Okey dokey. This is the second part of ’showing you your money’.

In the last post I covered the basics of starting to freelance in animation and/or storyboarding. I talked about setting up your invoices and for you Canadians, a bit about the wonder that is the GST. At the end of that I mentioned you can’t spend that GST money.

So here’s a little advice about handling the cold hard cash. Of course, you don’t have to do it this way. This is just how I did things when I started out and it worked pretty well for me. And if you’re young, you’ll thank me in your forties.

Separate your cash!

The GST you collect isn’t yours and about a third of your income isn’t yours.

“What?”

That’s right. You’re going to have to pay the tax man eventually. If you think and act like all the money you collect is yours, then you’ll be in big trouble, baby. There will be nothing worse then getting the news that you owe thousands to the government when you only have a few hundred in your bank account.

You may put off paying your taxes.

You won’t sleep at night.

You’ll get dark circles under your eyes and maybe develop a substance abuse problem.

I can’t let that happen. If you want dark circles and a substance abuse problem, just keep storyboarding.

But pay your taxes! Because it will catch up with you eventually.

So what’s the solution? When I first started working, I set up two bank accounts. A chequing and a savings. The chequing account was mine and the savings account was theirs. You separate your money physically and mentally. All that money in your chequing account is to spend as you wish, without worry. Treat the savings account like it doesn’t even exist or that it’s not even yours and tax time will be a lot less painful.

I found that always putting one third of every cheque into the savings account had me covered for taxes. BUT there is some good news and another smart thing to do. I took a chunk of that money in the savings account and put it towards a retirement fund. In Canada it’s an RRSP, in the US I believe it’s an IRA (check out that FreelanceSwitch article again).

Why do this?

Well, on one hand contributing to a retirement fund is a fantastic tax write-off. And if you’re self-employed you need all the write-offs you can get. So doing this is an easy way to hack away at that tax payment. Second, that money you’re putting away for your future is still yours. You just can’t touch it for thirty or forty years.

But would you rather give all of that thirty percent to the government or would you like to hang on to some of it and watch it grow? Not too bad a deal for the freelancer. And if you’re young, you’ll thank me in your sixties. But you can start at any age. For the tax break alone, I find making a healthy contribution to my RRSP is always a smart thing to do.

So separate the money and from that money, invest in your future!

Get those taxes even lower!

So you’ve invoiced, hopefully gotten paid, socked some away in your non-account and now you have to face the tax man.

But wait! You can get that tax payment even lower by saving all your receipts. I mean everything. If you save every single one all the time, it will become second nature. Start asking for them when you take a taxi, buy bus tickets, whatever. Just get in the habit.

All those little pieces of paper will come in handy at tax time too because they are the bulk of your write-offs. Write-offs make the tax you have to pay lower.

Lower is good.

Now remember my disclaimer at the beginning of my last article? I am no accounting expert by any means. This is just a friendly little guide, OK? So on that note, for tax time I do recommend hiring an accountant. If you can find one that works with self-employed people, all the better.

Yes, it costs money.

But you can write them off too…it’s a business expense! And if you organize yourself throughout the year and before you meet with them, it doesn’t have to be an expensive thing. But that’s the key. Organize those receipts!

The accountant is not your bookkeeper. You just want to walk in there with all your ‘numbers’ and have them plug them into the right and legal places and get the heck out of there. Because they probably charge by the hour.

So this does not mean showing up with a shoe box full of little pieces of paper for them to sort through. They’ll probably laugh your ass out of their office.

You want to show up organized.

This can be a challenge for us artist types. But not for me because I’m a freak, remember? I have a file folder drawer in my computer desk. I have many files in it. I can find an old bill in 5 seconds flat.

File folders. Get some. Get many. They have portable file folder cases if you don’t have a drawer. Use them for:

• invoices
• credit card statements
• cable bills
• telephone bills
• insurance bills and information
• medical/dental
• GST info
• tax stuff
• anything else you need to keep safe and find fast

So this is what I do with the receipts. I have about 5 file folders for the receipts. The bigger heavy-duty kind that have accordion-type sides (because those little suckers try to escape). You don’t have to do this, but sorting through your underwear drawer at the last minute for all those little receipts may not be the best idea.

