4 Smart Money Tips for Self-Employed Individuals - Classy Career Girl

4 Smart Money Tips for Self-Employed Individuals Increases in technology, individuals’ desire for more freedom, and the high cost of hiring employees has led to an increase in the number of self-employed workers in the United States. The job market for freelancers is expected to rise to $40 million by 2019. Ready to join the freelance revolution? Don’t dive in headfirst. Freelancers and self-employed individuals trade financial security for increased freedom. While 42% of freelancers reported they earned more than they did as traditional employees, freelance success is based on locating a steady stream of short and long-term freelance gigs. The situation can become a little trickier when you consider that you no longer have an employer to cover part of your income tax and health insurance premium. While money is sometimes an issue for self-employed individuals, there are strategies that current and future freelancers can implement to make freelancing more sustainable. 4 Smart Money Tips for Self-Employed Individuals 1. Use Free Tools and Web Apps Don’t use paid tools when there is a perfectly good free substitute. While I love Microsoft Word, it’s a spendy word processing tool. Google Docs, while not as fancy, is free. Rather than diving into purchasing a dozen or so different paid tools, you should research if there is a free alternative you can use. Here is a list of 15 free tools to get you started. 2. Pay Taxes On Time Taxes are an on-going obligation for full-time freelancers. In the US, full-time self-employed individuals (and some part-time) have four different tax due dates they need to meet. It’s in your best interest to meet those deadlines. Missing one of the deadlines can be a costly mistake. The penalty for late tax payments to the IRS is 5% for every month that the payment is late. If you can’t file or pay your taxes on time, you can file for an extension. This will reduce the potential late fee from 5% to either .5% or 1%. [RELATED: 5 Signs You Are Ready To Be Your Own Boss] 3. Take Advantage of Tax Deductions US based freelancers and self-employed individuals can increase their disposable income with a variety of business tax write-offs. You can write off far more than you think. Self-employed individuals can write off a percentage of: Rent or mortgage payments (based on the area your home office is located in). The phone bill for business calls. Utility bills that are work related. Meals eaten at business meetings. Office supplies. Travel expenses (gas, airplane tickets, hotels). The expense of hiring an accountant to help with taxes. 4. Move Living wage in the United States differs from city to city and state to state. A freelance income of $25,000 will equip you with a better life in Boise, Idaho than it would in NYC. An income of $25,000 in NYC is equivalent to an income of $13,221 in Boise, Idaho. As a freelancer, your wage isn’t as tied to a location. You can try to set your rates to allow you to live in an expensive region, but businesses might not be willing to pay enough (especially as a newbie freelancer) to help you live comfortably in the more expensive regions of the US. If you do find yourself with an unlivable freelance wage, but you don’t want to go back to a regular 9 to 5 job, you might need to move to a new location. Check out this handy tool to find a cheaper location. Finances can be difficult enough as a regular worker bee. Freelancers and self-employed individuals can have a slightly more difficult time making ends meet. With a little bit of work, a little bit of planning, and a little bit of luck, you’ll be on your way to a fruitful freelance career.