We’re here to help! Let’s break down what makes a great resume in 11 easy steps.

Click here to access the Invoice Template

1. Your logo – This is the first place on the page (Western) readers’ eyes will naturally go, so it’s where you should put your logo. Not only does it immediately convey who this invoice is from, but it’s also your opportunity to put your personal brand in their mind. Keep it simple, keep it memorable. Don’t have a logo? Not to worry. You can just put your name there as well.

2. Your company information – A handy place to put all your contact information, and especially important if your clients are paying you by check. We’ve also seen this information in the footer of invoices, but this is the classic position and easy for your clients to see at a glance.

3. Invoice details – We can’t stress enough the importance of writing the word “INVOICE” in big, bold letters. This tells the client exactly what the document is, and why they’re looking at it. Don’t put any barriers to getting paid on time! Include the invoice number (001, 002, etc) and the date (month of, week of, specific time period) for your and their reference. This is an important detail so you can keep track of what’s incoming.

4. Client information – So you and your client can be sure you didn’t send the wrong invoice, write down at least the company name (address is optional). If you’re working for an individual, use his/her name. Also, make a mental note to check this region before you email it out. The last thing you want to do is send the wrong invoice to the wrong client.

5. Payment notice – “Payment Due Upon Receipt” lets the client know not to dilly-dally with your dough. If you want to get more descriptive, you can write “Payment Due within X Days Upon Receipt”. It’s where you can use natural language to describe your payment terms (as opposed to section 10 below) if you’d like.

6. Item descriptions – Spelling out what your projects were helps your client understand exactly what you’re invoicing for. Keep the item name itself short, maybe 2-3 words (eg. “Marketing Consulting” or “Video Editing”) and use the description line to expand on each item as necessary.

7. Numbers – Don’t give your client extra work to do. Itemize the cost of each job or your hourly rate under Unit Cost (eg. “$100/project” or “$30/hour”), and the quantity (number of projects, or hours), so you can do the math for yourself. Writing everything out ensures that there are no mistakes. Note: The sections under Subtotal (Tax and Discounts) are optional. If your rates are hourly and pretty basic, you can remove these sections from your invoice.

8. Remarks – Does anything need extra explanation? Was this a shortened time period? Is there a late fee incurred? Anything that is out of the ordinary with your invoice should go into this textbox. Bullet points are best for legibility and for brevity. Anything that needs more explaining than what fits in this small box is probably a conversation to have on the phone with your client.

9. Payment methods – While your accepted payment terms should have been previously set in either your conversations with your client before the project began, or via a freelancer’s agreement/contract, it never hurts to remind them here. After all, your client’s accounts receivable may not have been privy to what you discussed.

10. Terms & Conditions – The technical explanation of #5 above. Here you spell out when your money is due (eg. Net30, Net60, etc) and if there will be late fees incurred if their payment doesn’t arrive on time.

11. Footer – It never hurts to be polite!

There you go: a crash-course into what an invoice should look like and contain. Like this template? You’re in luck! We’ve saved it as an editable Google Doc for you to use, completely free. Click here to access the Invoice Template

For Billy users, you can do this too. Click here for instructions to make your Billy invoices look just like this. 

The post The Anatomy of a Great Invoice appeared first on Billy Accounting.

Pictured here: NOT college ramen that costs 30 cents a pack.

After a couple months of running out of cash, I decided to try an exercise to see where all my money was going. I saved every single receipt for every purchase and put them into envelopes labeled with the month. If I bought gum, I kept the receipt. If I didn’t get a receipt, I jotted down the price on a scrap of paper and put it in the envelope. I was meticulous about it, probably because I had no money to do anything else remotely fun.

At the end of each month, I reviewed where exactly all my money was going. I did this for a full year and learned a lot about how I spent and saved in the process. It was my very first money habit, and that shoebox of monthly envelopes taught me a ton about personal finance and was pivotal in helping me keep to a budget.

Graduating from the shoe box

Fortunately these days there are much smarter people than me with even better money habits than stuffing receipts into an envelope. As a serial entrepreneur and former CEO of Billy, Zeke Camusio knows all about better money habits to subscribe to. In his eBook The Wealthy Freelancer, he outlines how spending just 15 minutes each week on these habits impacted his own finances in huge ways. He writes that The Money Habit (TMH):

• Lowered my taxes significantly. By recording all my business expenses in a timely manner, I’ve been able to comply with all the IRS regulations and legally lower my taxes significantly.
• Eliminated paper receipts from my life. The IRS requires that we keep receipts for all our business expenses for the last six years, but I didn’t like the idea of having a drawer full of paper receipts. Luckily, TMH makes it really easy to store all my receipts digitally.
• Made it easier to get paid on time. TMH has helped me keep track of the payments I receive, remind my clients to pay overdue invoices and see how much money I’d be receiving in the near future.
• Saved me valuable time. I’ve been able to automate boring tasks like invoicing clients and sending payment reminders, so I can spend my time growing my business, cranking out client work or walking in the park.
• Reduced the risk of an IRS audit. By reconciling my business bank account and double-checking that all my transactions are properly categorized, I’ve been able to proactively find errors that might have triggered IRS audits.
• Helped me take control of my cash. TMH shows me how much money I make, how much I’ll have coming into my account in the near future, how I’m spending my cash, how much money I need to set aside for taxes every month, and how well my business is doing. In short, TMH has helped me take control of my money.