Then I label those five folders as follows:

• Travel (car, gas, bus, train, taxi, etc)
• Entertainment (business meals, business drinks, etc)
• Research (movie rentals & purchases, books, museums, etc)
• Supplies (computer, desk, chair, art supplies, stamps, FedEx, etc)
• Other (any thing that doesn’t go in those categories…just in case)

The key is to keep those files easily accessible so you will use them with ease. I will sometimes pile up the receipts in the same area on my dresser then sort through them once or twice a month and put them in their file. Whatever will make you do it all year long.

Find the system that works for you but have one.

Again, this may not be the best way. I’m sure other folks have other ways of doing things but it’s my blog and my advice, so that’s what your getting. It’s worked for me for many years.

Now comes the math.

So before I trot off to the accountant, I have to spend the better part of a day going through all my invoices, receipts and bills over the past year. I add things up. I make a master list with all the totals. And that’s what I bring to the accountant.

My list of totals and any other documents I had collected over the year that need to be inputted onto my tax form (and that I kept in my ‘Taxes’ folder). This can include bank interest & RRSP forms, GST forms, charity receipts, any T4’s (some studios still might send you one), or anything that looks like it should be used for your taxes. (I know that sounds like a lame cop-out but I hope you get the picture.)

My master list includes the totals from my receipts I collected and are categorized (minus the GST, but talk to someone with more expertise about that stuff…I don’t want the responsibility). Plus the totals of other expenses and income:

• total amount invoiced over the year (minus the GST because that’s not yours)
• any other income like bank interest (ha, that’s a laugh)
• RRSP/IRA totals
• percentage of my rent because I have a home studio
• cable bill totals
• business long distance calls (or if you have a business line, all of it…don’t lie)
• any home/car insurance
• medical/dental (you’ll need a lot for a write-off…but bring it anyway)
• anything else that could be business related (the accountant will help)

And bring your previous year’s tax forms too. Fill out the tax forms with your accountant. Write out your painful cheque.

The end.

There could be other things about all this stuff, but my brain is starting to hurt.

That’s why it’s good to get set up with an accountant at least when you first start freelancing. If you feel you can do it yourself in the following years, more power to you. I’d rather eat glass so I prefer to pay someone for the peace of mind.

But that’s just me.

I hope this has helped out a few folks at least and that I haven’t bored the rest of you to death. I’m going to start digging into more ’storyboarding technique’ kind of posts next. So get excited.

Again, if you have any financial tips or want to see me or Adrien write about something specific in the near future, post a comment below!

Or did I put you to sleep?

Wake up! And subscribe to the Storyboard Blog by RSS or email and I’ll try to be less dull next time.

© 2007-2010 Karen J Lloyds Storyboard Blog - All Rights Reserved.

Some related posts other readers have enjoyed:

1. Show You the Money: The Basics OK, I’m back. And I even had four days...
2. Show You the Money: Part One OK, this is a quick one. No picture, sorry. I’m...

OK, I’m back. And I even had four days off…guilt-free. It’s a gift from above, let me tell you.

So here is the first ‘real’ post about handling finances and taxes as a freelancer after a request from one of my readers. See? I read my email and answer your burning questions! As best I can, at least.

But first, the big disclaimer:

This is meant as a general guide for beginners just starting on a freelance career in animation (or otherwise). I am in no way shape or form an authority on anything to do with your taxes or your finances. I’m pretty good with my own money but I prefer having someone else tell me what to do with it.

This is just how I do things and it’s quite possible I could be doing them better. And some of this may take a Canadian slant, so my apologies to the U.S. readers (and all you other wonderful folks). This post had some links to articles geared towards Americans so that should balance things out. I have zero knowledge about other countries on this matter.

Have I beaten that to death enough? Good.

What is the difference between freelancing and working for a studio?

If you work for the studio, you are getting a paycheque (look! I’m spelling Canadian too ) from them that takes off all your taxes and stuff for you. You can’t write off expenses when you file your taxes either (even if you work at home sometimes). They might hire you as staff if the job is fairly long term (in this business that could mean six months or more).

Or they may not hire you as staff but as an independent contractor. As a freelancer, you must invoice the studio (or whoever) for the work you do. When you sign on as an independent contractor, you are responsible for paying your own taxes. Hear that? YOU are responsible for paying your taxes. The good news is you can write off a lot of expenses to get those taxes lower. More on that soon.

What’s in a name?

The first thing you should know if you’re going to freelance in this business is that you don’t have to register as a business. You can just operate under your own name, which makes things much easier. Some people do register a business and even incorporate that business. Frankly if you’re just going to go from job to job (as in studio to studio) doing storyboards, animating or designing I don’t really see the point.

