PIXL Designs

Freelancing poses some serious questions related to finances. Among these are Do I need a business bank account?  How should I keep track of business finances? Do I have to pay taxes quarterly? How can I invoice my clients? Do I have to spend money to get an LLC?

Each of these are great questions. I’ll attempt to answer some of the ones we asked, but know this is not going to be an exhaustive list. It will simply be what has worked for us.

Do I need a business account?
Since Laura and I are the only ‘employees’ in our business and we only run through about 10-15 projects a year, we do not have a separate bank account. I can see where this could benefit tracking if freelancing is your full-time job, though. The IRS requires you keep tons of records, especially if you have a home office like we do. The way I see it though is I don’t need a whole separate bank account to manage when we already have two IRA accounts, a 403(b), a stock account, a checking, savings, credit card and health credit account. That made me tired just typing it out!

How should I keep track of business finances?
In the past, we have used Quicken entirely to track our finances. And it is simply daunting. There are lots of features, but sometimes these can be overwhelming. This past year we switched all our financials over to Mint.com and haven’t looked back. Mint is simply amazing. In about 15 minutes I set up all my accounts, categorized all my expenses and income and had a clearer picture of my entire financial state. Mint has recently helped us set a budget and stick to it. It sends us weekly email reminders about upcoming bills, lets us know when we are approaching our budget allotment for a certain category, and it also has an iPhone app. Intuit, who owns Quicken, bought Mint out in late 2009 and while I wasn’t too wild about that, they promise to keep Mint the same and so I will continue to highly recommend it.

Do I have to pay taxes quarterly?
Taxes are extremely time consuming, but thanks to Turbo Tax I am still able to do my own taxes. One major piece of advice is track everything. I mean everything. Purchases, purchase dates, mileage, utilities, cell phone, internet, mortgage/rent, etc. The IRS requires you keep hard copies of it all too so you will need to keep good records. Anything I purchase online I also make sure to store receipts in an administrative folder based on the year I purchased it. As for the question, you can if you need discipline and make a lot. Since we don’t make much over $5,000 a year then we usually even out our expenses and earnings (which is what you want). Big profits will move you up in the tax bracket since social security and medicare are not coming out of your checks. Proper management can really alleviate all tax pressures so just be smart.

How can I invoice my clients?
We currently use Freshbooks, an amazing to track project time, estimates and invoices. Freshbooks is a simple, yet amazingly resourceful Web app. And the best part is it links to your Basecamp projects which enables us a more efficient workflow. It’s a breeze to set up and clients’ can even see their own invoices/estimates history. At the end of the year, I use the reporting feature to find out exactly how much I made for tax purposes. For a while we actually had enough client projects to justify paying for Freshbooks. Currently we only have three active clients. Freshbooks allows you to upgrade/downgrade easily which is a huge plus for freelancers.

Do I have to spend money to get an LLC?
This will really depend on your business. I would say it is a very wise idea if you have employees, but since we are a husband/wife team currently our business is filed under our names. Essentially this means your EIN (employer identification number) is your social security number when doing your taxes. You might want to read more on this topic since I’m unfamiliar with it.

I know this isn’t the most exhaustive list and there are probably a million other questions you have. Feel free to leave a comment and let us know your questions or opinions. We are simply excited we can even share about some things that have worked for us.

Project Management
We currently use Basecamp for all our project management needs. Basecamp is a web-based collaboration tool created by 37signals that lets you share files, consolidate communication, and assign tasks. Basecamp is also extremely easy to use and learn. Some of my first clients to use Basecamp were familiar with computers, but not as computer savvy as the current Generation X. And they figured Basecamp out in a cinch. This went a long way in my credibility and it helped create the experience for our client that we were looking for.

• Sharing files is huge in the freelance world. You want to be able to send your clients proofs, but you don’t want things to get lost in email jargon. Enter Basecamp. This project management tool let’s you upload your proofs or high-res files to your clients job where than can login and download as many times as they like.
• Consolidating communications is essential. When working as a freelancer you no doubt find it hard to keep personal and business email separate from each other. With Basecamp this is no longer an issue. Now I communicate with clients through messages on Basecamp. The biggest benefit of this is that Basecamp keeps your messages in a nice thread in your client’s project. This allows me to delete an email after I have read it or replied to it and know that it is saved under its topic in case I need to view it again.
• Assigning tasks is one of the best ways to bring your client into the project design without actually letting them control the project. We currently setup our projects once the deposit has been paid and assign tasks with deadlines. This helps to hold us accountable and it gives the client a view of the design stages. Once the design is complete, the task can be assigned to the client for proofing. This allows them to feel a part of the process, and rightfully so. This is as much their project as yours, and as your valued client they deserve to be in the know.

Basecamp has really served us well in the past year. It has some really great features and it is simple to use. In fact, it wasn’t until PIXL Designs started using Basecamp that our business really took off. I highly recommend freelancers give Basecamp a try. Who knows, you might even start to get over those design anxieties and make a little profit.

As promised, this week we’ll kick of a series on how we have implemented certain tools to help us in our freelance efforts. While not an exhaustive list, these should give you a good understanding of what/why you need something before you spend your hard-earned cash on something pointless.

Organizational Skills
Before you do anything else, you need to get organized. You need to develop a system for storing projects and their files on your computer or an external hard drive in a way that is easy to manage. And don’t forget to backup the files on a regular basis. This seems like common sense, but so many designers fall into prey for bad organization.

