Let’s just dive on in to this one; a few basic business management things that every freelancer should do, right this red hot second. Not rocket science, just things that are crucial to the survival of your business!
- Completely separate your business and personal finances. Even if you are not incorporated, open a separate checking account for your business to keep things clean. This also really facilitates recreating your accounting records if you ever need to.
- Have a reliable project and invoice tracking system. Post-it notes on the computer monitor work if you’re doing one translation job every two months. But when you start juggling multiple clients in a week or a day, you need a better system. Whether it’s Translation Office 3000 (not an affiliate link), a spreadsheet or even a whiteboard, make sure to have something in place.
- Buy a domain name and use it for your work e-mail. Your own domain name looks professional, and protects you against ever having to change your e-mail address again. You can also use whatever interface you want (i.e. Outlook, Gmail) to manage it.
- Put a percentage of every payment into a business savings account. I say “a percentage,” because it depends on your country and your tax bracket. But here in the US, let’s say at least 30% of every invoice if you just want to cover your taxes, and probably 40% if you also want to establish a paid vacation fund in order to pay yourself when you take time off. In a higher tax situation, say if you live in the European Union, you might be looking at more like 50% just to cover taxes and social charges. But the point being, don’t get caught short at tax time with no way to pay what you owe.
- Investigate retirement account options. Again, a little vague, but that’s on purpose. Put it this way: although one of the nice things about freelancing is that you can potentially work into your older years if you want or need to, don’t depend on that. I have an individual 401K through Charles Schwab that I’m quite happy with (and it has very high contribution limits, allowing you to put away a lot of money tax-free), but there are lots of other options out there: Roth IRAs, SEPs, etc.
- Investigate whether it’s worth incorporating. If you live in the US and are a sole proprietor (non-incorporated self-employed person), self-employment tax is a big hit. Essentially, you pay some taxes as if you are the employER and the employEE. Incorporating can allow you to legally avoid paying self-employment tax on some of your income, and can also give you some liability protection. Downside: having to file payroll taxes and a separate tax return for the corporation, depending on the corporate structure that you use.
- Use a professional e-mail signature. An e-mail signature (the few lines of text that get pasted at the bottom of every e-mail you send) is a very basic marketing tool, and also helps people know who you are. Here’s mine:–
Corinne McKay, CT
ATA-certified French to English translator
http://www.translatewrite.com (professional site)
Even if you have a very basic signature, like “English to Japanese translator,” it’s worthwhile. But overdoing it can be worse than nothing: the original convention was 4 lines, and I’ve clearly broken that rule, but definitely do not double the length of a typical e-mail with your signature.
Any other basic tips out there?