If you’re going to do other things and really run a business, then you should register a name and get a business bank account. This is something I will probably be doing myself in the near future. I may be dabbling in some other ways of generating income, so I’ll need to be a business.

But right now, as a freelance storyboard artist, I am just me and don’t need the business bank account. And they cost money, so if you’re just starting out, I say hold off on all that.

Billing the money

The next thing you should do is make up your own invoice template. Many people use those generic invoice books, which is fine but look like crap. You’ll look a lot more professional to the accounting department if you have a professional looking invoice. It can be as easy as making one up in Word and saving it each time under a new name for your files. Print one for the client and one for yourself and keep it nice and safe in a file folder.

It should include:

• your name, address, telephone number and email (you can add some flare to this part)
  
• the date of billing
• an invoice number (you can make up your own system for that…or just start from 001)
• a Sold To: including the client’s/studio’s name and full address
• a description of the services you provided
• the price of those services
• if applicable, (in Canada) your GST charge of 5% on the above services
• the total price including the GST (nice and easy to see)
• I print my GST number at the bottom (accounting departments like that)

GST??? What? Huh?

Don’t panic. For the non-Canadian readers, it’s our lovely Good and Services Tax. If you make over $30,000 a year freelancing (you’re a service) then you need to get one. It’s not a huge deal. Google it. Find the government office you need to go to in your province to apply for one. Head on down and fill out the form. You get a temporary form with your number on it and then they mail you the official document.

Then you charge your client 5% on top of your services. IT’S NOT YOURS TO KEEP. Then you pay it back to the government minus all the GST you have paid on all your expenses. If you don’t make ‘crazy money’ (I sure as heck don’t) then you can just pay it once a year. I’m not going to go much further with this because I don’t want to say anything wrong. This is an area where an accountant comes in handy.

If you have no idea how much you’re going to make (so true when you’re starting out), then wait until they tell you to get one. After you file your income taxes, they’ll let you know if you should start collecting GST. The most important thing to remember is to not spend this money! Which brings me to…

Handling the money

But you know what? I think I’ll make this another post. Because I will get into banking, receipts, organizing everything and doing your taxes. Which would make this post a long one.

The post tease strikes again! If anyone has helpful tips to add, please post them in the comments.

Subscribe to the Storyboard Blog by RSS or by email to catch the next post about all this money stuff.

© 2007-2010 Karen J Lloyds Storyboard Blog - All Rights Reserved.

Some related posts other readers have enjoyed:

1. Show You the Money: Part One OK, this is a quick one. No picture, sorry. I’m...
2. Really Showing You the Money Okey dokey. This is the second part of ’showing...
3. Production Journal – Getting the Show on the Road And so it begins. Here I am, starting the...

I will do the article about money and taxes but my brain can’t quite handle it yet. I’ll post it up for Monday or so. In the meantime, I’m going to post this article by the very cool Christina Merkley. She’s a personal coach that uses visuals to help her clients (see her blerb at the end of the article). So she thinks like us artist-types.

This might be a little ‘touchy-feely’ for some, but I think we can all use a little pick-me-up in this business of ours and check in with our way of thinking. Maybe you’re down because you can’t find work. Maybe you’re overwhelmed right now. Or just feel a little lost sometimes. Here’s some brain-food-for-thought for your weekend.

Hope you enjoy and I’ll be writing something in the next few days. Thanks for your Hell Week patience. – KJL

ARTICLE: 6 WAYS TO CORRECT A NEGATIVE SPIRAL

We’ve all have them. Sometimes they last a short period. Sometimes they last weeks, months, years, decades – yikes, perhaps even a lifetime. I’m talking about downward spirals. Where negatives things pile one on top of another, until it seems that is the only reality that exists.

In the last few weeks I’ve fielded several calls from colleagues and friends who are in a down place. They’ve hit a bump, a logjam — what seems and feels like a downright calamity. They turn to me for some hope and inspiration, as they know I’ve weathered tough times and have come out the other side. So, having been through this process, I can understand it a bit and hopefully guide others about what to do and what NOT to do. So here is what I am sharing them with.

