HID Ep 16
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[00:00:00] Catherine: Hello there. My name is Catherine and I am 23 years old working as a full-time freelancer in the media and entertainment industry. And welcome to the how I diaries podcast. I'm here to debug all your fears and doubts surrounding the topic of freelancing and more importantly, get you on your way to a happy and stress free lifestyle.
[00:00:25] Doing that creative passion you love. So if you find yourself stuck at a job, you. We're wondering how to get your dreams started. You've heard of freelancing before, but you're skeptical about what it entails. I'm sharing everything I wish I knew earlier. And the tips and tricks I gain every day for my own freelance work.
[00:00:41] Today, we are talking about the numerous different ways to be paid as a freelancer. Uh, what is most secure and how to document it all. So, first off, the two types of self-employed income hacks documents are 10 99 and w two, I could be wrong. I don't, there might be other ones. These are [00:01:00] ones that I'm most familiar with 10 99 S and w two S the difference between them just has to do with taxes and who is withholding them for 10 99 contracts.
[00:01:09] You, the freelancer are responsible for withholding the tax. I plan to do more. Episodes in the future, specifically on taxes. I'm just still figuring it out myself. So I wanna make sure I have it all under control before I go out and put an episode out and you know, all that anyway, typically, depending on your situation, it's about 25 to 30%.
[00:01:31] That needs to be withheld. And for w two, your employer withholds the taxes. You're not saving any money by doing one or the other. The IRS will come for you no matter what, but yeah, 10 99 payments are most of the time invoiced by you and you are responsible for making sure you get paid out, et cetera. W two payments operate and pay out through the company's payroll department.
[00:01:53] So it's usually direct deposited or some people depending what you prefer. You. [00:02:00] Get checks mailed, but it's all processed by a payroll department for my production and film people out there. Most of the time you will fill out a w two and you can ask for a direct deposit form. Otherwise you'll be mailed a check.
[00:02:13] Like I was saying, other creative companies may hire you as a w. To employee two, it's just a matter of preference of the employer. There are pros and cons to each, when it comes to running a business and all of that sort of thing. So some 10 99 jobs allow you to wire your bank information for direct deposits, like the apps for food delivery services, dog walking, fiber Upwork, et cetera.
[00:02:35] But basically if you're using an app to provide a service for something and it makes over a certain amount every year, it's more than likely. You will receive a 10 99 from them. And some sort of wired payment is already set up. But of course, since there are so many different avenues of freelance and self-employment, there are situations where you can be wired payment or receive a check.
[00:02:54] I'm sure we all know about Z Venmo cash app and PayPal. But do you know about each [00:03:00] of their protection policies? For instance, when I first started, I was taking a majority of my payments through apps, like. And it wasn't until about a month or two in, I had heard from another, um, podcast called the Clark Howard show about the lack of protection and privacy policies from these companies.
[00:03:18] So protection and privacy policies are implemented in a company's agreement to ensure you that your private information is taken seriously by the business. And in some cases stating reimbursement and specific conditions, if, and when fraud occurred. So the news. I bet a lot of people don't know. I know I was one of these and I'm kind of still quite shocked to hear Zelle, Venmo and cash app offered no protection over fraud or your private information.
[00:03:44] And I'm sure you can imagine the numerous ways this is not safe. And you know, I get it. These apps were not built for being the main source of income and livelihood for people, but they are more than aware. They do not offer these protections and they do not have plans in the [00:04:00] near future for adding them.
[00:04:01] I mean, if they do. That will be great, but I don't see that happening again because they're not built and they were not built for those types of things. So, but if they see that people are actually using them for such things, they might change, but I don't know. All I know is that they are aware that they don't offer these protection policies and.
[00:04:21] They have done nothing since another side note. This is also why it is important to separate your business from personal accounts, but there is a holy grail, PayPal, PayPal offers these protections and policies, and there's also other softwares your company can use, or you can use, um, and pay for like QuickBooks.
[00:04:38] Um, the other names of ones are escaping my brain right now, but you know what I mean, more official softwares and apps built for being able to protect you. And those sorts of things, because they know that people use it for livelihood. PayPal, let's you hold your money in the app or you can wire it to your bank.
[00:04:55] This is not sponsored, but I do have an affiliate code. You can go ahead and [00:05:00] use, uh, it's in the show notes, you can click it and go ahead and get signed up. Your money is important. So take the needed steps to protect yourself. They also do invoicing and you can set up. Payments and charges it's super, super useful an app like this is something I would highly consider if you sell services independently or it's, you know, not the most feasible to be sent a check every time you invoice.
[00:05:21] I know this was my circumstance because where I was living, I was getting a lot of mail stolen. And, you know, even in regular, wherever you live, there's always a possibility of sort of checks getting lost in the mail or stolen. So definitely, definitely, definitely recommend PayPal. And just by the way, You are not hiding from the IRS by collecting income via these platforms.
[00:05:43] Venmo just recently made an announcement that if over the course of the year, you've made at least $600 on their platform, or, you know, you've accumulated over the times $600 within a year on their platform, you will be getting a 10 99 from them. And once you get a 10 99 from them, [00:06:00] then the IRS will be looking at you and you will have to claim that as income and pay the taxes on it.
[00:06:05] So just be prepared, narrow down your payment methods and make sure you're always protected. Even if you're not using these accounts like Venmo or Zelle, you know, close them, they still have access to your information, whether or not you're actively using them or not. And like I'm briefly mentioned in one of my budgeting episode.
[00:06:23] Is to keep a spreadsheet of all of your income. This is just important to have when tax season comes around. And also personally, I just needed it to apply for a rental and, you know, renting applications and other more adulty things. So just it doesn't hurt and it, you know, it really gives you the ins and outs of what you're making, what you're taxing and all that sort of stuff.
[00:06:46] Mine, for example, it's very simple. Just have the name of it, the name of the job that it was how much, and then. If it was taxed and it's either taxed cuz it's W2 income or I put that it's in my savings, [00:07:00] cuz that means it wasn't W2 income. So I have to withhold it. And there are some cases where I also note that I did not withhold the tax from it.
[00:07:08] So I have to be prepared to make up for that later when taxe. Come and I've mentioned this in other episodes, too. My go to tax like organizer for writeoffs and all of this stuff is called keeper tax. I will link them down in the show notes, super, super easy. They, you just put in all your bank information of where you're charging things and they organize.
[00:07:29] Very very easily all of your deductions and they make all of your deductions and all the taxes for 10 99 workers, freelancers, very easy to understand and digestible. They have a YouTube channel. They have an app on your phone. They have a website. It's great. So. PayPal link in the show notes, keeper tax link in the show notes.
[00:07:50] But yeah, that is it for this episode. I know it's a little short, but let me know what other money and finance questions you have. And if this reaches you and you have any other burning questions or [00:08:00] stories, I'd be happy to use this as an outlet to connect and build a community. How do you guys feel about Zelle and Venmo?
[00:08:05] Now follow me on Instagram at HOWI diaries and shoot me a. In the meantime, go binge all my other episodes for various other topics relating to how to get started, doing what you love. And please, any episode recommendations I'd love to hear. Let me know what your particular struggles are. You are probably not alone.
[00:08:21] Go ahead. Subscribe to this podcast. So you say up to date when I post the next batch, give it a rating and share with a friend who also needs to listen. I post five new episodes at the end of each month. So stay tuned and thank you for listen.
