Before co-founding Vireo Productions, I worked as a freelance writer and editor for seven years. Over that time, I learned a lot about how to run a freelance business.
First of all, it’s important for freelancers to understand that they are in fact running a business! It can be easy to forget this, but setting yourself up as a business from the start can save you headaches down the road, and establishes a professionalism that your clients will trust.
How much should you charge?
You can get rate guidelines from the Professional Writers Association of Canada and Editors Canada, and it’s important to have a sense of what businesses and publications are paying in your area; to find out, reach out to local freelancers. Many will be happy to share what they know!
The biggest problem most new freelancers have is that they undercharge. Know what you’re worth and come to any rate negotiation with confidence.
The importance of contracts
Whenever you agree to do work for a client, you should sign a contract with them. Not only does this ensure you’re both on the same page, it also helps you weed out people who may be trying to take advantage of you. If they’re not willing to sign a contract, that’s a red flag.
Here is a sample contract I use for writing assignments. It’s a modified version of The Contract Killer. Most of the legalese in my version is from my lawyer, who found The Contract Killer language to be a bit too casual. Note that I always either ask for 50% payment up front, or require that I’m paid 50% if they cancel the project for any reason. It’s not common for projects to be cancelled, but it can happen, so receiving some compensation for the work you did do is important.
I’ve found over time the most important thing about a contract is to have things written out, even if it’s not perfect legal language (though I’m sure my lawyer would disagree!). There’s a pretty good course from The Great Courses about contract law that I recommend if contracts are a big part of your work.
Bookkeeping for freelancers
Bookkeeping is pretty simple. All you really need to do is:
- Keep track of your expenses by category.
- Keep your receipts. We scan ours using the Google Drive app, and save those and any electronic receipts to a folder.
- Keep track of your kilometers and vehicle expenses. See my tracker here.
- Keep track of invoices sent and received.
- Take 20% off each cheque you receive and set it aside for taxes! It’s no fun being surprised by how much you owe. This is for the personal taxes you’ll owe on any income, plus CPP payments – people who are self-employed have to pay both the personal AND employer portions of the CPP payments, so it’s a bit higher for freelancers.
- Keep track of the PST and GST you’ve charged.
Regarding GST and PST, you only have to register for GST if you make more than $30,000 in any given 12 month period, and you only have to charge PST if you’ve registered your business with the province. Also, GST applies to everything but PST has a bunch of exemptions. For PST it’s best to double check with the government (they have a contact person who can look into it for you), but generally you don’t have to charge PST on journalism but you do on marketing. When you start to charge PST and GST, that money should always be put aside straight away; you’re essentially just holding on to it for the government.
You can do all this with spreadsheets, but I highly recommend using full bookkeeping software, with a bank account and/or Visa that you use solely for business purchases; it makes everything so much easier. Note: If you want a business bank account, you will have to register your business.
We use Quickbooks Online for invoicing and bookkeeping, at a cost of about $20/month. I’ve tried many different programs over the years — the ones that lasted longer include spreadsheets, PayPal, Harvest, and Freshbooks — but Quickbooks is by far the best because our invoices and bookkeeping are all in one place.
One of the best parts about Quickbooks is that we’ve added our accountant to the program, so she can do our taxes from there. Which leads me to another important point: Unless you’re very interested in tax rules and regulations, hire an accountant who knows about small business management. They’ll save you money and headaches. It’s well worth the cost.
Saving on a variable income
Being an independent contractor is often seen as having less job security because you don’t have a regular payday, but with good management, you can actually have more security than a typical job.
You should have about three months of savings, or be working toward that — if clients fall through, you’ll need to continue to run your business and feed yourself while you look for new clients. It is this savings that gives you better security, because many people with “regular” jobs do not have this safety net and find themselves jobless anyhow.
We sent out about 125 invoices last year, so we keep an “invoice tracking” spreadsheet to keep everything straight — as soon as I confirm an assignment, the upcoming invoice goes into the tracking system. You can see a blank version here; feel free to use it. It’s also useful for cash flow projections, and to see how we’re doing month to month.
You can generally send out an invoice as soon as the work is completed, but I do invoicing in a batching system to save time — we send out invoices on the 15th and 30th of each month. This system also makes it easier to follow up on tardy invoices because none should be 30 days old. You can, however, apply exceptions. For example, one of our clients consistently pays in a 45-day cycle, so they get more time.
You should add an interest payment disclaimer to the invoice (our contracts state “All invoices not paid within 30 days shall bear interest at the rate of 18% per annum”), and don’t be afraid to use a collections agency for clients who are avoiding payment. I’ve only actually had to do this once because simply threatening to take it to collections usually does the trick.
Tracking your time
I swear by time-tracking, and I use the free version of Toggl to track my time. I find that it helps me to figure out how profitable projects were, and helps me quote for similar projects down the road. It also has the side effect of keeping me on track and focused on the task at hand.
Vireo co-owner Jordan Mears dislikes time-tracking, though — he prefers to think of his time in terms of days and half days, so such a task will take him half a day, or a full day, or two days, etc. He often forgets to track his time, and finds it more disruptive to his workflow than helpful.
Some clients will ask you to track your time, and it’s up to you if you agree to do that, but there’s no requirement to do this. Contractors should be thinking about and selling their prices in terms of value for the finished work, at a price that covers likely cost/time overruns. If you happen to get it done faster, that’s a bonus for you, and none of the client’s business.
Are there any freelance writing and editing topics you’re curious about that I’ve missed here? Let me know, and I’ll add it to this post!