1. Recognize What You Are Doing

If you’ve got a negative spiral occurring, the first thing you need to do is recognize that you’ve got one and take responsibility. Chances are this has been building up for a while. Negative spirals don’t just come out of the blue. They are a slow build up of energy that eventually picks up speed – attracting negative situations and events like a magnet. Like attracts like. Somewhere back in the chain of events you got something you didn’t like and you really focused on it – and unfortunately, you began an attraction parade from there. Its very easy to do, and unfortunately again, our society kind of supports this way of thinking and being.

2. List the Benefits of the Trauma

When a negative event happens we always have the choice of how we are going to interpret and apply meaning to it. We can choose to think of it in a negative way and as a result get an associated lousy feeling or we can choose to think of it in a more positive way and as a result get an associated better feeling . I’m not talking about being a Pollyanna or just slapping a happy face sticker on things (to quote Abraham, my favorite Law of Attraction source). I’m talking about at least finding a slightly better feeling way to think or talk about things. Your power lies in figuring out how to think more proactively or productively about things – if needed, put a bigger picture on them.

Yes, sometimes the ‘silver lining’ approach can only be seen in hindsight. I know when I was back in San Francisco and 911 hit (and 80% of my worked dried up), my Green Card process was denied (try getting a lawyer to explain graphic facilitation to an INS official!), and my live-in relationship dissolved, all in a very short period of time, it took me a while (ok, up until about last week – hee hee, just kiddin’) to see the good in all of that. The benefit of that very trying time in my life is that it got me to stand on my own two feet in a much larger way. It got me into my ‘real’ work and made me play bigger. It got me to become my Next Self, which in the bigger picture was a very good thing!

So, if you’ve got a challenging event, or several of them (like in my previous situation) do your very best to focus on the embedded benefits. How might this situation actually be serving you? How could this be a ‘good’ thing at some level? What role can you appreciate that it might be playing in your life? List all of these things onto paper. It is really important to extract them out.

3. Remember It’s a Vibrational Game

Why is it important to do the work of pulling out the benefits? Because it’s a vibrational universe that’s why – like attracts like. Everything has a certain vibration or field to it. A more downer thought creates a more downer feeling in you. And that downer feeling is like a radio signal that goes out and attracts more downer things to you. That is why a downward spiral picks up such speed. A downer thought, creates a downer feeling. A downer feeling attracts a matching event. Which elicits another downer feeling, perhaps just a touch more intense. Which attracts another event, of a matching downer intensity. And so it goes. Until you’ve got a really bummer reality built (that’s a technical term –wink).

4. The Good News

The good news is – the same phenomenon also occurs for the upward spiral. You can course correct a negative spiral by interrupting the pattern. Stop the insanity. Turn the train around by choosing to find a slightly better thought – that will create a slightly better feeling. Which will attract a slightly better event. Which will create a slightly better thought. Which will create a slightly better feeling. And so IT goes. Except this time you are headed in the direction you really want to be – upwards and onwards!

5. Be Optimistic, Have Faith, Believe In ‘Crazy’ Possibilities

Another thing – it is good to set aside logic for a bit and allow for the possibility for ‘crazy’ things to happen. There are ways for you to come out of whatever situation you have created for yourself. It is possible for good and unexpected things to occur. I’m not suggesting that you sit around and wait for something magical to happen – no. What I am saying is to open up your thinking a tad, to allow room for something you haven’t thought of to come through. The ‘universe’ (or whatever you want to call it) has a very wide range of possibilities to draw from. Imagine and really feel that your situation is solved, and then be open to the unique forms that may show up as an answer.

6. Take Inspired, Aligned Action

You do have an active role to take in turning your downward spiral around. First, you need to do the belief and attitude and focus work we have been talking about – you need to shift your emphasis to what you really want (instead of complaining, worrying and fretting about what you don’t – and in doing so attracting all of that towards you at warp speed). And, you need to find the positive aspects in what is happening to you.

The other thing you need to do is to identify and just take your next step. Get quiet, get settled, tune into your higher self or inner coach or inner strategic planner (whatever you want to call it!) and listen for what your next step is. If you are honest with yourself and settle down enough to listen, you will know what your next step is. Then – do it!

I didn’t shift out of my situation by thoughts and attitude alone – it took lots of aligned actions as well (all successful people I know take action). You must move towards the things that you really want. You must trust yourself and foloow the inklings, whispers, intuitions and guidance that you get. As you implement one idea, the next one will emerge. They emerge, like a trail of breadcrumbs for you to follow — leading you out of your forest of worry and bad feelings, into the wide open of possibilities, hope and well being.

