When starting to walk the road to becoming a freelancer, it is vital for writers and journalists to stay on the top of their bookkeeping to protect intellectual property and earn enough to pay bills on time. At the JAWS Freelance-for-All workshop at CAMP, panelists Jennie Phipps, Stacie Brew and Gail Ross answered some difficult questions about tax deductions, contracts, insurance and privacy policies. Here are the top 10 tips they shared with the freelancers:
1. Payment: Before taking on a freelance project, ask the editor how much they will be paying for the work and what their budget is. According to Jennie, a great question to ask editors is, “Is this the best you can do?”
2. Contracts: Never ever start working on any freelance project without a contract in hand. It is equally important to read the contract thoroughly to see if it includes payment terms, timeline and warranties.
3. Insurance: If you can, have media perils liability insurance to protect yourself from lawsuits.
4. Taxes: A freelancer is an independent contractor and therefore responsible for their own health insurance and Social Security, unlike an employee, whose employers pay a certain percentage of the health insurance. So you should make sure your base income covers these two expenditures.
5. Mental and emotional health: Freelancing can affect the mental and emotional health of someone not used to working in isolation. Extroverts especially should find a space where they can collaborate with other independent workers.
6. Tax deductions: Travel, cell phone, the internet, the portion of the home from where a freelancer works — all these things are tax deductible. You should research and find a financial consultant for the specifics of deductions.
7. Retirement: Calculate the base income that would cover your insurance and taxes, and charge for your work accordingly. Hence, once the base income is determined, freelancer can think about savings and set up a 401(k) plan, which is crucial to retirement security.
8. Recordkeeping: Keeping track of quarterly earnings, paying attention to the expenses and strategizing to earn more are three vital things a freelancer must do to avoid huge tax bill at the end of the year.
9. Kill fee: A kill fee for a canceled project is like an insurance policy that can make sure you are paid for your work, even if it is not published. You should ask for at least 50 percent of the agreed charge as kill fees in the contract.
10. Copyright: Gail compared copyright to an orange. Each piece of a copyright is a possibility that a freelancer’s literary work can be turned into: magazine article, translated into another language, film right, book right, or more. Freelancers should think about each piece of that orange before signing a contract.