[Moon-dæg] Five Reasons Freelance Writers Aren't in It for the Money

T-A-X-E-S

But I'll get to that below.

Introduction
Potential Incomes
Taxes
Conclusion

{Is the hand giving or taking? Image from "Freelance Writing - Career and Scopes" on ezdia.com}

Introduction

Freelance writing. Perhaps this is an inevitable topic for any "unemployed" writer with dreams of literary grandeur. 'Unemployed' is in double quotes since it doesn't really apply to freelancers in quite the same way as it might to a person who formerly worked for a company as a press release writer, or ad writer but now needs to find work.

There are a number of online job sites and boards that cost a freelancer some money (as a union might), either as deducted from pay or upfront, but working with these outlets can hardly be regarded as an employer-employee relationship. The writer who uses sites like Elance, oDesk, Constant Content, or Guru.com, doesn't generally get any benefit from working with them aside from increased visibility and a pleasant platform on which to deal with clients. But already this article's being diverted, let's just say that this whole paragraph a metaphor for YouTube in the day to day life of a freelancer and then close this tab.

Working for yourself isn't just about being able to control your output and ultimately being the only person to whom you answer. There's the matter of making enough to live on every year as well. In spite of its apparently small number of polled freelancers, the site payscale.com paints a hope-inspiring picture.

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Potential Incomes

According to this website, the average hourly wage for a Canadian Freelance Writer in Canada is between $9.90 and $64.11 (between $20 357 and $106 818 yearly). The site quotes the yearly earnings of Canadian Writers as $20 101 to $68 207; Writer/Authors as $11 745 to $84 971; and Freelance Writers, Technical as $32 580 to $141 015. All of these are fine and comparable professions since they're all dealing in fairly general writing.

Compared with Freelance Writer, however, the ranges - except for the specialized "Freelance Writers, Technical" - make going your own way with your writing look pretty promising.

However, the money you earn is not entirely what you keep. If you get a cavity you'll need to see a dentist, if you fracture a bone or damage a nerve (carpel tunnel becomes a serious job-threatening injury as a writer of any stripe), then you'll need to see a doctor. And of course, as spring overcomes winter each year, so to you need to file your taxes.

So, at the end of a good year, according to payscale.com, you could expect about $63 000. Tempered by the more sobering data offered by Sarah Turner, namely that only 8% of Canadian writers earn $25 000 or more a year, let's move that $63 000 to $30 000. That's still a relatively high number, but what would you owe in taxes on that sort of income as a freelance writer?

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Taxes

There are certainly a lot of different factors involved in tax calculation as it is. But, however individual a tax return may be, as someone selling services, you may have to charge your clients sales tax for your writing.

In fact, with 30 000 a year you need to charge GST/HST. You should keep clear records of your expenses since they could be written off if you can connect them to your writing business (this includes things like books on writing, and part of your rent if you work from home). And you also need to be clear and honest about what you make, even if you run a deficit with your writing, since this could offset income from other sources (assuming you have some).

Much like the nature of freelance writing itself, figuring out its taxes is a very individual activity. However, to get a general sense of at least one aspect of the income tax you file as a writer, let's take a look at what sort of GST/HST remittance you would need to pay on your $30 000 if you had a registered GST/HST account.

Running with 2011's numbers for Ontario (8.8% remittance rate for business providing services in another "participating province"), you would need to remit 30 000 * 0.088 = $2 640 of your income to the government in sales tax. The Canadian Revenue Agency website on the Quick Method of Accounting for GST/HST offers more help on this matter, but is also quite dense.

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Conclusion

So, if you're considering starting up as a freelance writer and feel like you've got a realistic grasp on how much you could make in a year, you should definitely plug your numbers into the calculations outlined on the relevant Canadian Revenue Agency website (or find what you need on the main site).

You might also want to consider moving to one of the "non-participating" provinces or territories (PEI, Quebec, Nunavut, Manitoba, the Northwest Territories, Saskatchewan, or Alberta) so that your remittance rate, at least, is considerably lower. Montreal does have a pretty vibrant arts scene.

How do you feel about how taxes work for freelancers, or in general? Let me know in a comment.

Check back here Wednesday for a lightly researched thought piece about Anglo Saxon burial finds, and don't miss Friday's review of Battlefield Earth - there's good in it somewhere, there's got to be!

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