Let’s just dive on in to this one; a few basic business management things that every freelancer should do, right this red hot second. Not rocket science, just things that are crucial to the survival of your business!
- Completely separate your business and personal finances. Even if you are not incorporated, open a separate checking account for your business to keep things clean. This also really facilitates recreating your accounting records if you ever need to.
- Have a reliable project and invoice tracking system. Post-it notes on the computer monitor work if you’re doing one translation job every two months. But when you start juggling multiple clients in a week or a day, you need a better system. Whether it’s Translation Office 3000 (not an affiliate link), a spreadsheet or even a whiteboard, make sure to have something in place.
- Buy a domain name and use it for your work e-mail. Your own domain name looks professional, and protects you against ever having to change your e-mail address again. You can also use whatever interface you want (i.e. Outlook, Gmail) to manage it.
- Put a percentage of every payment into a business savings account. I say “a percentage,” because it depends on your country and your tax bracket. But here in the US, let’s say at least 30% of every invoice if you just want to cover your taxes, and probably 40% if you also want to establish a paid vacation fund in order to pay yourself when you take time off. In a higher tax situation, say if you live in the European Union, you might be looking at more like 50% just to cover taxes and social charges. But the point being, don’t get caught short at tax time with no way to pay what you owe.
- Investigate retirement account options. Again, a little vague, but that’s on purpose. Put it this way: although one of the nice things about freelancing is that you can potentially work into your older years if you want or need to, don’t depend on that. I have an individual 401K through Charles Schwab that I’m quite happy with (and it has very high contribution limits, allowing you to put away a lot of money tax-free), but there are lots of other options out there: Roth IRAs, SEPs, etc.
- Investigate whether it’s worth incorporating. If you live in the US and are a sole proprietor (non-incorporated self-employed person), self-employment tax is a big hit. Essentially, you pay some taxes as if you are the employER and the employEE. Incorporating can allow you to legally avoid paying self-employment tax on some of your income, and can also give you some liability protection. Downside: having to file payroll taxes and a separate tax return for the corporation, depending on the corporate structure that you use.
- Use a professional e-mail signature. An e-mail signature (the few lines of text that get pasted at the bottom of every e-mail you send) is a very basic marketing tool, and also helps people know who you are. Here’s mine:–
Corinne McKay, CT
ATA-certified French to English translator
http://www.translatewrite.com (professional site)
https://www.trainingfortranslators.com (blog)
http://speakingoftranslation.com (podcast)
303-499-9622Even if you have a very basic signature, like “English to Japanese translator,” it’s worthwhile. But overdoing it can be worse than nothing: the original convention was 4 lines, and I’ve clearly broken that rule, but definitely do not double the length of a typical e-mail with your signature.
Any other basic tips out there?
Oh, man, Corinne, you’ve hit me where it hurts. All of these things (except for the signature – hey, I did something!) have been on my to-do list for 2 years. Some of them I’ve investigated but never made the final decision. I guess it’s good that I’ve been too busy, but I really have to make some time. But… really? Right this second? It’s midnight here.
Buy a sharply-tailored business suit and have professional business cards made. Essential for getting credibility at industry conferences (and no, I don’t mean the translation industry) – and you should *always* be ready for the phone call: “I have a new project I’d like to discuss with you, can you come by my office tomorrow?”.
Well, I like the call for translators to be more professional and serious about their business, that’s for sure. So that’s very good.
I do think pausing to consider the larger picture in some respects might also be a good idea, though.
For example, translators are very likely to have trouble making informed and intelligent choices for themselves (and especially their families) about their options on 4, 5 and 6 unless they have done the following:
1. Hired a good (certified public) accountant with expertise in small-business accounting and taxation and good familiarity with the best software packages out there for managing your business. This individual can advise you and guide you through your best choices — and the various and myriad tax impacts — for how to set aside money for whatever reason you like (there is a relationship between how you save and use money and how/when it’s taxed, for example, and that’s just one item) as well as how to manage cash flow and a dozen other aspects to running a small business.
2. Hire an expert corporate attorney, again ideally with small-business expertise, who can advise you on the various options in your jurisdiction (state and federal in the U.S.) with respect to your options on incorporation — there are several corporate forms, each with different tax and income distribution rules and liability protection considerations.
Also, to help you actually incorporate if you go that route.
Because translators have wildly different circumstances in terms of income, net worth, insurance needs, liability, family requirements, etc. it’s a bit risky in my view to be making decisions with potentially serious liability and tax consequences without first asking a professional for guidance.
So my thought here would be to do what we tell all our clients to do. Don’t try to just do it yourself. Hire a professional! 🙂
3. It’s also a good idea to spend some time (not necessarily a lot) with an investment adviser — if you shop carefully, you can find a CPA with that expertise, so combine two into one here — who can set up a financial savings and retirement program that is best suited to your specific requirements.
I recognize that the point of this post was “What can I do quickly to make a difference?” and that’s great for sure, but some of these decisions — 4, 5 and 6 — should not be made quickly or lightly without due consideration of the larger picture (again, especially for freelancers with families or other significant financial obligations). Even one short meeting with each person above could help enormously.