New habits, new money.

Saving more than you think

Those envelopes in the shoebox helped me save some amount of money, but these new habits can help anyone save a whole lot more. According to Sandy Botkin, former IRS tax attorney and senior tax law specialist (and current CPA), small business owners leave between $4,000 to $10,000 on the table every year because they were squandering deductions. This includes freelancers who may be a one-person shop, so it’s clear that the savings can be significant.

Think that’s not likely for you? Check out this list of potential deductions from Freelancers Union and think again. Deductions you may not have considered include:

• Advertising costs for your freelance business
• Continuing education
• Bank fees
• Retirement contributions

And the best way to make sure none of these deductions fall through the cracks is to get into The Money Habit of categorizing and documenting your expenses. This way, when you do work with an accountant come tax season, you’re not wasting time tracking down receipts, but using this time to track down worthwhile deductions together.

Get into the Habit today

It takes just 15 minutes a week to develop the habits that will save you thousands of dollars each year, and the best part is that it’s so easy. Download The Wealthy Freelancer and spend your first 15 minutes learning about the other habits to get into. It’s an invaluable resource for seasoned and budding freelancers to make sure they get their money right!

Discover how to lower your taxes without increasing the risk of being audited by the IRS. Learn why it’s up to you – not your accountant – to track your expenses, and why doing your taxes once a year can result on most of your deductions being rejected.

Download Now

The post Getting into The Money Habit appeared first on Billy Accounting.

One of the reasons for this oversight is the daunting length of the tax code (10x the size of the Bible!), not to mention its complexity. But with a few pieces of advice and the help of a business savvy tax accountant, most of us can be saving thousands of dollars a year! The key is understanding what legitimately qualifies a vacation as a business trip.

When it comes to maximizing your travel deductions, planning ahead plays a huge role. Let me explain.

There are two kinds of travel expenses: transportation (the cost of getting to your destination and back) and on-the-road expenses (lodging, car rental and meals, for example).

Transportation expenses

Transportation expenses are only deductible if at least half of your travel days are business days. What’s a business day?

• A day on which you perform some kind of work. These are some examples for a web designer:
  • Your presence is required at an event. For example, you could be a guest speaker at a Meetup for web designers, which would help you show other designers what you do so they can refer clients to you. Finding Meetups in your industry is pretty easy, isn’t it?
  • You attend an event or seminar to learn about a new technology to build websites. To qualify a day as a business day by attending events, they need to be at least 4 hours and 1 minute. This could be one single event, or multiple events that add up to at least 4 hours and 1 minute.
  • You meet with colleagues to improve skills. For example, your could meet with successful web designers and learn what’s working for them, or visit successful web design shops and discuss how you could work together and refer business to each other.
• Travel days are considered business days. If you travel overnight, both days are considered business days as long as you take a reasonable route to get to your destination.
• Weekends and holidays between actual work days are also considered business days.
• When you can’t work due to circumstances beyond your control (like a flight cancellation or a prospect calling off a meeting), these days still count as business days.

Let’s say I fly to Hawaii on Monday, take three vacation days (Tuesday, Wednesday and Thursday), I speak at a web design Meetup on Friday for 1 hour, spend Saturday, Sunday and Monday (Labor Day) exploring different beaches, meet with a local design agency for 1 hour on Tuesday to discuss the possibility of working together, then take two more vacation days (Wednesday and Thursday) and fly back home on Friday.

Even though the actual time I’d spend working is 2 hours, this is considered seven business days! What? How? We have two actual work days, two travel days, and three sandwich days between meetings, for a grand total of seven days.

Because seven business days is more than half the total days (12), I can deduct 100% of the cost of the flight.

On-the-Road Expenses

On-the-road expenses are only deductible on business days. This means that, for seven of the 12 days of my trip I can deduct 100% of my hotel, car rental and Uber rides, for example. Meals are 50% deductible on business days.

For the other five non-business days, none of my expenses are deductible.

