FR OM PAR T-TIM E

TO PR OFE SSION AL:

How to
manage your
creative business

03

Introduction

08
17

Dont sell yourself short

Invoicing can save you time and money

26
35

How to handle an unhappy client

Take control of your taxes

44

Conclusion

2016 Ideaform Inc. No part of this publication may be reproduced

in any form without the prior written consent of Ideaform Inc.
All company logos used are trademarks of their respective owners
no endorsement is implied.

Starting a creative business wasnt something illustrator Michael

C. Hsiungs had planned. After receiving his degree in English Literature and securing a job as an assistant grant writer at a museum,
drawing was still a hobby. Hsiung kept drawing and uploaded his
work to his websitesoon enough, people began to notice this
quirky, charming characters.

Introduction
I started getting invited to shows, selling works, contributing to
zines, and I guess just creating a following. It was an unlucky
turn of events that catapulted Hsiung into his career as a full-time
freelance creative. Laid off from his position at the museum, he
began building his creative business.
One of my first clients was actually Saatchi & Saatchi / Doc
Martens, which at the time, sounded too good to be true,
remembers Hsiung. The opportunity lead to Hsiung creating two
pairs of shoes for Doc Martens which sold in Asia and Canada.

Michael C. Hsiung

INTRODUCTION

03

But despite working with Vice, The Hundreds, Burton and Vans,

It can be a very intimidating timeaccording to the Freelancers

Hsiung recognizes the difficulties creatives face when they

Union, 13% of part-time freelancers and moonlighters say that

decide to pursue a full-time freelance business. It definitely

paperwork and administrative overheads keep them from

wasnt easy and still isnt, he admitted. But I think what ulti-

entering the freelance workforce full-time. For commercial and

mately is the hardest part is rolling with the ups and downs that

editorial photographer, Diego Texera, the realities of launching

come with being your own boss. Not having money, not being

a freelance creative career were all too real.

able to go out, having no insurance

What derails
creative professionals:

Now is the time to start tackling the business side of becoming

a creative professional. In a perfect world, your job would end
after creating beautiful work you are passionate about, but
there is a lot more that goes into running a business. How much
are you going to charge for your time and services? How are you
going to handle a client that never pays on time? What if a client
is unhappy with your services? How do you even begin to tackle

~ Lack of organization
~ Poor pricing model
~ Failure to negotiate terms

the tricky task of filing your taxes?

This wasnt my first attempt at self-employmentI had
Freelancersindividuals who have engaged in supplemental, temporary,
or project-based workmake up 34% of the American workforce.

already failed twice, Texera explained. I was ready for all the
ins and outs of running a company. That doesnt mean I enjoy
accounting, taxes, managing a website, designing a logo or
printing business cards, but its an important part of being a
one-man show.
While you may find yourself getting caught up in the creative
elements of your work, and ignoring the somewhat boring
business side of your work, dont. The skill set you need to be an

Independent Contractors: 40% of independent workforce

Moonlighters: 27% of independent workforce
Diversified Workers: 18% of independent workforce
Temporary Workers: 10% of independent workforce
Freelance Business Owners: 5% of independent workforce

exemplary creative is not the same skill set needed to become

great at business explained Rob Harr, VP of Sparkboxx. We
have to unlearn things to become good at the business side. It
is important for creatives to not take the business management
aspects of their career lightly.
INTRODUCTION

04

There are many things to consider when it comes to running

your business, and it may seem totally overwhelming. Worse yet,
it may feel like the dull administrative tasks could take up all of
your time. The opposite is actually true. Keeping your mind free
from a backlog of unpaid invoices or angry emails filling up your
inbox affords you more time to do what you do bestcreate.

Youre the creative, now let us help you

become the professional
Every year, the freelance community adds $715 billion to the
American economy. And 43% of the current creative workforce
identify themselves as self-employed. With so many creative
professionals running their own profitable businesses, theres
no reason you cant follow suit. Thats why were sharing how
you can manage your creative business when it comes to:
~ Correctly pricing your services
~ Best invoicing practices
~ How to manage unhappy clients
~ Tips to help you navigate your taxes
If you dont have an MBA, dont panic, well be helping you
sift through the noise to make the right decisions. Youre the
creative, now let us help you become the professional.

