Those of us who freelance or have other small businesses from our homes often have no one to help us navigate the treacherous tax waters. I sit down with Bruce Nowakowski, a Maryland small business accountant, to talk about the basics of freelancing and tax.

1. What can a home-based freelancer claim on taxes as expenses?

It depends on a number of things. If you have a room dedicated to your business then you can deduct a portion of your rent, electricity and other utilities. The portion is determined by figuring out the square footage of your apartment/house and dividing the square footage of the room. For example if you have a 1,000 square foot apartment and a 200 square foot room is used exclusively for the freelancing then you can deduct 20%. Business use mileage can be done at 50 cents a mile under current rates (changes annually). If you work from home and travel to a client or to pick up office supplies, this counts toward that mileage. I issue all of my clients Excel spreadsheets that track mileage (in addition to business expenses reimbursed to an employee or personal account). The IRS will want to know where you went and the estimated mileage on how to get there and back.

2. Does it make sense for a freelancer to set up an LLC?

An LLC will limit your liability if you are sued and protects your personal assets if your company goes bankrupt so it probably does from a legal sense, especially if your industry tends to be litigation prone (i.e. a construction company). In normal accounting sense, an LLC is considered a pass through company and thus it is still taxed on the owner(s) personal tax return at the personal rate UNLESS you also elect to be taxed as a corporation. If you do, and the IRS approves it, you will be allowed to deduct a reasonable salary from the company before the company is taxed. You will still be responsible for income taxes on both your salary and the company’s Net profits, but since both are smaller than a single large amount, they will both be in a lower tax bracket.

3. How does a freelancer file their taxes? How much (%) should they set aside to pay the IRS every year?

It depends on your situation. A freelancer with no other source of income (no W-2 employers) needs to make an quarterly estimated tax payment if you have a net profit of $1,000 a quarter. If you were in business last year, and are doing about the same financially, it is ok to use the same bracket to calculate how much you are likely to owe based on the current quarter.

If you are doing this part time; have a full time job and ended up owing taxes because of the business last year, you can ask your employer to take extra out of you paycheck each week to spread the payment around. If it was less than the $1,000 threshold, then put it in a CD or something to earn some interest.

Bruce Nowakowski is a Maryland small business accountant who runs Nowakowski Accounting and Business Services, LLC. Contact Bruce through his website or at 443-520-5225.

Now, there are a few gems buried among the turds. I have bought quite a few ebooks that have been hugely helpful. But for the most part, I am being offered a bill of goods. A lot of them say “join my membership site for networking!” only to have you find out that the only people you’re networking with are the ones offering the site. Truth is, as a member of the Canadian Association of Journalists ($75, annually), I can network in my field for much less money. I can go to the MediaBistro quarterly mixers in my region. And lord knows I can tweet. I have made an amazing amount of valuable contacts via twitter.

And what of the courses? Are they of any value? I honestly have no idea. The freelancer who can drop $400-900 on an e-course actually doesn’t need to learn much about the business, I’d say.

I want to read writing blogs and get a sense of the person doing the writing. I want to know where they came from, where they are now, and what the journey was. I want to hear the wisdom of the day-to-day. What I don’t want is to be pitched all day, every day.

So today I unsubscribed to about 30 blogs, which I will not name here. My time is valuable, and shouldn’t be wasted on the blog equivalent of infomercials.

Your time is, too. Be selective as to what you want to read. If the blogs you read offer real value, and somewhere along the way the writer provides a product or service for a fee, go for it. But don’t get bogged down under a heap of sales offers all day long. That’s time you could be spending doing some actual writing of your own!

A change of career direction should not be mistaken for standing still, but it often is. If you are seen to be sleeping late, not wearing pants*, etc, you are considered a time-waster; someone who doesn’t or won’t work. I disagree. I just don’t happen to work in a job like yours. I don’t commute anymore, I don’t buy my lunches at the fast food joint in the mall, and I don’t sit in a cubicle. Nor do I wish to.

Of course, friends have a right to be somewhat concerned, at least until I really start producing. After all, given what they know about me, it’s easy for me to spiral down into a depression and forfeit any good work I had already accomplished.

