No problems, Justin. People need to know what works and experiment, and if we can help them find something new, great! Much appreciated.

I saw Quicken mentioned above in the comments as a way to track expenses. Actually I used this too for a while, but recently made a switch to You Need A Budget (YNAB) and haven’t looked back.

YNAB (warning: affiliate link with 10% discount): http://ynab.refr.cc/F3PLLS5
YNAB (no affiliate link): http://www.youneedabudget.com/

I was using Quicken for freelancing, and YNAB for personal (actually this method has its own benefits) but decided to push everything through YNAB after a couple of months.

Apologies in advance for my first comment on your site containing a link but this software completely changed the way I think about expenses. There is a lot of info on the site specifically for freelancers and how they can set up budgets and whatnot.

I’m not going to do much on taxes, Jean, because I’m not a lawyer, accountant or tax expert. I just do mine. My rule of thumb is know everything you can possibly (and not even the IRS auditors can keep up on all the rules) and make your best guess. Make sure it’s one you can defend in front of an auditor. If you can’t defend it, don’t take the deduction. Otherwise, take it.

As for things you already own, it depends on the structure of your business. If you’ve started a corporation, you can sell your laptop, etc, to the corporation. If you’re just doing a Schedule C, I’d look into depreciation schedules and the like. I’d also take a percentage–depending on your business. In mine, the entertainment is part of the business (I sell to comics/games, etc, and must keep up). So figure how you’ll do all of that.

Btw, you don’t need to report gross income several times a year. You only need to report taxable income. So if you’re only going to break even as the IRS defines it, then don’t worry about it. Otherwise, find some small business books on taxes (there are a million of them), and start reading.

Good luck with everything. I’m glad the site is helping. I hope this opportunity turns into the best decision of your life. Best, Kris

Where I’m getting confused is that everything I’m using in my freelance business–namely my laptop, internet connection and cell phone–are things I already had anyway and I’m just using them to make money now. I would still have and use them if I wasn’t using them to run a business. So do I count them as overhead? I also use them for personal stuff and entertainment, so do I just count a percentage as overhead?

I run a virtual assistant business and I set out to run it with what I considered no overhead. Except for the three tools listed above, all of the software I use is either free and open source or was already installed before I started. My web site is free, and all of the marketing I’ve done (so far) has been free. So apart from taxes, I’m not really sure what I should be counting as overhead and business expenses. But I feel like I must be doing something wrong.

As for taxes, I haven’t read ahead to see if you’ve addressed them yet, but that’s where all of my biggest questions are right now. I know freelancers are supposed to report income several times a year, but I don’t even know where to get started with all of that.

Thanks again for this, Kris. I’m one of the “suddenly unemployed turned freelance as a matter of survival” people, and I’m not doing well enough to be able to donate anything yet, but I’m telling people about this site every chance I get.

Thanks, Carolyn. Good link.

http://quickbooks.intuit.com/

Just playing with something like this will give you some good practice with the concepts that Kris is teaching here.

Here’s what I learned from a three-million-dollar mistake:

http://lambertwatch.blogspot.com/

http://lambertwatch.blogspot.com/search?q=runelords