How much money did I make and spend in 2013-2014?

Pie chart writer's expenses 2013-2014

Buffer’s “transparent pricing” inspired me to share my expenses and net profit. Here’s what I made and spent in the 2013-2014 Australian tax year working part-time as a freelance writer.

Overall Expenses for 2013-2014

Item2013-2014 Tax Year
Online Services$1,018.24
Contractors (other)$1,201.84
Bank Fees$1.95
Sample Materials$3.80
Reference Materials$7.49
Advertising (other)$15.00
Personal (other)$35.00
Professional Services (other)$39.95
Meals & Entertainment (other)$77.00
Taxes & Licenses$250.00
Taxi & Parking$287.78
Office Supplies$334.79
Other Communications$450.00
Office Space$720.00

My biggest expenses included Consultants in green. Consultants included bookkeepers, web coders, and graphic artists working for my own business.

Another large expense was virtual office space. I opted into a small business incubator at The Nest in Victoria Park from Jan 2014 to Dec 2015. I gained tremendously from the networking, and consultants I hired through the shared space. I consider the virtual office space as money well spent.

My postage and printing were spent on business cards, and promotional training guides. I did not consider this printing as a Cost of Goods Sold (COGS). I printed and mailed the guides as part of my overhead.

Monthly Income Fluctuations 2013-2014
 Jul ’13Aug ’13Sep ’13Oct ’13Nov ’13Dec ’13Jan ’14Feb ’14Mar ’14Apr ’14May ’14Jun ’14
Total Expenses338.3487.37275.92678.81393.82542.65420.34938.19556278.1318.3278.1
NET PROFIT1075.831284.21882.83642.44421.18-295.273271.5934.4673.17533.98963.661774.4

Holiday Income

The biggest issue with my freelance writing business has been the period around Christmas and New Years. I tend to have a rush of projects before the holiday, then businesses are slow to pay during the period from late November to early January. This leaves me with a surge of collections on open (unpaid invoices) in January.

My income lags because I have net 30 payment terms. January is slow. I do not start collecting income on my writing projects or website training projects until February.

Bad Debt and Slow to Pay

I am a cash-based business. If I invoice — and the client does not pay, I cannot count the money as a loss. I don’t have the exact numbers, but I tend to find that clients with projects under $200 AUD who do not pay within 30 days are more likely to become bad debt.

I do not report bad debt to credit agencies, but have considered reporting unpaid invoices. I have had between $200 and $300 AUD per year in slow to pay (more than 60 days, or partial payments stretching as long as 120 days). I have had 1 bad debt of just over $320 AUD, that I wrote off when the company went out of business.

To mitigate the risk of poor cash-flow:

  • I bill at mid-month and at the end of the month
  • I do not book or go to future appointments when there are outstanding invoices
  • I call on the phone to collect
  • I warn my fellow colleagues if I’m having trouble collecting so a bad client doesn’t churn through my business network

This coming tax year (2015-2016) I am considering amending my Terms and Conditions to require a deposit on jobs under $300 AUD.

How Much Did I Make That Tax Year?

Consider my 2013-2014 Tax Year a hybrid of a start-up business, and a part-time business. This is the year I started to get serious about returning to the workforce after taking several years to raise my child.

Gross income
$15,768 AUD

$5,105 AUD

Net Income

Re-starting a business on the other side of the world is slower than I expected. I feel taking time off to be a mother added to the “object at rest — stays at rest.”
Shauna playing Foosball

Should you become a freelancer?

In summary for my colleagues who are thinking about freelancing – I recommend freelancing full-time, because the base expenses are about the same as a part-time business. Freelancing does not make sense as a hobby business. I worked about 450 total hours in the 2013-2014 tax year, about 230 hours were billable.

My expectation of full-time freelancing is billing 60% of the 1900 work hours in a year (1140 hours per year). 40% of my time is unbillable. The 760 of unbillable hours are consumed by:

  • Administrative time (bookkeeping, sales, marketing, administrative, travel)
  • Cancellations or rescheduled work
  • Unbookable fragments of time

In the previous year, I supplemented my freelance work as a temporary employee for an agency. There was a temptation to go from temp employee to permanent employee, but I love the adventure of working for myself.

How much money did I make in the 2014-2015 tax year?

I will share my progress over the past 4 years in the next article. I’ll follow on with an article about how much I made in the 2014-2015 Tax Year (Jul 2014 to Jun 2015). As you read my articles, please share privately by email, or publicly in the comments:

  • What have your self-employed experiences been?
  • How do my expenses differ from a company with partners, or multiple employees?
  • What do you do to reduce expenses and get better margins?