This morning, I decided to start my spring cleaning a couple months early and uncovered a stack of old ATA Chronicle issues. In the April, 2012 issue there’s an article by Corinne McKay that offers several financial management tips for translators.
Tax time is creeping up on those of us in the States, so I thought this might be an appropriate time to share some of McKay’s advice.
5 Financial Management Tips for Language Translators
Open a business bank account and use a debit card
Open a separate account for your translation business and use your debit card for any expenditure. When tax time rolls around, everything will be neat and organized since all of your statements are digitized online. No more overflowing shoeboxes full of receipts!
Set up a business savings account
Every time you receive a payment from a client, transfer 30 percent of the payment into a savings account. Use these funds pay your taxes at the end of the year.
Keep a running total of your receivables
Let’s say that your gross income goal is $6,000. If you only have $4,000 in outstanding invoices, you cannot afford to be too picky about job offers.
But if you have, say, $8,000 in outstanding invoices, you have more options:
- Raise your rates
- Be pickier about the work you accept
- Take on projects that interest you, but might not pay as much
Regardless of what you decide to do, continue issuing invoices and keep a running total of receivables in an Excel sheet.
Set up a paid vacation account
Many translators complain that they cannot take time off because time off means that they won’t get paid.
Here’s the solution: Let’s say that you typically gross $1,500 per week and you want to take four weeks of vacation. Then you’ll need $6,000 in savings in order to pay yourself $1,500 per week off. Divided by the 48 weeks a year that you would be working, you’ll need to save $125 a week.
Stash that amount in your paid-vacation account and enjoy your paid time off.
Within the limits of the law, deduct, deduct, deduct
Talk with your CPA and figure out what you can deduct. Here are a few things that should be deductible:
- Professional development or conferences
- Mileage (client meetings, trips to the airport, trips to the office supply shop)
- Memberships (if you are an ATA member, this would apply to you)
- Hardware and software
- Internet costs
- Parking costs (at airports en route to conferences, etc.)
- Cell phones
- Web hosting costs
- Gifts for clients