The Tax Man Cometh– Managing Your Finances as a Freelance Graphic Designer
When April 15th rolls around, there are many citizens (in the United States)that are probably breaking out in a cold sweat just about now, since April 15th represents the deadline for filing your income taxes. If this syndrome occurs for the regular employee at a regular 9 to 5 job, you can bet your bottom dollar (pun intended) that you might be developing additional symptoms , if you are a freelance graphic designer or independent contractor. Why? Simply, because independent contractors and/ or freelance graphic designers are indicative of a new and growing type of workforce that earn their money via clients, contracts, customers and assignments and other variable income and not a set weekly paycheck.
In fact, according to the Freelancers Union, an advocacy group for America’s independent work force, freelancers, part-timers, consultants and similar jobs constitute about 30% percent of the nation’s workforce. And that number is likely to grow, in the wake of new communication technologies and the down-sizing and right-sizing that is occurring at many corporations during this global economic downturn. While these changes are creating new opportunities or job descriptions for many people, managing your finances as a freelance graphic designer or independent contractor becomes doubly challenging and sometimes problematic. And it is especially challenging when most of the financial books available at the bookstore or online at Amazon are geared for designers or others working at a traditional 9 to 5 job.
This was a problem I encountered in my own experience. Although I had always done freelance work, even as a fulltime employee, I wasn’t prepared for the financial management challenges ahead when I was laid off and fulltime freelance graphic design became my primary source of income. There are a whole host of new financial activities, tasks and present and future budget planning that one needs to know as a freelance graphic designer and are rarely taught or I should mention these financial tasks are rarely addressed at design school.
So , I started doing some internet searching on managing finances for graphic designers, (beside soul searching) and had a few conversations with my tax accountant in order to get an idea as to how to proceed. Sad to say, there wasn’t much out there, but slowly I built up a small library of good books geared to the graphic design business, and freelance graphic design in particular, that I’ll refer to in future articles but the one financial book I would like to recommend is The Money Book for Freelancers, Part-Timers, and the Self-Employed: The Only Personal Finance System for People with Not-So-Regular Jobs by Joseph D’Agnese and Denise Kiernan.
This paperback book will give you great insight into the basics on how you need to set up your financial planning as an independent contractor and the tools you’ll need to keep you on track from things as basic as hardcopy spreadsheets and envelopes to online software packages and banking. The book main focus is geared specifically to independent contractors and not the traditional 9 to 5 employee. It’s written in a conversational, general style but it addresses all the financial issues that you will now have to be responsible for as an independent contractor or freelance graphic designer.
The following are some topics and strategies the book covers:
Treat yourself like a good employer would treat you: set up accounts to cover taxes, retirement and nest egg.
Get Organized: Set up your financial records using accordion files, financial software
Get Educated: Start plugging into personal finance news, blogs etc.
Know your fixed and variable costs: What does it cost to run your life and your business?
Know your income sources: Who are your top clients?
Know your debt: What’s your good/bad debt? What plan have you set up to pay it off? Check out a debt calculator lately?
No, it doesn’t address pricing, estimating and budgeting for graphic design jobs but it will you save you an enormous amount of grief and time in managing your finances and understanding the challenges freelance workers face. The book is available on Amazon and has a “Look Inside” feature that allows you to review a few pages of the book. You can also view the entertaining book trailer below if you wish. Get the book and maybe next year when April 15th rolls around you won’t be breaking out in a cold sweat!
Posted on April 13, 2012, in Freelance Design and tagged book review, client fee, creative work, design business, finances, freelance design, freelance graphic designer, freelance work, graphic design, graphic designer, independent contractor. Bookmark the permalink. Leave a comment.