Eleven Tax Tips for Outdoor Industry Freelancers
I’ve gotten paid for my outdoor writing for over two decades, and fortunately the annual cumulative total has gone up substantially. Nevertheless, mo’ money equals mo’ problems, or at least some complications. Those come primarily in the form of taxation. You can debate all you want about whether the US tax system is fair, but no one can dispute that it’s here and it’s complicated, and if you don’t comply you can get in a world of hurt.
As you read the following tips, remember that I am not a tax professional. These are only commonsense nuggets of advice based on my experience and should not be considered legal advice. I strongly advise that you consult a true expert with any remaining questions.
Nevertheless, as we transition to a new accountant (my father-in-law retired from the task after helping us for 20 years), I thought that perhaps some of my fellow writers, photographers, YouTubers and even anglers could benefit from some of the following advice:
First, take this seriously. No one cares that “it’s just a fun little side hustle” and you can’t state that you didn’t know you were supposed to reflect your earnings and expenses.
Second, enlist a tax professional. When you had a simple return, you might’ve been able to do it yourself, but as things get complicated you’ll need someone who truly knows what they’re doing. Screwing up is not an option. Avoiding the task is not an option. The person should be experienced in helping freelancers and should give you some guidance on how to approach things so you can plan accordingly. Their fees may even turn out to be tax-deductible.
Third, segregate all of your freelancing assets, money and accounts. Get a separate business checking account. Get a separate business credit card (preferably one that provides some sort of benefits consistent with the goals of your business – cash back, miles, travel protections, etc. All expenses need to go through these mechanisms.
Fourth, consult with your tax professional as to what form your entity can and should take. For many years, I operated as a sole proprietor. Last year, Hanna and I formed a partnership LLC. Your needs may be different, and you can always change but you need to make a decision for now.
Fifth, keep good records. For years, I’ve done two things to keep my otherwise messy writing life in order: The first is to get a simple 12-month accordion file to store all of my receipts, check stubs and other relevant paperwork. If I ever get audited or questioned about the business, I’ll have paper records of everything. Second, I have a simple Excel spreadsheet on which I record all of that same information. It has evolved over the years in response to new needs. Our new accountant has requested that we move to QuickBooks for our 2025 taxes, and while I’ve been putting off that task for a while, it’ll probably happen soon. No matter what software you use, try to update your info at least weekly, if not daily. You’re more likely to be overwhelmed and to make mistakes if you save it all for the last minute.
Sixth, ask your tax professional about other true business expenses. You may be able to deduct a portion of your home expenses if you have a home office, or your vehicle expenses, if you use your vehicle for the business. Taxes are likely not your area of expertise, so don’t be afraid to ask for guidance.
Seventh, find out if there’s a way to use your freelance income for tax-deductible or tax-deferred retirement expenses. Whether you have a 401K through another job or this is your sole income, you’ll want to minimize your immediate tax burden and take care of yourself in the long term. One of the best pieces of financial advice I’ve ever gotten was from my parents, stressing the importance of maximizing retirement planning early, and explaining the power of compound interest.
Eighth, reconcile your 1099s. Because I have a bunch of clients, every January I get a deluge of mail with 1099 forms that the sender has also filed with the IRS. Make sure your numbers match theirs. I don’t want BASS saying that they paid me $35,000 if they only paid me $20,000, and I don’t want Outdoor Life saying they paid me $1,000 if my records show they paid $20,000. If there’s that kind of discrepancy, someone screwed up somewhere, and I assume that’s often a red flag.
Ninth, stay on top of the process. There may not be a penalty for asking for an extension (except possibly losing out on the time value of any refund), but your accountant can help you plan and will be much more pleasant (during his or her most stressful time of year) if you have all of your ducks in a row. Get your paper and digital track record to them asap and ask your questions before it’s too late to do anything about any unexpected answers.
Tenth, maintain your records. Just because a single year’s tax season is over doesn’t mean that you won’t need the info in the future. My accordion files get retired to an out-of-the-way shelf, and our digital records get saved…just in case. Our new accountant needed to see some info from 2022 and we were able to provide it immediately. It’ll come in handy more than you think, but hopefully you won’t need them for an audit.
Eleventh, learn from last year. Even if your gross income and gross expenses are similar from year to year, various changes in law or your own processes can produce wildly different net amounts. It’s not a game, but there is strategy to legally fulfilling your own long-term financial goals, so keep on learning.
Remember, there is a distinction for tax purposes between “hobby” income and “business” income. As you progress with this process – ideally under the watchful guidance of a professional, remember to treat your business as a business. There may be years where you don’t make a profit, but the goal should be to show the intent to make a profit. Because some of the activities you undertake in pursuit of this sort of business may seem pleasurable, you may come under more scrutiny than someone opening a shoe store or even an accounting business. That’s why it’s critical to take this seriously.