Just when you least expect it, a client calls will 8 months after their project and request that logo they sent for their project’s second page on the third revision. And while you are at it, they really liked you second revision and they’d like a copy of that as well. While you are stumbling over your words, your mind will definitely race back to when you first set the project up. And you’ll either freak. Or you’ll smile because you organized your project really well.

I currently assign all my clients call letters. For example one of my clients, Quartzsite Southern Baptist Church is QSBC. Then I organize a client’s project files by the month and day the design began. E.g. QSBC 0109 Would refer to Quartzsite SBC’s January 9th project. In addition, I use these call letters for invoices and estimates. This does two things for me: it keeps me organized; and it sets a date to the project that corresponds to the estimate and/or invoice.

There are many ways to stay organized and we will be discussing some Web-based practical tools throughout this week. Stay tuned and be sure to comment with your own advice on how to develop good organizational skills.

Lately I have been pondering the term UI – User Interface. The reason I have been doing so is I think it transcends Web design and computer graphics. Now UI is everywhere and is being redefined as how you interact with various ‘interfaces’ throughout your day. As a freelancer, my UI is how I interact with my clients and my artboard.

If I am trying to get my clients to buy into my services, but don’t have a portfolio to show off. Then I have bad UI.

If I am working on projects for my clients but don’t give them any timetables or progress reports. Then I have bad UI.

If I do really great work but don’t take the time to explain why I designed something in the way I did. Then I have bad UI.

It is essential as freelancers that we take the time to ask ourselves what experience we are designing for our clients. The beauty of Apple, DisneyWorld, and Southwest’s successes are defined in the experience you have using their products or services. Next week I’ll be sharing some of the practical things we have incorporated into our business to help it run efficiently and smoothly, while giving our clients a consistent experience. We aren’t perfect, but we have definitely recognized the need for a great experience. Then we have good UI.

Anxiety is defined by Wiktionary.org as “an unpleasant state of mental uneasiness or concern about some uncertain event.” This is probably the biggest obstacle I have had to learn to overcome when it relates to running my own business. I can be the most vocal person at times and be shier than a mouse at others. My main problem stems from dealing with hearing loss since birth and wondering if I will catch everything or end up saying “yes” when someone asked me a question. But this is only an excuse. Here are some tips to how I’ve learned to deal with anxiety as it relates to my freelance business:

1. Music. It has often been said that music relaxes the mind. eHow even has a post on why this is is true. I find it keeps my mind from focusing on the fears that I have of introducing myself to a new client, calling a potential client or even sending my clients a bill reminder.
2. Remember Braveheart. Okay, this one may sound funny, but it’s very true. Bravery can help you overcome anxiety. Envisioning this scene always pumps me up when William Wallace (Mel Gibson) yells out to the troops, “Aye, fight and you may die. Run, and you’ll live… at least a while. And dying in your beds, many years from now, would you be willin’ to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they’ll never take… OUR FREEDOM!” If you don’t remember it, then watch it now.
3. Remember it’s over soon. The final thing that always helps me get past my anxiety is knowing that it’s going to be over soon. Whatever it is I’m about to face. Sometimes it’s been a difficult phone call, breaking off a relationship with a client that treated me poorly, or repeated phone calls/email to get paid for services I completed. I am human and hate to annoy people and so when I know I’m entering an uncomfortable situation I become really anxious. Listening to music helps those nerves, remembering Braveheart can really pump me up, but the thing that matters most is reminding myself it will be over before I know it.

I hope these tips resonated with you in some way. Freelancing is hard work and we don’t take it lightly. We feel all the client pressures, the financial setbacks, the headaches, and much more. Just remember that tomorrow is a new day with new possibilities, not anxieties.

After nearly two years of experience, we have encountered several ups and downs in the world of freelance business. Our goal is to share our past, current and future experiences on this blog in hopes that you can learn from and laugh at our mistakes, utter failures, and our rare successes.

This past year, 2009, was incredibly tough as the economy was down. Many people had to put in extra hours at their own jobs and therefore their freelance time shrunk. Here a few lessons we have learned on how to stay adept during stressful economic times.

Stay Active
This is the most important thing for freelance designers. We’re not talking about actively looking for new jobs either. We are talking about getting off the couch and working out, running, taking a walk, or doing some Wii Fit strength training. Anything. Studies show that it is important to stay active because it keeps you in good health both physically and mentally. The freelance world can be hit or miss. One minute you have plenty of work and the next you have none. This can take a toll on your mind and it can be really easy to have a negative view. Staying active can help fight the freelance blues and keep you focused on the tasks at hand.

Focus
You probably saw this one coming. Focus is the key in the freelance world. Without a focus, you will die. Don’t try to be all things to all people, try to be the best at what you are good at. There is always going to be someone who is better than you out there, but if you have razor focus, you can build your client base and develop strong relationships that will retain those clients. Keeping your focus can also enable you to keep your mind and skills sharp. Reading blogs, taking design tutorials, or simply mapping out your values are all great things to engage in.

Creative
Freelancers are creative by nature. You have to be if you want to survive. Now this isn’t simply an artistic term, but rather one that shows of your personality. You need to be creative in how you reach out to customers, how you communicate with existing ones, and how you show off your services. When is the last time you called a client? Sent them breakfast? Invested some time into your relationship with them outside of sending them a bill and a business card? Get creative! Freelancing is hard work and you definitely have to work to get and keep clients. Quit spending time chasing white rabbits and instead get creative in reaching out to the strongest clients you do have.

This list probably isn’t the most exhaustive in the world, but it does give a small overview of some very practical things you can do to keep your ideas fresh and your freelance business thriving.