© 2007-2010 Karen J Lloyds Storyboard Blog - All Rights Reserved.

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I’m still in ‘Hell’ (that week seems to get longer and longer) so I won’t be writing a real post until later this week. But just so you know, I’m going to write about handling your finances and doing your taxes if you are a freelance artist. This was after getting an email from one of my wonderful readers asking for such advice.

And I’m here to give it. Cause I’m that kind of guy…er, gal.

Seeing it’s tax time and all (note to self: must do taxes), I figured it was a great way to answer her questions and get up a meaty post. I sure don’t know everything about the subject, but I’ll tell you how I handle all that ‘money’ stuff.

And I’m not in jail yet, so I must be doing something right. Wesley Snipes could have used this advice.

In the meantime, the folks at FreelanceSwitch seem to be writing about this very thing these days. So take a look at these posts first and I’ll give you my two cents later. Keep in mind, they don’t write about animation specifically, but there’s great freelancing & money advice there. Check these out.

How to Save: A Short Guide for Freelancers

Transitions: Saving for the Freelance Future

(UPDATE: Some of the advice is geared towards Americans. Fear not, fellow Canadians…I’ll give some of our savings options too.)

If you have any questions about money and stuff, leave them in the comments and I’ll do my best to answer.

See you later this week…if I survive.

Subscribe to the Storyboard Blog by RSS or by email to see if Karen survives Hell Week.

© 2007-2010 Karen J Lloyds Storyboard Blog - All Rights Reserved.

Some related posts other readers have enjoyed:

1. Show You the Money: The Basics OK, I’m back. And I even had four days...
2. Really Showing You the Money Okey dokey. This is the second part of ’showing...
3. Production Journal – Getting the Show on the Road And so it begins. Here I am, starting the...

OK, I’ll admit it. I’m a bit of a freak.

I’m an artist and I’m organized. An unusual combination that I’m not ashamed of. Some creative types seem to think that disorganization equates being a true artist. Well, if riffling through mounds of paper every-single-time I need a design means I’m not a true artist, then so be it.

But I think that’s cr@p. Storyboarding is a business and every business can benefit from being organized. Gee…that almost sounded like a rant : ).

So what’s that one thing you should do?

Organize your work area.

I’m going to turn this subject into a whole category because it’s something I enjoy and think can be useful to the rest of you. For now, I’m going to keep it general and about the problem of paper.

In my previous production post I talked about all the materials I received from the studio to work on my show. That’s a whole lot of paper. With just a few well-placed systems, I know where to find what I need in seconds. The less attention taken away from what I’m trying to do, the better. And organizing my stuff helps a lot.

I have a traditional animation desk that I draw at. It has a light table and some shelving on the side. I don’t store my materials there (many people do). Instead, I like the following items to organize my paper:

• Ikea shelving to my left (which also houses a TV and cat bed)
• two sets of legal-sized in/out box stack-able shelves (3 shelves each…placed on the Ikea unit)
• a portable, wheeled plastic drawer unit on my right (full of other supplies)
• a vertical paper organizer (the paper rests on its edges…placed on top of drawer unit)
• some old courier boxes (yes, you read that right)

The key to organizing is assigning everything a home. The key to staying organized is to put everything back in its home. Easier said than done for some people, but very effective if you stick with it. You also want to keep it simple and visual…important for creative people.

So on my left I have my legal sized stack-able shelves. In the first one I leave the top slot empty for now. This is where the final board pages will go. Under that, I place the blank board paper. Under that goes blank thumbnail paper and some blank letter-sized paper.

The second set has the stock model pack separated into the three categories: Characters, Locations and Props. In the vertical organizer on my right, I’ve separated the episode model pack into its three categories and I have the script and some director’s notes in the other slots. You can just take what you need for the sequence you’re working on, then put them back before moving on to the next.

Courier boxes are a great way to get some smaller shelving onto a larger one. Close up the box and then cut off one end. They’re super sturdy and last quite a long time. You can even stack them on top of one another, tape them together with packing tape, and voila! Cheap shelves.

Before starting a job I always organize my paper and my supplies including pencils, pens, ruler, tape, and a few other things I’ll talk about in a future post. And yes, all those things have a home too.

Told you I’m a freak.

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© 2007-2010 Karen J Lloyds Storyboard Blog - All Rights Reserved.

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