My accountant’s early deadlines are a really good thing, because they force me to get my year-end finances in order in January. My 2021 income (gross, minus subcontracting) was right on target at a bit over US $100K. I’d like to aim for $140-$150K, but I’m happy with what I earned in 2021, given that I was still in conference interpreting graduate school for half the year, and I then took most of July off to celebrate passing my MCI exit exams.
I always find it interesting to break down my business expenses during the tax preparation process. I hate…no, I actually loathe accounting, but I find the accounting data interesting. My 2021 business expenses were $24,581; approximately the total that I earned from freelancing in 2005. Here’s the breakdown of the top five:
- Office rent: $5,715
- Bank fees and credit card commissions: $4,743
- Online subscriptions (web hosting, Zoom, online course platform, Microsoft Office, antivirus and backup software, etc.): $3,693
- Professional services (accounting, website manager, etc.): $3,092
- Continuing education (conferences, webinars, one on one coaching, etc.): $2,736
A quick analysis of these, and how they fit into my business model:
- I pay $545 a month for my co-working office desk (this expense varied during 2021 because I worked in a small, private office for part of the year). Obviously I could reduce this rather large expense to zero, simply by working from home, but I’m the oddball who hates working from home. That’s a topic for another day, but the six initial months of COVID that I spent working from home were among the least satisfying and least profitable of the past several years. In part, this is because we live in a very small house by U.S. standards (1,150 square feet), and I’ve worked at a co-working office since 2013, so I no longer have an office, or even a comfortable place to work, in my house. Honestly, I like it that way. I like going home and not thinking about work. So, although my co-working office costs almost 6K a year, I’m not looking to reduce or eliminate that expense.
- Bank fees and credit card commissions: Annoying, but I don’t see a way around this expense. Nearly everyone who signs up for a Training for Translators class pays by credit card, and there’s simply no way to take credit cards without a commission. Likewise with my individual translation clients; I offer them options where I don’t incur a fee (Zelle, Wise, etc.), but most still pay by credit card.
- Online subscriptions and professional services: I’m pretty liberal about spending money on things that make my business run better, or that free me up from tasks that I hate. And it seems like most software is moving toward the subscription model instead of the one-time license model. So I don’t see this line item going down anytime soon, and in fact it will probably increase, because I just switched from Excel for accounting to QuickBooks online.
- Continuing education: What can I say, I enjoy learning! I also did a lot of interpreting workshops this year, attended the ATA conference in person (yay), and at about 3% of my gross income, I think what I spend on continuing education is pretty reasonable.
So there you have it! Readers, any thought on your business expenses from last year?
Hi Corinne, very interesting and thank you for sharing. I’m UK based and have the same ‘pleasure’ every January as I get my paperwork ready for the date with my accountant. Your business expenses seem very reasonable and I agree, banking fees are a bugbear every year but I guess unavoidable (I do manage to get the £150.00 overdraft arrangement fee waived every other year by phoning my bank and haggling though). One surprise: I thought you’d be able to claim more on CPD / professional upkeep. Besides any and every off and online event, do you claim for subscriptions etc.? I also have a separate column for ‘office expenses’ (e.g. new flooring and curtains last year). Best wishes across the pond! Angelika
Thanks, Angelika! I do claim my subscriptions, I classify that as professional memberships and I think I spent around $800 total last year.
Hi Corinne,
Your expenses appear to be rather high for a one-person freelance operation. Do you prepare some sort of “segment reporting” for your business, allocating expenses to your translating, interpeting, and training activities? If so, I suspect that training accounts for disproportionately more of your expenses than translating or interpreting. My own expenses for 2020, with translating accounting for almost all of my revenue (the last year available: I always file to defer my income tax return) were about half of yours, net of outsourced translation and related services, and net of payroll taxes paid for me (my company is an S-Corp).
Thanks, Robin! That’s an interesting idea: I segment my income by translation, interpreting, and classes, but not my expenses (an idea for this year!!). By far my biggest expense is my co-working office, but I agree that Training for Translators has a lot of expenses (Zoom, Thinkific, etc.) that I wouldn’t pay for if I were just translating and interpreting. To be honest, my accountant says that my major problem is that I pay my online course instructors too much…haha!