Getting paid, and handling that money
That’s what it’s all about isn’t it? Even more so than doing great work (though I don’t expect anyone reading the posts in this space to would do bad work). But we all have bills to pay, vices to fund, and all of that.
I don’t know how many times I’ve been asked, either by novice freelance writers or people who are just curious, how a freelance writer gets paid.
While I’d prefer money just appearing, reality doesn’t work that way. Getting paid has definitely changed a bit since I started as a freelancer. In many ways the situation’s gotten better.
Here are some of the ways in which I, and other freelancers I know, collect payments.
Cheques and direct deposits
Yes, even in this age of electronic fund transfers people and businesses still write cheques. And it’s not just small businesses, either. Larger firms issue them, too. Cheques are easy to deal with — to deposit them, you just drop into a branch of your bank or use an ATM. To be honest, I still find it rather comforting to hold a cheque from a client in my hands; I’ve yet had one bounce. The only problem I’ve had is that I always want the decimal place to be further to the left …
I usually only receive direct deposits from corporate clients. Handing over a void cheque isn’t something that I do with everyone! It’s convenient for them and for me, and the money is available once it’s moved into my account. Not all clients will be set up for direct deposits, though. You might have to settle for a cheque.
Using PayPal, wisely
I like PayPal. Not just for receiving payments from clients, but also for getting revenue from blog ads and for purchasing items online. Like a direct deposit, PayPal is fast and immediate. There are more than a few criticisms of the service (from both users and merchants), but I’ve never run into any problems with it.
If you don’t do much shopping online, you’ll want some way to get your money out of your PayPal account. An easy way to do that is to link it to a bank account. To be able to do that, you need to have your bank account set up for online transactions. Believe it or not, some people don’t use online banking.
For those of you who keep all, or even a majority, of your payments in your PayPal account remember that PayPal isn’t a bank. You’re not going to earn any interest on the money that’s in there. And if something happens, and it has in the past, there’s no insurance. You could lose any money that you’ve accumulated in your PayPal account.
The best way around that is to regularly download statements from PayPal. It only takes a few seconds, and you have a fairly up-to-date record of what’s been moving in and out of your account.
Maintain separate accounts
In my first few years as a freelance writer, I did it in my spare time. And I deposited all of my payments into my general purpose chequing account. That was a mistake. Why? It was a lot of work to keep track of what I’d earned freelancing and what I’d earned in my day job. Even though at that time I wasn’t making huge amounts of money, trying to separate my freelance and regular income at tax time was a major hassle.
Whether you’re a sole proprietor or incorporated, having a separate account for your freelance revenues is a good idea. It allows you to maintain a church and state relationship between the money you earn as a freelancer and whatever other income you might have. If you’re incorporated, you can legally use the corporation to lower your tax burden.
Foreign exchange and such
Throughout my freelancing career, I took a lot of criticism for not writing for more Canadian publications. Part of the reason for that was I found certain Canadian publications to be overly snobbish and elitist. But mainly it was because for the same amount of work, I could earn more money writing for American publications. And all of that was thanks to the exchange rate.
If you live outside of the United States and write for American publications (or do work with foreign clients that pay in U.S. dollars), consider setting up a U.S. dollar account at your bank. When the U.S. dollar is higher than your local currency, this can add up. When it’s lower than your local currency (as was the case in Canada a few years back), then a U.S. dollar account is a good place to park your money.
So, how do you get paid? And, more importantly, how do you prefer to get paid for your freelance work? Feel free to leave a comment.
Photo credits: lisasolonynko from morguefile.com and Photo credit: mconnors from morguefile.com
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