Hi! If you’re new to this column: I’m tracking my freelance income every month and sharing it with all of you. This is my third year of public income tracking, and my first year sharing my income with The Write Life.
April was tax month, which meant I did a lot of taking stock: of my earnings, of the amount I need to set aside for freelance taxes and of the spreadsheet system I use to track my daily workload. So in this installment of Tracking Freelance Earnings, we’re all going to take stock together.
First, an overview: In April, I wrote 58,000 words and had an average per-piece earning of $64. My highest-paid piece was $300, and my lowest-earning piece was $35.
Completed Pieces: 86
Work Billed: $5,514.50
Earnings Received: $5,178.79
I’m still meeting my goal of earning $5,000 a month, and it already looks like I’m going to hit that goal for May, too.
How do I know how much I’m going to earn in May? Well, right now I earn about $3,800 a month from regular contributor assignments. These are sites like The Billfold, The Penny Hoarder and SparkLife, where I write a steady, predictable amount of pieces every week, which means recurring, consistent income.
As I recently wrote for my Ask A Freelancer column — also a regular contributor gig — turning freelance assignments into regular contributor gigs is one of the best ways to build freelancer security. (Here’s a post The Write Life published recently about how to do that.) Yes, when you’re freelancing you have to accept that clients will come and go, but even if one of my regular clients disappears, I still have several other contributor gigs that will bring predictable income into my bank account.
With that in mind, earning $5,000 a month requires pitching $1,200 worth of work. At this point, I have a lot of “occasional contributor” relationships with sites like Unbounce and Boing Boing, so my first attempt at filling that income gap is sending them ideas for posts. Pitching a client you already know is often more likely to be successful than cold-pitching a new client. I wrote about that in this month’s Scratch Magazine, if you’d like to read more about my thoughts on pitching — but I’m also happy to answer your pitch questions in the comments, so send ‘em in!
I should be very clear: even though I’ve worked with these clients before, they still don’t always accept the pitches I send! That means I have to constantly look for the best ideas that might be appropriate for each of these publications. I also sent a successful cold pitch this month, and began the process of building a new client relationship.
First quarter 2015 and freelance estimated taxes
The first quarter of 2015 ended on March 31, so let’s take a look at how I did:
Actual earnings received between January 1 and March 31 totaled $12,419.77. That’s a little less than the $15,000 I’d need to stay on target to earn $60,000 this year, but I am slowly catching up as more freelance payments come in. If I continue to earn like I’ve been for the last two months, my $60K pre-tax income goal is achievable.
That “pre-tax” designation is important. This year, my CPA suggested I set aside 20 percent of my income for freelance estimated taxes. (Other freelancers suggest setting aside 25 or even 30 percent, but keep in mind that I live in Washington State, which does not have a state income tax. Talk to your CPA about what might be right for you.)
Interestingly, I’m already behind on those payments. My CPA suggested I pay $2,100 for the first quarter estimated taxes due on April 15, but 20 percent of $12,419.77 is $2,484. It’s great that I’m earning more than my CPA predicted, of course, but this probably means I’ll need to pay more estimated taxes later this year to make up for additional earnings.
Now that I’ve paid my first quarter estimated tax burden, I’m proactively preparing for the next round of estimated taxes in June by sending 20 percent of every freelance paycheck I receive directly into a sub-savings account labeled “freelance taxes.” If you don’t save it in advance, it might not be there when you need it!
My freelance tracking spreadsheet
When you complete 86 pieces a month, you need a good tracking system to make sure every client gets everything they need on time. My freelance tracking spreadsheet is an essential part of making sure I write everything, pitch everyone and keep track of whether or not I’ve been paid.
Here’s how the spreadsheet works. Instead of explaining it, I’m going to drop in a visual:
(I’ve blacked out the “earned” column because, while I’m happy to talk about my income in the aggregate, it’s less appropriate to share what I earn from specific clients for individual pieces.)
Every day, I take a quick look at what needs to be completed before the day ends, both in terms of writing and administrative work. I can also easily see which pieces I’ve invoiced for, which still need invoices and which ones have been paid.
This freelance spreadsheet keeps me on track, and it also helps me plan out both my writing and administrative workload far in advance. Today, for example, a client asked if I could complete an extra job, and I was able to look at my schedule and see that the next two weeks were already fully booked with work.
It’s important to note that this spreadsheet is only as good as the person who fills it in; once, for example, I forgot to invoice for a piece, and didn’t notice there was an “x” missing in the column until a few months later. (I successfully submitted a late invoice and got paid.) It’s amazing what your eyes will skip over — earlier this year, for example, I put some wrong numbers into the “earned” column and thought I had earned a more than I actually did! I was later able to correct the error.
It takes constant vigilance to keep up with freelance administrative work, and as we learned last month, this work requires one to two hours of every workday. However, it’s an essential part of making sure I can earn that $3,800 of contributor work and pitch the $1,200 in new work that I need to earn $5,000 every month.
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