A guest post by Dennis E. Hensley, PhD, Director of the Professional Writing Major at Taylor University in Upland, Indiana.
First, establish a guaranteed monthly positive cash flow. Cash flow for freelance articles will be sporadic and unpredictable, but monthly bills will be constant and inflexible. You need to secure some kind of work that will guarantee a set amount of income each month. Perhaps you can teach a continuing education class at a local college’s night school or write a column for a newspaper or magazine or perhaps run a part-time résumé service. You might even want to do what I’ve done: invest some of your royalty earnings in rental real estate which generates monthly rent payments while also providing a tax depreciation deduction. Do whatever you feel most comfortable doing, but never jump into freelance writing full-time without some guarantee of cash flow from some source.
Second, develop some long-term income-producing projects. Instead of churning out one article after another in a frenzied attempt to generate immediate cash flow, allot some of your weekly writing time to writing books. Once a book is written and published it will earn money for you even when you are sleeping, eating lunch, or taking a vacation. This is passive income. You no longer have to do the work, yet the earnings continue. This takes a lot of pressure off you in regard to feeling you have to be pounding the keyboard around the clock.
Third, capitalize on tax shelters. Have your accountant determine the best way to handle expenses. You may wish to depreciate your computer, audio recorder, camera, and other new equipment over five years so that you will always have sizable yearly tax write-offs. Whenever your book royalties are substantial, buy yourself a new printer or some new office furniture or file cabinets and use accelerated depreciation to reduce your present tax bite, should that continue to be an option allowed by the IRS.
By planning in advance for a steady stream of income, you’ll increase your chances of success as a professional 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.