Commonly Missed Tax Deductible Expenses For Your Home Office
If you work from a home office, there are plenty of expenses you can deduct from your tax bill to save money. Don’t miss some of the most common.
I used to daydream about how skydiving would feel. I pictured myself stepping out cautiously toward the threshold of the airplane door: that thin line between humdrum half-fulfillment and perilous freedom. I imagine my anxiety blending into exuberance as I make my descent.
The plunge into freelancing has a similar feeling: one of excitement, panic and wonder (though I’m sure jumping out a plane is a touch more intense—it’s the analogy that counts). Before the pilot takes off, the skydiver makes his leap, or the hustler begins their journey into self-employment, each of them have questions that they must address.
If you’re building up a business and gearing up to go it alone, ask yourself the following questions to see if you’re really ready.
“Can I handle the risk?”
Some people love the stability of working their nine to five, and that’s an important characteristic to consider about yourself. Freelancing has to be more than a fantasy; it has to be a genuine career goal. Persistence and passion will play a huge role in determining your potential for success.
While research suggests nine out of 10 startups fail, it’s important to remember that you have the power to improve the odds of your business succeeding. It’s not like you’re merely rolling the dice and praying for a seven or 11 on the Come Out. Your work ethic plays an important role in whether your startup will be profitable.
Important characteristics of a successful self-employed worker include, but are not limited to being punctual, demonstrating high energy levels, having an optimistic outlook, and maintaining an eagerness to learn.
“Is the timing right?”
Timing plays a huge part in the success of a startup. Ask yourself:
- Do I have any money saved right now? Make sure you have a little dough stowed away for potential lapses between projects. Vanguard suggests socking away three to six months in living expenses.
- Do you have a current network? You should have a few prospective clients in the wings before you decide to fly. (Need help getting started? Here are some tips for sending the perfect cold-email.)
- What do I, or does my family, need at the moment? If you’re single, then your list of necessities is likely a bit shorter. If you’re the breadwinner with a family at home (who may or may not be contemplating giving up benefits), then you’ll have more to consider.
- How much money do you need to keep your family afloat? Well, a report from the USDA found that the average cost to raise a child from birth to 17 was $233,610.
“Is one job suffering because of another?”
If you’ve already taken the plunge while maintaining full-time employment (AKA side-hustling), there will undoubtedly come a time when you have to ask yourself: “Is my work suffering at one job because of the other?” If the answer is yes, this could potentially be great news.
When it becomes impossible to make deadlines while keeping your full-time job, then that is usually an indicator that it’s time to let something go. Ideally, at this point, your freelance business is outweighing your nine to five work, meaning you have enough gigs to consider becoming self-employed full-time.
Making the Decision
Take some time to decide whether or not you’re truly ready to let go of your full-time employment. Are you possibly just getting overly excited about a new contract? Is it really necessary to say “sayonara?”
Remember, if you’re going to live off freelancing, you need a lot of projects and/or steady clients. Moreover, you’re going to have to manage your time between projects and business responsibilities like bookkeeping, communications, meetings, social media upkeep, etc. You can expect about 30 percent of your time to go to non-paying obligations.
As for salary, there is no exact amount that freelancers should make, but consider all of your expenses, your goals, incidentals, and taxes when determining your rates. To make invoicing, time sheets, and banking a little easier, find yourself an app or website that will do some of the work for you.