But for now, what I need is a week to get my brain used to the new routine, and to find the rhythm in my new lifestyle. I’m not standing still, I assure you. I’m just hitching a ride in a new direction.

* And I really do wear pants. Vinyl kitchen chairs in a heatwave? Yeah, pants.

It is 94° in my apartment, mercifully minus the bedroom, where the air conditioner is straining to capacity to keep my sheets cool. As I reached for a book about an hour ago, a funk tickled my nostrils and I realized I had fallen into the worst work-from-home trap: Forgetting to bathe daily.

Don’t snicker – anyone who works from home has fallen prey to this oversight at one time or another. It’s so nice to roll out of bed at your own pace (ironically, I woke up “on time” today, for the first time in months), throw on a pair of shorts, and hunker down at the computer. There’s no one to see/smell you, and the dogs don’t care. In fact, they prefer you at your most pungent.

Other things that fall by the wayside when you work from home: Clothes without holes, clean clothes (with or without holes), cooking/eating, answering the phone, going outside… the list goes on and on. It’s both a blessing and a curse. A blessing in that I will be saving a fortune in transportation (the Toronto TTC is one of the most expensive transit systems in the world) and dry cleaning, as well as buying lunches. A curse in that I will have the pallor of the walking dead and will often smell like them too.

Sigh. This is going to take some adjustment and a whole new routine.

That said, I have showered and already feel 10° cooler. The dogs aren’t as affectionate, though.

1. 9-to-5 really doesn’t work for me. First of all, my circadian rhythm is such that my natural wake-up time is about 9. Oops. Add to that a 45 minute commute with dirty “bus people,” and it was a failure from the outset.
2. I have an uncanny and heretofore unknown knack for sales. I rock at B2B. Who knew?
3. Wendy doesn’t work well with others. I was in a Project Management role, which suited me beautifully. One-on-one with the client,  making things happen; I was in my element. But when faced with office politics, it brought out the worst in me. Which segues nicely into…
4. I can’t work for anyone who isn’t me. The thing about me is that everything is about me. And when it’s about someone else, I lose interest. With no real incentive (bad pay, no sick days, no benefits to speak of) to score the next goal, I get bored of the game. Not to mention, if I loathe myself this much, I likely loathe you even more. Which is why the only person I can work for is ME. I need ownership of every project in order to feel properly motivated.

Taking this office gig, which from the outside seemed like a nightmare, was actually the best thing I could have done. It helped me to once more remember the pros and cons of each environment – Out There and In Here. And it gave me valuable experience in large project management – dealing with clients as well as service providers, and making the whole thing come together. Prior to this, I was the provider. Now I know what it’s like from both sides.

I also learned that cube farms are the epitome of city life – people boxed together in small spaces, trying not to go mad.

So it’s time to get back to the basics, to strip off my dry cleaning and get back into my jammies, and focus on what satisfies me most.

Lisa’s gig is streamlining the home office process, so that you aren’t shoved into a corner of your dining room, buried under a pile of receipts.

For $12, Lisa’s book is jammed with little lists of small changes you can make NOW, which will reap big rewards in the longer term. What to keep and what to shred, how to avoid cluttering up your desk with tchotchkes that are marketed to make you feel more organized (but really don’t help at all), and management of your space and your time.

Every freelancer has to account for every minute of their working day to ensure that they maximize billable hours. If you spend client time searching for a specific folder of materials instead of working on the project at hand, you can’t bill your client for your disorganization.

For those that work at home (I’ve recently gone back to being a corporate whore – at least for a while), managing your office space and keeping it separate from your family life can be hard, especially if you have kids, pets, spouses and whatnot underfoot all the time. It’s too easy and convenient in the short term to put your personal and project files into the same cabinet, or keep your stuff strewn across the coffee table, but once you start mixing work with “real life,” chaos ensues. Little fingers grab stray papers, the dog knocks over your coffee cup, or your husband keeps wandering into your office space to find his passport or what-have-you.

Working at home means running a very tight ship, managing your time efficiently, and still making room to enjoy the experience of not having to commute every day to be part of the corporate grind.

Check out Working Naked: A guide to the bare essentials of home office life by Lisa Kanarek, and make your 2011 resolution to organize your home office!

