You may be surprised when you discover some of the deductions you’re entitled to!
Keep a Record of Any Work You’ve Subcontracted Out
If you’ve subcontracted more than $600 worth of work to anyone during the financial year, you need to send that client a 1099-MISC by the 31st January. These can be prepared online (FileTaxes.com) then mailed to your clients. We suggest that you send 1099s to both corporations and individuals.
Keep Accurate Records of Your Deductions, and Know What You Can Legally Deduct
Speak to your accountant about deductions that may be applicable to you. There’s always something new, and as long as you keep it within the limits of the law, you should deduct anything and everything you’re entitled to. You may be surprised when you discover some of the deductions you’re entitled to! It’s very important that you have a good working relationship with your accountant and keep in touch with them on a regular basis.
Like Everyone Else, You Must Always Have a Savings Cushion
A savings cushion is especially important if you are your or your family’s only source of income. As we all know, freelance translating has its highs and lows: some months are fantastic and other months are a nightmare. Your regular direct client may suddenly change their plans, or even employ an in-house translator. And what happens if you or your family member become ill and are unable to work for an extended period of time? Unless you have disability insurance you’ll be left without any income. So please, don’t be one of those people who lives from pay-check to pay-check. Ideally, you’ll have a minimum of 3 to 6 months living expenses, in cash, on hand at all times. We know it sounds like a lot of money, but sadly many people get caught unawares without any income at their disposal. And when this does happen, it’s usually during a very trying period in their life and the lack of finances simply makes the situation even worse.
Set a Certain Amount of Money Aside Each Year for Professional Development
If you don’t want your freelance translation business to stagnate you simply must set money aside for professional development. It’s important that you stay current and up-to-date with all matters in the translation industry and continue improving your knowledge, skill set, and contact base. Again, this does not only apply to the translation industry, but to all industries. You have to continue learning – read books, take webinars, attend in-person conferences, do teleconferences, join the Chamber of Commerce – whatever, just keep learning! Try setting aside a minimum of 5% of what you make towards professional development.
You Deserve a Bonus!
If you’re having a really great year, you deserve a bonus. Why not set aside some ‘fun’ money for yourself: perhaps you’d like to treat your colleagues to a lovely dinner at the end of the year, or even purchase that new technology you’ve always wanted. Because you’re self-employed, you’re the only person who can give you a bonus, so why not treat yourself? And if you’re really lucky, perhaps your grateful clients will also throw in a bonus; simply because you’re a talented and professional translator!