume of creative options, test campaigns, and budget. Start small, identify two or three segments, and focus on attracting as many of those people as possible through relevant messaging and ad placements.

Defining your target audience is one of the most critical aspects of growing any business. Start at a high level, defining the lowest possible denominator is – regardless of which marketing channel and targeting options. If you take away one key point from this article, it’s this: the more empathy you have for your audience as people (vs. target consumers) the better your marketing will be.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/09/how-to-find-your-target-audience/

[antwanrmurphy]

IRS recognizes Small Business Week: Information and free resources for starting a business

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(Art credit: Sisi Recht, "Balance")

This article is posted with permission from our partner IRS and originally appeared on the IRS blog at: https://www.irs.gov/newsroom/irs-recognizes-small-business-week-information-and-free-resources-for-starting-a-business

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During National Small Business Week, May 1 to 7, the IRS is highlighting tax benefits and resources tied to the Small Business Administration theme for this year's celebration: "Building a Better America through Entrepreneurship."

During National Small Business Week, the Internal Revenue Service wants taxpayers to know there are free resources on IRS.gov for those that are starting a business. Small businesses play a pivotal role in the nation's economy. The IRS has a variety of resources available to help employers meet their tax responsibilities as well as help their employees.

Selecting a business structure

When beginning a business, taxpayers must decide what form of business entity to establish. The form of business determines which income tax return form must be filed. The most common business structures are:

Sole proprietorship - When someone owns an unincorporated business by themselves.

Partnerships - The relationship between two or more people to do trade or business.

Corporations - In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock.

S Corporations - Are corporations that elect to pass corporate income, losses, deductions and credits through to their shareholders for federal tax purposes.

Limited Liability Company (LLC) – Are allowed by state statute and may be subject to different regulations. The IRS will treat an LLC as either a corporation, partnership, or as part of the owner's tax return (e.g., sole proprietorship) depending on elections made by the LLC and its number of members.

Understanding business taxes

The form of business being operated determines what taxes must be paid and how to pay them. The following are the four general types of business taxes:

Income tax - All businesses except partnerships must file an annual income tax return. Partnerships file an information return.

Self-employment tax - Is a social security and Medicare tax primarily for individuals who work for themselves. Payments contribute to the individual's coverage under the social security system.

Employment tax - When small businesses have employees, the business has certain employment tax responsibilities that it must pay and forms it must file.

Excise tax – Excise taxes are imposed on various goods, services and activities. Such taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

Note: Generally, business owners must pay taxes on income, including self-employment tax, by making regular payments of estimated tax during the year.

Knowing when to get an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number and is used to identify a business entity. Generally, businesses need an EIN. This is a free service offered by the Internal Revenue Service and business owners can get their EIN immediately.

Keeping good records

Maintaining adequate records will help small businesses monitor their progress, prepare financial statements, identify sources of income, keep track of deductible expenses, keep track of their basis in property, prepare their tax returns and support items reported on their tax returns. Taxpayers should maintain their records for at least 3 years.

Choosing the business year

Small businesses must figure their taxable income on the basis of a tax year. A "tax year" is an annual accounting period for reporting income and expenses. Tax years small businesses can use are:

Calendar year – 12 consecutive months beginning January 1 and ending December 31.

Fiscal year– 12 consecutive months ending on the last day of any month except December. A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/05/irs-recognizes-small-business-week-information-and-free-resources-for-starting-a-business/

[antwanrmurphy]

A New Freelancer's Guide to Funding & Retirement

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(Art Credit: Karen Fischer)

Securing funding and prioritizing retirement should be parts of every freelancer’s business and life plans. But most of the time, they aren’t.

Freelancers struggle to pull in enough to pay the bills AND save. They’re funding everything out of their own pockets, which can be incredibly overwhelming.

But what if you could relieve some pressure financially and start on a path to early retirement? We’re happy to tell you that you can.