All the go-getter scribes will be typing or scribbling away to meet the 50,000-word goal by the end of the month. That means a daily tally of 1666 words. Sounds fairly simple – and it is if you are unemployed, young, live at home and have few other worries in the world and a penchant for Red Bull or Monster energy drinks.

If you are like the rest of us, completing NaNo (as it is affectionately known) can be a challenge.

Here are some tips to get you through:

Moral Support. Find other masochists like yourself, and band together. The only time I ever completed NaNo was when I was part of the NaNo community in my city. Sign up to the bulletin boards for your area, and get out to all the events. The writing sessions can be a bit of a confab (with very little writing getting done), but you’ll find that you pick up loads of inspiration from the others in the group.

Caffeine. For those late night writing binges followed by early morning classes or, worse yet, WORK. Ugh. A coffee maker with a timer is great – two coffee makers with timers are even better!

Change of Scene. While the idea of locking one’s self in a room of one’s own for the duration is very romantic, you will eventually crack up and start gnawing on your own hand. Doing so slows the typing considerably. Grab a laptop or netbook and get out of the house. I recommend coffee shops as the obvious locations, but don’t underestimate the ambiance of a gritty pub. At least you can drink. Sure your prose might be slurred, but it’ll be inspired!

Flow. Don’t worry about quality – quantity is key in NaNo. Think you left a plot hole? You probably did. Ignore it and keep moving – this train stops for nothing. In fact, one of the benefits of completing NaNo is getting past any Obsessive Compulsive behavior. Perfectionists don’t fare well with NaNo. Get over it!

Whether you choose to do NaNo in fevered sessions, whacking out giant chunks and then sitting in repose (i.e. getting on with real life) for a few days, or meeting the daily goal of 1666, it’s important to stay focused on reaching the 50,000. The first week is critical. It’s kinda like a diet – if you flag in the first week or two, you may feel overwhelmed about catching up, and just give up altogether (like I do!).

So good luck, Godspeed, and may your coffee supply hold out till November 30th!

You can pick up a copy of No Plot? No Problem!: A Low-Stress, High-Velocity Guide to Writing a Novel in 30 Days.

Sometimes, no matter how good your story, publishers might not be willing to take the risk to publish it. Perhaps it’s too controversial, or they are concerned there may not be enough potential buyers in the targeted niche. In the case of Jennifer Lawler, the story was just too damn sad for any publisher to back it.

“Many of you have also asked why I don’t write a book about my experiences with Jessica. I have. My agent, the indomitable Neil Salkind, has been trying to find a publisher for it since last August. We have received many rejections, mostly on the grounds of ‘it’s too painful; it won’t find an audience.’ ”

“I have never believed that, and your response to ‘For Jessica’ is my validation. People want to read the truth, even if it is raw and makes them cry. They want to be moved, to feel that there is more to life than just another bathroom to clean or a new pair of shoes to buy.”

So she put the manuscript up on e-junkie.

More and more, ebooks are becoming a popular alternative to the long, drawn out process of finding an agent, shopping your book around, and hoping your publishing house sets aside enough cash for decent promotion. In the case of ebooks, you do your promotion yourself, but you eliminate the middleman costs – no 10% to the agent, no paybacks to the publisher. It’s all yours – or maybe you share a little with affiliates who help you with your marketing.

If you are a writer struggling to have your story read, frustrated with the whole agent/publisher setup, why not go it alone? It’s really a lot less scary than the daily rejections from agents and publishers that the average writer receives, and the marketplace will tell you how good your book is.

The Sticky eBook Formula will help you get the book written, formatted, published and marketed in record time. Like Jennifer Lawler, take matters into your own hands and tell your story, no matter how timid the publishing houses might be. They care about their own bottom line – shouldn’t you care about yours?

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Whether you’re new to the blogging world (Welcome!) or an old hand at it, getting your blog ducks in a row is essential to building the traffic and creating the income you desire from your blog.

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Try The Copywriting Scorecard for Bloggers and see the difference it can make for your blog.

Opening a business is always tricky. In Ontario, entrepreneurs and small business owners can turn to the federal, provincial and municipal governments for financial assistance. Governments at all levels understand that small businesses drive local economies, and do all they can to support these businesses, helping to ensure they have a strong foundation on which to build.