Other Travel Deduction Rules

• Although the requirement to deduct transportation costs for domestic travel is that 51%+ of your days are business days, when it comes to international travel, 76%+ of your days must be business days.
  • An exception to this rule is when the total length of the trip is a week or less.
  • “Domestic travel” isn’t only the continental United States and its territories (like Guam and American Samoa), but also Canada, Mexico, Jamaica, Costa Rica, Barbados, Dominican Republic, Dominica, Guyana, Honduras, Trinidad, Tobago, Palau, Grenada, Marshall Islands, Micronesia, Jarvis Island, Johnston Island, and Kingman Reef.
  • If you attend a conference or seminar outside the areas mentioned above, you need to have a pretty good reason for being there. You can’t justify a trip to Australia to learn a skill you could learn in your hometown, unless the quality of the learning event in Australia would provide a clear business advantage over learning the same skill from a local instructor. But even when this isn’t the case, if you see potential in expanding your business to Australia, you could meet with Australian agencies and prospects to get new business, and this would be a valid business reason to travel to Australia.
• You can bring your spouse or significant other and deduct their expenses if they’re an employee of your company, or they’re traveling for a business purpose. For example, they could take care of all the appointment bookings and travel planning. Or, when you speak at Meetups or attend networking events, they could go around meeting people, establishing relationships, talking about your business and working on getting referrals. To do this, they need to know about your business and be prepared to represent it.
  • If you bring someone with you as a guest, lodging and meal expenses can be deducted as long as the deduction is in the amount that you’d normally pay if you had stayed by yourself. For example, if a hotel’s single rate is $100 and its double rate is $120, you can deduct $100 even if you pay $120 for a double. If you do this, make sure you save a screenshot of the hotel rates or take a picture of the rate sheet.
• If you travel somewhere and go back home the same day, you can’t deduct it. If you spend the night at a hotel in your hometown, you can’t deduct this either.
• If you drive to your destination, the IRS will calculate the number of business days by dividing the total length of the trip by 300 miles. For example, the drive from Seattle to San Francisco is 808 miles, so you could break it down into three days each way, for a total of six business days.
  • At 53.5 cents per mile, you’d get $864 in mileage deductions.
  • On-the-road expenses for the six days you’re on the road would be deductible. For example, hotels would be 100% deductible and meals would be 50% deductible.
  • The IRS expects you to take a direct route to your destination. You can take detours for sightseeing if you want, but the extra miles you drive wouldn’t be deductible, and neither would be the on-the-road expenses for any extra days you take for sightseeing.
• You can take seminars on cruise ships and deduct their cost up to $2,000 per year per person as long as 51%+ of the total days are business days.
  • The ship needs to be a U.S. vessel and all the ports of call must be in the United States and its territories.
  • You need to submit two statements with your tax returns. One signed by you with the days of transportation, number of hours of the trip and the seminar schedule. The second one, signed by the company providing the training or an officer of the ship showing the number of hours of the seminar and how many of those hours you attended.

Detailed documentation is required to prove the business intent of travel.

• There needs to be a pre-existing business intent for the trip. This usually means setting up meetings in advance (email is great to document this). You don’t need to schedule all your meetings in advance, but it’s a good idea to do it for as many of them as possible.
• Keep a diary of each business trip: dates of departure and arrival, trip itinerary, names of the people you meet with, what was discussed in these meetings, when and where the meetings took place and how long they lasted, how your business benefitted from the trip (what you learned, what you did to get new clients, etc.) and what events you attended.
• The easiest way to do this is to keep screenshots of emails, event tickets, flight itineraries and any other relevant documents.

How to Record Travel Expenses

• If 51%+ of your travel days are business, the transportation cost can be fully deducted, so you should record these business expenses in Billy.
• Meals on business days are deductible (even they’re not business meals), and they should go in Billy. Meals on non-business days are personal expenses.
• Some on-the-road expenses are partially deductible, like lodging and car rentals. Keep track of these in your Hybrid Deductions document and indicate how many of your travel days were business, as this is the basis your accountant will use to calculate what portion of these on-the-road expenses can be written off.
• If all your travel days are business days, then you should enter all your on-the-road expenses into Billy.
• Billy lets you attach files to your transactions so you can keep everything organized for your accountant. For example, if you buy a plane ticket, you can attach the itinerary to the bill in Billy.

As you can see, with some advanced leg-work and adherence to the above guidelines, that beautiful trip to Barcelona can not only be both a joyful vacation but a profitable business venture too.

So get out there and take advantage of all the travel perks of being a freelancer.

Bon Voyage!

This blog post is an excerpt from the book The Wealthy Freelancer. To download the book and learn about other tax deductions available to freelancers, go to www.billyapp.com/TheWealthyFreelancer

DISCLAIMER

While we work to ensure that all information provided is accurate, every tax situation is different. We encourage you to consult with your local tax professional (attorney and/or accountant) before making any decisions that may impact your business. Information provided should not be used in lieu of the advice of a professional that knows the entirety of your situation.

The post Freelancers, Deduct Your Vacations! appeared first on Billy Accounting.