This is an important subject for every freelance translator. The topics covered here are not mind-blowing, but they’re definitely crucial to the survival of your translation business.
Make a complete separation of your business and personal finances. Whether you’re incorporated or not, open a separate checking account for your business. This keeps things neat and tidy, and of course it makes it so much easier to access your accounting records when required.
Incorporate a reliable and efficient project and invoice tracking system. Perhaps, when you’re just starting out, having notes stuck on your computer monitor might work, but once you start working with multiple clients each week, and sometimes each day, you need a much more reliable system. It doesn’t matter whether it’s a whiteboard, a spreadsheet, or a specific program purchased for this purpose, just make sure you have a tracking system to work with.
Purchase a domain name and use it solely for your work email. Having your own domain name makes you look professional, and it protects you from having to change your email address again. Remember that you can use whichever interface you want to manage it, like Gmail, Outlook, and so on.
A percentage of every payment you receive should immediately go into a business savings account. We’re saying a percentage because it really does depend on your country and your tax bracket. In the United States you might work with 30% of every invoice if you’re just trying to cover your taxes, and 40% if you’re also trying to establish a vacation fund to enable you to have time off. If you’re in a higher tax situation, such as in the European Union, it could be as high as 50% just to cover social charges and taxes. Either way, our point is that you don’t want to be caught short at tax time and have no way of paying what you owe.
Start investigating retirement account options. Of course the great thing about freelance translation is that you have the potential to work into your later years if you want to, or even need to. But you should not be depending on this! Do your own research into retirement accounts, which will allow you to put away money, tax-free. There are many options for these types of accounts out there.
Do some investigative work as to whether it might be worth incorporating. If you’re a sole proprietor (self-employed non-incorporated person) and you live in the United States, self-employment tax is going to be a big hit. Basically you pay some taxes as if you’re both the employer and the employee. If you incorporate, legally you should be able to avoid paying self-employment tax on a portion of your income; and it can also provide a degree of liability protection. And the downside (yes, there’s always a downside!) is that, depending on the corporate structure you use, you’ll be required to file payroll taxes and lodge a separate tax return for the corporation.
Our final piece of advice is to use a professional email signature. Your email signature is the lines of text that are automatically pasted at the bottom of every email you send. Your email signature is a basic marketing tool, but a good one – because it helps people know who you are. The signature doesn’t have to be very fancy: a basic signature with a salutation (Kind Regards/Regards/Sincerely), your name, then “English to Spanish Translator”, followed by some form of contact information for you (email address/phone number) is all that’s required.