With a bit of creativity and a spotlight on good financial habits, a thriving business and retirement are within reach. Here’s your new freelancer’s guide to funding and retirement.

Explore All Funding Options

As stated above, freelancing is tough because most of us use our own money to keep our businesses afloat. It’s such a relief when you can get additional funding from other places to grow your operation. You can also use extra financial help for living expenses.

If you can get a traditional small business loan from a bank, do it. Work with your banker on suitable loan terms and the lowest interest rate you can get. When you receive your loan funds, use them wisely. It might be a good idea to draft a plan for the loan funds, whether you plan to use them to hire an employee or scale your marketing strategy.

If you have trouble landing a traditional business loan, consider creative alternatives. Personal loans and lines of credit are available to freelancers. So are alternative lenders like private online companies offering personal finance solutions. You could even get the funds you need for your business through crowdfunding or grants geared toward freelancers.

Ample research is the first step to getting any of these funding options. In addition, keep all your financial and other business documents organized and easily accessible should you need to provide information for one of these opportunities. Be sure that every application you put in fulfills every requirement. Finally, follow up until you get a final answer on each option you pursue.

When you get funding and start making money as a freelancer, it’s important to have a designated account for your retirement funds to stay on track.

Open an Individual Retirement Account

Start your retirement savings with a simple contribution each month to an individual retirement account (IRA). The most appropriate IRA for you depends on:

Your retirement savings goals

If you plan to withdraw money early

How much income you generate each month

How you want to diversify your investment portfolio

How much help you need to open and maintain your account

Whether you set up a Roth IRA, Traditional IRA, Solo 401(k), or SEP IRA, budget for the max contribution. Understand the tax benefits available to you with these accounts and how to take advantage of them. Be sure you’re aware of any penalties associated with early withdrawals. And dig into the rest of the details about your chosen account until you thoroughly understand everything about it.

When your retirement account is open, getting in the habit of saving is crucial.

Get in the Habit of Saving

When you find funding, you have to use the money responsibly. Also, you have to be diligent about saving for retirement once you get your accounts set up. Getting into the habit of saving and sticking to a budget will help.

Create a budget for your freelance business. Note all your income and add up all your fixed and variable expenses. Don’t forget to account for your salary. See what’s left over after all expenses and salary are paid. Allocate leftover money to your business savings accounts and investments.  

Repeat the budget process for your personal finances with the salary you pay yourself. You should have a line in your budget for money allocated to your retirement savings account. You should also get in the habit of setting aside money for healthcare expenses and emergency funds.

Being consistent with your budget and savings are key. Use a budgeting tool if you have to, but just stick with it.

If you aren’t totally comfortable with finances, look to a financial advisor for help.

Enlist the Help of a Financial Advisor

It’s a smart move to work with a financial advisor. Financial advisors can help you set up your retirement accounts correctly and maintain them. In addition, they can ensure you fully understand your benefits.

They’re also great people to have on your side to help you put your freelance income to work for you. Furthermore, financial advisors are great resources to tap into to learn about changes to IRS rules for retirement that affect freelancers.

Determine if you have money in your budget for a financial advisor. If you do, research potential fits in your area specializing in working with freelancers. Set up consultations with your top choices and go from there.

Conclusion

Navigating funding and retirement as a freelancer doesn’t have to be overwhelming. Having everything in your hands can be just as beautiful as it is scary. Use these tips to help you take charge of finding funding for your freelance business and achieve the retirement life you envision.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/04/a-new-freelancers-guide-to-funding-retirement/

[antwanrmurphy]

9 Small Business Ideas for Veterans With Entrepreneurial Spirit

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(Art credit: Pedro Gomes)

Now that you know the different business models, let us look at some actual small business ideas that can make your civilian life more meaningful.

Logistics Support

Almost every business or organization requires help with their logistics. Even big events need logistical support. And, logistical failure can lead to complete disaster for the organizer.

You can use your experience to help clients move and store their goods, services, and information. Your resourcefulness and problem-solving ability will come in handy.

