GET MONEY AWESOME!with Emily Schooley of

Workshop Outline Money Pitfalls

Personal Habits & how they affect Professional Work

Getting It All Organized

Tax Time

Getting Money Awesome

Q + A

Everyone has bad money pitfalls!

Outdated money ideas from your parents or friends

The “shoulds”/keeping up with the Joneses

Spending too much Not keeping a budget Lack of savings

Not owning your value Spending too little Carrying credit card

balances Not charging what

you're worth Forgetting to bill clients

and not following up on unpaid invoices

If you're not careful, your bad personal habitsWILL become your bad business habits!

You (personally) NEED a budget! Freelancers' overall finances are closely tied to their

professional income.

You need to know what your monthly expenses are to know what professional income will help your business thrive.

If you can't balance a personal budget, tracking professional expenses will be much more stressful.

Having a personal budget helps you plan for the future – including unplanned emergencies!

What to track?Put simply, everything you might spend money on in a

month. You can break down your personal budget to be as complex or as simple as you want. And be sure to keep an eye out for “hidden” expenses – it's easy to forget about a sneaky chocolate bar here or a beer there.

Examples of monthly expenses include: rent or mortgage payments, groceries, hydro, phone and internet, public transit costs, home/life/auto insurance, property taxes (if you own property), credit card payments, medical expenses, car payments, gasoline, car maintenance, savings, student loan payments, gym fees, and any social/recreational pastimes.

Set it and (don't) forget it!There are lots of great tools for managing a personal budget, many of them free or affordable. These include:Mint.comMoneyStrandsBudgetPulseTracking in Excel/OpenOffice

Because freelancers often have multiple sources of income, knowing what's coming in/out is key!

Business Bookeeping 101

At the very least, you need to be able to track:what money comes inwhat you spend money on

Most clients will expect an invoice. All invoices should have: your name and address the date(s) of service name, address, and contact info of the person paying you a brief description of what you are being paid for the amount you are going to be paidthe terms of payment

Business Bookeeping 101 There are many ways to do your bookkeeping. Consider:

how tech-savvy you are, what functions you need, and what can you afford

The best way to accurately track your expenses is to save every receipt.

Good bookkeeping habits include updating at least monthly. Not only do details stay fresher in your memory of what you spent or what you're getting paid for, being consistent also means you will spend less time stressing and sorting out papers.

Getting It Together Have a central location to save and sort receipts. (ie file

folder from Dollarama)

Schedule a set time for yourself to work on bookkeeping

Make use of free/affordable bookkeeping software to help:

Quickbooks Freshbooks WaveApps Excel/Openoffice spreadsheets

Business Expenses Advertising (business cards, websites,

etc)

Meals and Entertainment - you can claim up to half total of what you spend

Bad Debts (ie if someone hasn't paid you for work you've done)

Business insurance

Interest you've had to pay for business-related debts

Subscriptions or membership dues (online sites, business licenses, etc)

Office supplies (paper, printer ink, pens, software, etc)

General supplies

Management and administrative fees (what you would pay your agent, bank fees, etc)

Rental fees and/or property taxes on any spaces you use just for business

Maintenance/repair costs on facilities

Subcontractor fees if you are paying anyone else to work with you

Travel costs (taxis or public transit in town, any out of town travel)

Phone/internet/utilities not accounted for at home

Business Expenses Shipping and postage

Professional fees (lawyers, accountants, other certified professionals)

Professional Development (workshops, seminars, etc) – record these in the “other” line on your statement of business income

Field-specific expenses, such as magazine or podcast subscriptions, theatre tickets, etc that you would qualify as professional research rather than a personal expense – record these in the “other” line on your statement of business income

In short... if you spend money on it for business purposes, you should be tracking it and writing it off!

Business ExpensesHome Expenses: Rent, heat, landline, internet, electricity, renter's insurance, etc – anything you spend to

live personally, you can write off a percentage of your costs for your business if you work at home.

You can calculate either by square footage or by number of rooms. For example, if the place you rent has 4 main rooms, and you use one of them as your office, you would track and total up what you spent for the year, then write off 25% of the total cost. (As long as it's reasonable, the government isn't likely to question it!)

Car Expenses: Gas, maintenance, insurance, licensing costs, parking, etc – just like your home, anything

you spend on a car to get around for business, you can write off.

Ideally, you should keep a log of kilometres you drive for business, as well as recording the total kilometres driven in the year. Keep a log book in your car and get into the habit of recording every business trip after it happens.

Business ExpensesCapital Costs: Any major purchase, such as a new computer, a new business vehicle, furniture,

film equipment, a musical instrument – basically, anything that is not intended just for use in a single year and has a value of at least several hundred dollars should be classified as a capital cost.

This means that you cannot write off the whole value on income tax in a single year, but are allowed to write off a percentage of it each year as the item depreciates. This is called a depreciation expense.

For more on capital costs see:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/cca-dpa/menu-eng.html

Sales Tax

If your freelancing business has made close to $25 000 before the end of your fiscal year, you should register for GST/HST.

Create a separate savings account to put aside the GST/HST you have collected, as you will need to pay this in installments throughout the year.

For more on GST/HST, see: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html

Stick it to the (G)Man!

Doing your own taxes is NOT as scary as you may think, especially if you've never done them before! AND it's a great way to take control of your finances.

How much you get back from the government will

depend on factors such as: how much income tax you paid throughout the year, your overall net income, and what other expenses you have incurred personally.

Tax HintsIf you are formally employed elsewhere (ie they make

deductions), you will receive a tax slip from your employer. If you worked multiple jobs, you should be getting a tax slip from each place you worked.

If your freelance business has a negative net income (ie if you spend more than you made), then you can subtract that negative number from how much you made at your place of employment, thereby lowering your overall income. Even if you don't make money – as long as you INTEND to make money you are a legitimate business!

Tax HintsCommonly missed personal tax deductions include:

medical expenses you've paid out of pocketany leftover tuition credits from schoolwhat you paid for rentmonthly transit passesmoving expenses (if you've moved over 50 km in the last year)donations to registered charitiesdependants' credits (including children's activities)

No Sweat Tax Prep Research what credits and deductions you personally may be

entitled to. Everyone's situation is different!

Gather ALL personal documents, including tax slips, RRSP/investment info, any stock gains/losses, expenses and deductions, info for tax credits, etc

Gather ALL freelance documents, namely info on your income and expenses. Using bookkeeping software will speed this up

Use intuitive online sites or computer software such as TaxChopper* to fill in your return. (*With TaxChopper, if your net income is under $25 000 you can E-file for free AND this gives you a chance to see what you can be writing off!)

No Sweat Tax PrepThere will be two “parts” to your return:

Federal and provincial tax forms that all citizens fill out

Your statement of professional income (Form T2125). This is automatically generated using tax software, but if you're curious you can check out the whole form at: http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-14e.pdf

This is the only step that makes your tax return different from the personal tax return you'd have to file anyway.

No Sweat Tax Prep

If this is your first year filing taxes as a freelancer (or someone else did them previously), you will need to know your industry code.

You can check out the list of codes at:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/ndstry/menu-eng.html

Getting Money Awesome!

Thinking back to your personal money pitfalls, what habits would you like to improve?

Spend time each day checking in with your money

What are your personal and professional financial goals for the next month? Three months? Six months? A year?

How much do you need saved up “just in case”?

Know your value and charge what you are worth!

Q + A Time!

You've got Q's! I've got A's (or will help you find them.)

Want to find me after the workshop?

http://laughingcat.ca

@EmilySchooley – personal Twitter

booking@laughingcat.ca for inquiries