The future is never certain, even in the best of times. These are certainly not the best of times, and the future is even less certain.
In light of all this uncertainty, we wanted to provide you with some financial tips and information that you can utilize both in hard times and when business picks back up again.
And we are hopeful. We know that there is light at the end of this tunnel, and we want you to have the tools and information you need to succeed during hard times and when things pick back up. We’re hopeful that animators will continue to animate. We’re hopeful that lighting crews will continue to shine (pun intended). We’re hopeful that photographers and camera crews will continue to capture beautiful and captivating content. We are hopeful.
So, in the spirit of hopefulness, below please find a couple tips that we think are helpful for all freelancers, independent workers, or small business owners.
Tip #1: Keep your personal and business expenses separate!
This sounds easy in theory, but it’s often not as simple as you might think. Was that lunch I had with my client a business expense? If I work from my apartment, do I classify my monthly wifi expenditure as a business expense?
As discussed further below, many businesses expenses can be written off on tax day. However, you will NOT be able to do so, unless you’re carefully documenting and tracking such expenses.
We're working hard to create an easy and simple solution to manage all your business expenses using MOXI (coming very soon!), but in the meantime one way to help with this is to open up a separate bank account that you only use in connection with your business expenses. If your bank allows it, we also recommend that you open up a credit card that you also use only for business expenses.
Here are just a few types of expenditures that are business expenses and can be written off as such:
Travel Expenses: Make sure you’re tracking all of the expenses you incur as a result of traveling. This can get tricky if you use a car for both personal and business purposes, as there are two methods for writing off car mileage. The important thing to remember is that you need to carefully track such miles and then determine which method is most appropriate for you.
Home Office: Do you work from home? If so, this is deductible! Like with travel expenses, there are two methods for deductions. We recommend using the “simplified method,” in which you calculate the square footage of your “home office” and then multiply by $5.
Supplies: Here, we’re talking cameras, lighting equipment, editing software - all of that stuff. Keep track of these expenditures.
Tip #2: Make a budget & stick to it!
Budgeting stinks. It’s not fun. It can be time consuming. But … it’s important and can really come in handy, especially on tax day.
The first part of putting together a budget is figuring out how much you spend for business purposes. This can be accomplished, as discussed above, by tracking such expenses using a separate bank account and/or credit card.
The second part of budgeting for an independent contractor/freelancer is making sure that you set aside money for taxes. Unlike full-time employees, who have their taxes automatically deducted from their paychecks, you will need to file and pay your taxes all on your own. We recommend setting aside 30% of your income for tax purposes, and soon MOXI will be sorting out your taxes automatically, so you won't need to stress anymore!
One really helpful way to manage your budget and stick to it is by controlling how and when you get paid by your clients. For long-term projects, request an up-front deposit. For projects with ongoing deliverables, discuss getting paid as work gets completed with your client. We can help here. Through MOXI, you can create customized invoices based on the unique nature of your work and your relationship with your clients.
MOXI is here to help
We realize that, even with all of the tips, tricks, and tidbits in the world, finances are challenging and, quite frankly, boring. We recognize that independent contractors, freelancers, and small businesses simply don’t have the time to sit down and do all of the things that we mentioned above. You’re running a business. You’re managing multiple gigs and demanding clients. We get it.
That’s why we created MOXI. Our app allows you to track your expenses, manage your budget, create invoices at the click of a button, and get paid by your clients - all in one consolidated place.
We encourage you to download the app and have a look for yourselves. Like you, we’re navigating this one day at a time. That’s why we want to engage with you so that we can truly co-design our app with the people who are actually using it. What’s important to you is important to us.
We appreciate any and all feedback as to how we can better serve you and improve your financial wellness. Please reach out to us!
Thank you for reading. Take care and keep hustling!