Business Checklist for Freelancers

A checklist of things you should do to set up your freelance business before you begin:

  1. Meet with an accountant – ideally someone who works regularly with self-employed folks, and with writers if possible – to figure out what sort of documentation you’ll need for your self-employment income file taxes next year: how much money you’ll need to stash away to pay self-employment tax and estimated quarterly income taxes, how to organize your receipts and expenditures in a way that you can report on a Schedule C, and how to keep track of all the little things for which you don’t have receipts (the IRS likes systems, so keep a log of business miles, or bridge tolls, or parking meter payments).
  2. Consider setting up a SEP-IRA.
  3. Get used to a billable-hours frame of mind.
  4. Keep in mind that as a freelancer you will not have workmen’s compensation insurance, an employer paying into Social Security for you, paid vacations, or sick pay. Think about whether to take out private disability insurance and whether to start a vacation savings fund.
  5. Start “cash receipts bookkeeping” – develop systems that allow you to keep a record of all expenses (and income) as they take place.
  6. Start keeping track of everything you earn. I recommend a system with some redundancies: Keep a copy of every invoice you send to a client. Log the amounts in those invoices in a list or a spreadsheet that includes every date delivered, amount invoiced, and date payment is received.
  7. Start keeping track of everything you spend, from how much you paid for a class to how much it cost you to set up an office.
  8. Decide on whether you qualify to deduct an office in the home.
  9. Develop a boilerplate contract or letter for editors who rely on word of mouth agreements or clients who don’t have a standard contract.
  10. Consider working with colleagues to manage streams of work so that the feast-or-famine cycle leaves you neither starving nor frantically working.
  11. Consider registering for a fictitious business name (If you choose to call your writing business anything other than your own personal name, you’ll need to register for a “Doing Business As,” or DBA, name). Also, think about having personal/business insurance.
  12. No commingling! Open a separate, business-only bank account.