A guest post by Dennis E. Hensley, PhD, Director of Professional Writing Major at Taylor University in Upland, Indiana.
First, determine your financial role as a writer. Are you writing just for the enjoyment you gain from sharing your views with others, or are you doing it as the sole support of your family? Is writing just something you do for a little extra cash, or is it your true second income? You cannot set a cash goal until you determine how many cash obligations you have.
Second, evaluate your hourly rate. Add up to the total amount of cash you receive for your first three manuscript sales and divide that total by the number of hours it takes you to research, write, type, and submit all that material. This will tell you how much you are worth per hour. If someone wants to hire you, you then will know what to charge.
Third, prepare a budget. Make two lists. One will be a list of the obvious costs you are required to cover in order to stay in business as a writer (online monthly service fees, paper, stamps, computer maintenance). The other list will outline the household expenses you are required to meet (food, rent, clothing, utilities). These lists will give you a clear picture of what your total cash flow needs are per month.
Fourth, set up three business books.
You will need a separate checkbook so that all of your expenses will be legitimately documented by canceled checks should you ever be audited by the Internal Revenue Service.
You will also need a cash disbursements journal so that you can record the date, payee, cash amount, item purchased, and check number for all expenses related to your writing career.
Finally, you will need a cash receipts journal to record all your freelance sales and royalty payments; be sure to note the date the check was issued, its payer, the amount, the check number, and for what manuscript the money was paid.
Taking the time to establish these foundational steps will ensure your financial success as a freelance writer.
Adapted from Writing for Profit by Dennis E. Hensley [Thomas Nelson, 1985; revised 2003]. Learn more about the prolific Dr. Hensley’s writing, editing, and public speaking credentials at www.DocHensley.com.