I completely agree that it’s essential to get professional help for items 5 and 6. As regards taxes, I’ve actually been fine doing these on my own up until now (the tax system for simple sole traders here in the UK is quite straight forward). Plus, the government offer free training courses on how to complete your tax return properly. I think the important point here is to really make sure you do stash some money away from everything you earn, so you have enough in your account when the tax bill comes due.
Another basic business thing you can do fairly quickly: prepare a short list of questions to have handy when a new prospective client calls, e.g. “please can you tell me more about your project?”, “who is the target audience?”, “by when will you need the translation?”, etc.). I found this really helpful; it gets you focused right away and makes you look very professional 🙂
Get listed! Even before I was ATA-certified, my listing in its directory got me a job within a few weeks that paid for the membership. Years later, I still do occasional work for that agency. Local and regional membership listings help as well.
I second Sylvia’s suggestion of professional business cards. Having them professionally designed (and printed) is not expensive and makes a huge difference in having you come across as a professional.
Definitely second #2! It makes a huge difference at tax time, and I think it also leaves a favorable impression with clients when you have a professional-looking invoice. Personally, I use TO3000 and like the customizable invoicing features, etc. I even recently made some tweaks to my custom variables in Business Expenses that simplified filling out Schedule C on my taxes.
Most of us rely on tech, so I would add “Have a backup plan for tech emergencies.” If you ask yourself ahead of time “What would I do if my computer died? What would I do if I lost my cell phone? What would I do if I were working while traveling and something happened to the work essentials I brought with me?”, etc., you can plan. Coming up with a plan for these basics now means that when things go wrong you can recover more quickly. I just had a hard drive die, and knowing what I had backed up in Dropbox, how I’d communicate with clients about any delays, etc. was very helpful. (Note: I’d encourage all TO3000 version 10 users to take a moment to ensure they have an up-to-date version 10 installer *and* back it up somewhere in case of computer troubles – see http://sal.detailwoman.net/backing-up-your-records-in-to3000-version-10/ for how to get the installer and why.)
Professionally designed and printed business cards also help, as others have suggested.
I agree with The Detailed Woman that freelance translators need to have a a backup plan for emergencies. But I would go even farther: I would say that we need to have a plan B for everything.
For instance, since computers are so cheap, why not keep all software and working files on at least two computers. If you have a problem with one of them (a virus or a hardware problem), you can simply junk the sick computer, work on the other one and still finish the long rush job on time.
I also have a plan B for my word processor (I switch to WordPerfect when MS Word does not allow me to do what I want to do), and my plan B for slow months is doing some light-duty marketing, updating my website, trying to figure out my immediate and long-term business strategy and alos to enjoy a break when there is little to do (which is the hardest part for me because I am pretty addicted to my work).
Plan B for slow months when little money is coming in precisely when taxes are due can be a line of credit, etc.
Here is what I believe: A wise man or woman has plan B for everything.
Well, almost everything.
I’m starting up as a freelancer, and I just wanted to pop in and say thank you! All this information is priceless to me. I was wondering about pension, separate bank account etc., but just thought I wouldn’t have to think about it until I was really busy. It has now been entered into my to-do-list. So thanks again!
Great article, and a great collection of responses. Thank you, Corinne. You would expect me to add, “figure out what your time is worth,” and calculate your break-even point, so you can set your range of prices, and know when to turn down offers that are really too low. It’s in your book (and mine, too).
About #7, one rather elegant way I’ve seen to fit several links onto one line: the “pipe” | . It’s on the same key as the backslash on US English keyboards.
Use it for listing your different professional profiles like this (I wouldn’t do more than about five):
LinkedIn | Twitter | Instagram | Whathaveyou
Then just link each word to the respective web page. Compact and easy to click!
Loved your article! Definitely one of the best :). Again and again: thank you so much for everything you share with us. Your information is so precious and you just gave me a couple or more ideals to put in practice asap.
Have a wonderful day 🙂
You have very helpful information and every freelancer should have to work on these points. I am also working as freelancer with safe freelancer visit my website at http://www.safefreelancer.com/. And you can check here my work
Thanks to your course Getting Started as a Freelance Translator, I have 6 out of 7 in place. Now I’ll have to work on my retirement options. Thank you for sharing invaluable information!
A question about saving a few $ on phone service for work & personal use. I live and work overseas (Taipei, Taiwan) and am about to start doing some freelance translating (Spanish-to-English). I anticipate having to talk on the phone with clients in the US and elsewhere from time-to-time. I’m on Skype but would like to have a US phone # with voicemail that folks can call. I’m debating between Vonage (lets me keep my current US cell phone # that’s costing me too much $) and Magic Jack. Haven’t used either; would consider other options if anybody here is familiar with them.
–Any other expats out there (or others who know there way around this cheap phone service stuff)?
Thanks!
Dan Villarreal
Taipei, Taiwan
Did I just write “know there {sic.} way”???????????
I think I need more java before I post stuff!!!!!
Dan V, Taipei