You won’t need any considerable investment to start your logistics firm. Having a zeal to solve problems and finding the right business partner is enough. And, that won’t be difficult with your strong networking skills.

Security Specialists

The demand for security personnel is booming. Whether we’re talking about politicians, celebrities, or societies and organizations, everyone might require security services. And, who can be a better fit than military veterans?

Your military training has developed courage, strength, and the ability to work well during a crisis. Starting your security agency will give you an excellent opportunity to utilize your skills.

Not everyone knows how to disarm attackers or manage surveillance equipment. Thus, your services will be in great demand.

Form a team and start your own security agency. You may already know trained professionals in your network. People will value you for your military experience, and you will never run out of clients.

Gyms

Starting a gym is one of the best business ideas for veterans. You have received extensive physical training during your military days. Now is the time to share your experience and help people lead healthy lives.

You can set up a gym catering to a specific set of customers. A gym that helps middle aged people to stay in shape is a great idea.

Women veterans can start a women’s gym. The more niched out your small business is, the greater are your chances of gaining loyal customers.

Technology Consultant

The military deals with various forms of technology like GPS tracking, drones, etc. If you had hands-on experience during your service days, you can share your knowledge with others and build a business out of it.

Many organizations require technology experts. If you can train their staff on using various tools and devices, you will become an invaluable asset for them.

Find a company that requires technological guidance and pitch your consulting services to them. That way, you will get your first client and get started with your new business.

Healthcare Advocate

As a veteran, you know how important good health is for military personnel. People in the services often get disqualified after an injury. Moreover, they are under constant pressure to stay fit. You can start your business to help these service members to get back in form.

Getting started is easy because you don’t need additional skills and resources. You can use your military experience and create a system to help the distressed personnel. Guess what? It is another zero investment business idea for veterans.

Military Consultant

If you have extensive experience in the military, you will become an invaluable asset to governments. Military consultants advise the government and the army to improve and run the forces efficiently.

You will be closely associated with strategic planning and implementation. It requires deep knowledge about the deployed troops and ammunition. The government may ask you to help with a particular military campaign.

However, it is not one of the best small business ideas. That’s because you might have to travel a lot and get calls for emergencies.

Restaurants

Who doesn’t love good food? They say it is the easiest way to one’s heart. So, starting a restaurant is one of the best small business ideas.

But how will being a veteran help in your restaurant business? Well, you already know what teamwork is. Different soldiers in the troops had their own responsibilities but you worked towards a common goal together. That is what happens in a restaurant kitchen.

Moreover, you might have some experience in the kitchen during your camp life. Remember making those quick meals for your colleagues with the minimum ingredients available? Now is the time to put all those skills and experience to use.

You will require some capital for the restaurant space and equipment. However, you can also start your food delivery service from home. That won’t require much investment and would turn into a profitable business in the long run.

You can also start and expand your restaurant franchise over time.

Extreme Adventure Training

Are you passionate about adventure sports? Many veterans even have experience with extreme adventure sports. Why not turn it into a profitable small business?

From paragliding and skydiving to horse trekking, you have endless opportunities. You can provide training for adventure sports in general or pick one particular sport.

You will need to invest in the resources and equipment. Apart from that, you also require land to carry out your adventure sports training. But once you start gaining a reputation, there is no looking back.

Outdoor Company

As an experienced veteran, you will be a natural fit to start an outdoor company. You must have spent a considerable time in camps and trenches. So, you know how to deal with adverse situations.

You can start a traditional outdoor company to help tourists in their activities like trekking and camping. Or you may also create a more specialised business to help professionals. For instance, Crackshot protects snake gaiters from poisonous snake bites.

All you need is an adventurous spirit and the ability to handle crises. And you already have these skills as a veteran. Thus, you can start a small business out of it without considerable investment.

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from Freelancers Union Blog https://blog.freelancersunion.org/2022/05/02/9-small-business-ideas-for-veterans-with-entrepreneurial-spirit/