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Financial tips for freelance translators

Unfortunately, the subject of finance is generally treated by translators as either endless complains about low rates or discussions about prices for their service. In this article you will find a different approach to financial aspects of translation. We will give you some useful tips that will help you maintain a stable financial position.                                                          

Of course we are not going to take into account any possible personal situation that may influence your income in this or that case. The point is that the pieces of advice that we suggest here can be applied under many different conditions and thus, may be called universal, no matter what field of translation you work in and what your rates are. So, let’s get down to business.

Set aside for paying taxes

If you live in a country where the tax office doesn’t collect taxes every month, so that you don’t have to think about going anywhere to pay them, you can easily forget that you haven’t paid what you have to. This carelessness will bring about a very unpleasant surprise at the end of the tax year. The best way to prevent this rather stressful situation is to set a certain sum of money aside on your bank account for such purposes. You may decide for yourself what part of income you can do without. But remember that when you charge a new client, about 20-30% of the sum will go to the tax office, so set an adequate price.

Be ready for “dead” periods

You should already know that in your job there come active and quite periods. So, whether you call it savings, financial management or financial cushion, you should have some money to survive such periods. When you work actively and earn much, put aside money on a special fund. You will use it when you have no clients and no regular income. Don’t think that it won’t happen to you, because it’s an integral part of any translator’s routine. There’s nothing shameful about it. But if you treat your business seriously, you should be prepared for quiet periods.

Keep track of your expenses

Don’t throw away receipts and invoices for every single purchase that you make for you business, even if you are not quite sure whether you can consider it a business expense. It’s much easier to ask an accountant to find out rather than being unable to claim it when it’s required.

Plan your budget

One of the most useful pieces of advice for a freelancer is to draw a budget for his/her business that will cover training, marketing and operational expenses. It can be allocated as percentage of your revenue, so the more you make, the more you spend on CPD and marketing your services.

Track all the expenses

I order to be successful you should be very precise and accurate with planning and measuring. Budgeting goes without saying. Now you must also learn to track all your expenses. It’s not actually an extreme to count how much you spend every month. This will give you a feeling of stability and safety. It doesn’t mean that you should save everything, but you should know how much you spend on your coffee or lunches out. If you learn to track your expenses, both personal and professional, you’ll acquire a useful habit that will save you quite a sum.

Develop an efficient system of time tracking

You already know that in the world of freelancing, the time you spend on work and the money you make are directly connected. That’s why effective time tracking is one the crucial elements of your business. For instance, you may earn $300 on some assignment and be happy about it, but fail to realize that it took you 25 hours to complete it. So, it means that you got $12 per hour. It doesn’t look so inspiring anymore, does it?

Set a profit margin

You should understand that every business, even if we speak about a very small freelance enterprise, should have an objective to get profit. Profit is what remains after you’ve paid all the expenses. You need it for investing in your further learning, marketing and business development.

Pay yourself and established salary

Practically all the freelancers think that whatever is left after all the bills have been paid is their own money. But you’d better try another approach. Set yourself a salary that you will get every month. Count it into your business expenses and you’ll be able to see how much is left in your profit. If you pay yourself a salary, it will motivate you to achieve a certain level of income every month.

Set income and profit objectives

Very often translators and interpreters simply wait for orders to come and cannot say exactly what each month will bring. It’s a rare case when translators set firm income goals to establish how much money they are now making and how much they want to make. The reason to start doing it is that if you don’t have any objectives you won’t be able to achieve them.

Make sure that you are paid in time

All freelance translators and interpreters face a problem of cash flow. If you are invoiced for a large sum of money but it is delayed, you are in a big trouble because it will be difficult for you to cover your expenses. You should always have some countermeasures, like setting different payment terms that will make sure that some money will always come in. You may also consider fines for late payment and get in touch with the collector agency if it’s necessary.

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