Peleg's Note: I was in Santa Fe, NM last week and met with June Walker, tax and financial consultant to independent professionals since 1979 and, luckily for us, one of our speakers for the next Creative Freelancer Conference this August in San Diego.
We talked about all sorts of money challenges faced by creative freelancers but especially about how this new economic stimulus will affect you. Here's the first in a series of three posts from June:
Creative freelancers have been asking me what effect the new federal economic stimulus package will have on them.
Why do they ask me? Because I write and speak on the subject of taxes for self-employed people. I call them indies. And I have been a practicing tax consultant for indies for three decades.
I’ll be one of the speakers at the 2009 Creative Freelancer Conference and for the next few months I’ll be a guest columnist here – in the course of which I’d like to pass on some useful information and give you some clear and simple advice that will help you during these difficult times.
Now, as to the effect of the stimulus on freelancers: it can be minor or major, depending on a lot of factors, although none of those factors involve self-employment specifically.
How the stimulus affects your pocketbook includes factors like these:
- Are you collecting unemployment benefits?
- Are you disabled?
- How many children do you have?
- Are you buying a new car?
- Are you buying your first house?
Almost everyone, whether an independent professional or an employee, will get some financial break. Which one or how much will depend on the factors just mentioned as well as the amount of your income.
What creative freelancers must keep in mind is that the biggest impact on their wallets, stimulus or no stimulus, is how much they know about the tax and business side of their creative ventures.
For indies the most important rule is to think like a business. I call it an indie business mindset. To start that process, I’ll lead off with three ways to take advantage of every possible business expense.
From this moment on, whenever you reach into your pocket for money, write a check, or slip out your credit card, be aware that you may be engaging in a business transaction.
Common sense – you know, that's the commodity your mother wished you had – would tell you that business expenses are the costs you incur to run your business – the money you must spend in order to make money. Take a look at these three ways to expand your thinking.
Here’s the first way to take advantage of every possible business expense:
Define your business as broadly as you honestly can. The more multi-faceted and inclusive your field of endeavor the more wide-ranging your expenses and thereby the less taxes you'll end up paying! A photojournalist can deduct a more extensive variety of expenses than can a wedding photographer. A technological consultant's expenses will be more diverse than those of a computer repair person.
Check back tomorrow for the second way to take advantage of every possible business expense…