When you daydream of being a Writer, sitting at home doing Important Work and actually getting paid for it, you most certainly DON’T daydream of filing tax documents, managing bank accounts, chasing people for money, and other such nonsense.
Yet you’re sure as hell going to end up doing it, and plenty of it, too.
They never tell you this. (Never mind who “they” is.) No one explains that if you plan to make a go of supporting yourself as a freelance writer, your days will be just as filled with “business” stuff as they will with writing. They never tell you that you’ll sometimes have to rattle cages just to get paid for work you did, or that dealing with the tax man will become a constant game of This Sucks: Deluxe Edition.
This is probably one of those self-evident things that focused, sane adults can spot a mile away. If you’re foolish enough to think that devoting yourself to writing full time is actually a sane life choice, though, you probably don’t fall into the Thinks Things Through And Has A Good Grasp On Reality category (he says while looking in the mirror).
So here’s the deal: If you just start writing for pay, start making some headway at it, and then file your taxes like normal, you are going to get CRUSHED by income taxes. That’s because in the eyes of the gubmint, you are both an employer and an employee. As a self-employed person, you pay the taxes for both roles. You pay as an employer and you pay as an employee, and yes, that shit adds up.
To help alleviate this double-dipping by Uncle Sam, you’ll probably end up incorporating. If you do, consider keeping it simple. Something like Your Name LLC works fine.
You’ll then have to keep separate bank accounts. No more co-mingling funds. When you get paid as a writer, it’s your company getting paid, not you.
Depending on the advice your accountant gives you, you might end up assigning yourself a salary. You might have to file special forms. In my state, you have to file quarterly Something or Other documents that I haven’t quite wrapped my head around yet, paperwork presumably designed so that the state can be sure you don’t accidentally get a nickel without them knowing about it.
You’ll have a new tax ID number, and this and that and on and on.
Oh, and sometimes you’ll do work and payment will never arrive, so you’ll end up having to be a collection agency, too, making calls and sending notes and crossing your fingers hoping that you’re not going to get screwed over after having spent two days writing about whatever oddball thing you were hired to write about.
No, this is not what you signed up for. It’s sure as hell not what I signed up for.
And yet here I am, essentially operating what amounts to a one-man consulting business and dealing with all the pain-in-the-assedness that comes with it, wondering when I’m going to forget to cross a T that ends up biting me in the ass five years down the road.
This would all be much nicer with a business manager.
Guess I just need to write the next Fifty Shades or something and maybe I can afford to hire one.