The Money Management Guide For Freelance Video (2019 Edition)
Virtually every article I’ve read about freelance money management discusses very general principles. This article is about specifics: Which tools, strategies, and services should you take advantage of to maximize your freelance video income. For anyone who manages client money and works in video production - this guide is made for you.
So let’s dive into it…
Best Accounting Tools:
Benefits of Quickbooks: Self-Employed
QB: SE has an array of great features that make it the perfect tool for any freelancer. Categorizing transactions to reduce taxable income is a must for any freelancer. This version of Quickbooks makes this process smooth and enjoyable. The biggest advantage QB: SE has is its mileage feature. The mobile app tracks mileage on every trip, which makes writing off miles for business as easy as swiping and leaving a purpose note.
Example: “Drive to music video shoot on 12/9/18”
It also has great mobile app where you can organize business and personal finances by swiping left or right. It shows profit/loss, mileage, quarterly tax integration, and is accountant-friendly.
Wave has a great mobile app for sending invoices. But unfortunately it has a separate app, Wave Receipts, that is a less-than-satisfactory mobile app experience for tracking finances. It felt clunky and annoying to track receipts on - which is already an unexciting process. This is
Paperless Cash Is King:
Treat Venmo like a cash wallet and pay roommates for bills, friends for dinners, etc. Use occasional Venmo payments from clients to fund these personal bills.
The Venmo card looks interesting because you can use it like cash outside of P2P transactions. But I haven’t tried it yet, so for now I can’t personally recommend it.
Take Advantage of Credit Cards:
The benefits of operating with a credit card in this industry is so undervalued. Every time you have a budget for a client project, cover everything with a credit card. Every time you buy new equipment, put it on credit and pay it off at the end of the month. Eventually you might want to leverage credit to make an investment, but until then keep paying off by the end of the month. This means you’ll keep getting points, take advantage of cashback, and be able to take vacations for free. Here’s a diagram to translate it:
Client Project Money + Credit Card = Free Money For You
If you register as an LLC, you can get approved very quickly for a business credit card. I called American Express about 3 months after incorporating to apply for Business Platinum. I ended up chatting with them for almost 2 hours about options, benefits, and signing up. And by the end of our conversation, the application was approved. I’ve fallen in love with the card since (besides it’s $450/year fee)
Also if you have multiple credit cards, you can strategically buy certain things on certain cards. I use my Discover It card for it’s quarterly 5% back (right now it’s Amazon and BJ’s, so i’ve been using Amazon for every purchase). Amex has benefits too for shopping at certain places too. Get cards that match your lifestyle and career.
Avoid Invoice Payment Fees:
Never use payment processing like PayPal, invoice credit card payments etc. unless you’re footing the fee to the client. To avoid this, make sure they pay in check, cash, bank transfer, or Venmo. There’s no processing fee with these methods, so your payment doesn’t get chipped into. You can adjust settings in your invoices to disable credit card payments, while keeping no-fee bank payments enabled. Check out this article for this and other invoice tips.
High Interest Savings Account:
You should be operating with a few months of liquid income available for slow months and late payments. Keep additional income in an online savings account with 2%+ interest to keep up with inflation, like Ally. Inflation for 2018 was 2.5%, so a checking account with 0.05% interest doesn’t cut it.
Take Advantage of Tax Deductions:
Write off all gear that is purchased exclusively for your video business. You can use it on personal projects, but purchases that are used for shooting, editing, etc. can be written off. I’m no expert on deductions, but it’s worth researching what can and cannot be deducted on taxes.
Everything you write off needs a purpose, date, and anyone involved written as a note. An example would be:
“Equipment rental on 12/9/18 for (insert band) music video.”
A good rule of thumb is: If you bought it/spent money on it exclusively to build your business, you can write it off.
Diversify Your Income:
Diversify your income streams so you can build wealth. This means incorporating different streams of income like:
Retainer (monthly payment for a quota of work)
Investments (stock dividends, real estate, etc.)
Focus on building each stream strategically until you can dial back your efforts and work on the next one. Manage each income stream with diligence so you can keep a steady income to pay bills, grow your business, invest, and enjoy life.
You should be making an active effort to develop passive income streams. Renting out equipment is a great place to start. For tips, check out this article about renting out equipment. I’ll put out a new article about income ideas for freelance video next week.
Educate Yourself: Further Reading
Here are some of my favorite books about money management:
The Money Book for Freelancers, Part-Timers, and the Self-Employed
Rich Dad Poor Dad
Four Hour Work Week
I keep a version on my kindle and iPhone so I can read them whenever I have spare time. As a collection, these books will make a huge impact on developing your financial intelligence. They’ve changed my life so I highly recommend them.
I hope these tips help you get a clearer grasp on freelance money management & accounting. If you have any questions, feel free to reach me here. If you have some more helpful advice or comments, leave a comment below.