Melissa Cowan

INTRODUCTION

05

Creative success
lives here.
Within 48 hours of posting
images to his Format portfolio,
photographer Michael George was
contacted by National Geographic.
Build your professional online
portfolio in minutes without
learning to code.
Photography by Michael George

Get Started
No credit card required

Featured in:

06

Accounting Software Made for You,

the Non-Accountant
Say hello to ridiculously easy cloud accounting software.
Join 5 million self-employed professionals who are already using
FreshBooks to send invoices, track time and capture expenses.

Start Your Free Trial Now

ONE

Dont sell
yourself short
How much are my services worth?
Its a tough question, one that freelance professionals often
struggle to answer. For creatives, there is an added layer of
difficultymany find it hard to see themselves as a business.
But to actually survive as a professional creative, you need to set
rates for your work that are competitive and reasonable.
Starting out as a photographer at nineteen, Minh Bui was trying to learn
the ropes and land her dream client. I knew little to nothing about
managing a business or myself as a brand, she said. But after six months
spent shadowing a professional photographer, Bui began to attract her
own clients such as BCBGeneration and Ashley Tisdale. After developing
her own list of clients, Bui came to one main conclusion about working
as a freelance creative professional: You, your work, and your business
deserve to be rightfully compensated and protected.

Jason Bassett

DONT SELL YOURSELF SHORT

08

Its an uncomfortable subject.

So we push the money conversation
to the back burner.
Putting a price on your work may seem slightly awkward but it is
one of the most important business decisions you will to make.
Its an uncomfortable subject. So we push the money conversation to the back burner, Sparkboxx VP Dan Harr told HOW
Design Live podcast. But business is an exchange of goods
and services for money. I believe we have an inherent fear of
talking about money with our clients because we think these
things we do are for some higher calling.
Overcoming that little bit of discomfort is crucial to your success
your creative career isnt going to last long without cash flow.
The good news is that 77% of freelancers are making the same
or more money than they did at their traditional 9-5 jobs and
43% expect their wages to continue to grow year to year. You
dont need to be a financial analyst or economic whiz, but its
important to establish a basic, cost-plus pricing model.

Minh Bui

DONT SELL YOURSELF SHORT

09

77% of freelancers
make more money than
they did at traditional
95 jobs. 43% expect
their wages to continue
to grow year to year.

Minh Bui

DONT SELL YOURSELF SHORT

10

Using a simple formula, you can establish a price-per-project

Overhead costs can be a bit intimidatingyou want to start

model that will not only provide you with a return on investment

making money, but first youve got to spend on equipment and

but also with your desired profit amount.

software. You need to spend money to make money is a cliche

for a reasonbecause sometimes its true. Overhead costs are

The first step is to take your expenses into consideration. This

the items and services that do not directly generate revenue,

is important as it will help you to ensure you arent taking too

but are essential to the day-to-day operation of your business.

much money as profit.

Think equipment, software, advertising, and a work space.

These costs are going to vary from profession to profession
and person to person.

There are two kinds of expenses youll be dealing with: fixed

and variable. Variable expenses include costs that vary based
on what kind of work and how much of it you dothink travel

Take for example, your workspace. As a freelancer, you probably

costs, assistant fees or casting. Fixed expenses include

dont have a supplied office like a normal employee. Instead,

equipment, marketing, communications, and other business

it is up to you to figure out where youre going to conduct busi-

necessities. Fixed and variable expenses are further broken

ness. Maybe youll rent a desk in a shared office space, convert

down into overhead, material, and labor costs.

part of your home to an office, or post up in a local coffee shop.

No matter which you choose there will be an overhead cost
whether its a rent cheque or a small fortune in americanos is
up to you.

+
Cost of Materials

+
Cost of Labor

=
Overhead

With self-employment comes a category of overhead costs

you may never have considered as a 9-to-5 employee. As a
Total Cost

full-time employee, your salary also takes into consideration

business costs like health care, licensing, taxes, and other
business essentials, Ryan Robinson, Content Marketing Lead

+
Total Cost

at CreativeLive, said. But when you work for yourself, youve got

=
Desired Profit
(ex. 20%)

to cover all of that. Taxes and health care should be factored

into your overhead costs, lest they become a costly surprise.
Final Sale Price

DONT SELL YOURSELF SHORT

11

Once youve calculated your overhead costs, consider the cost

of materials that you may incur. Certain professions will have

Average Yearly Overhead

Expenses For A Creative
Professional

higher material costs than others, but it is important to always

keep track of these variable expenses.
Photography, for example, will often require printing, photo books

~ Office space/co-work membership

and framing. Dont forget the costs associated with your digital

- $5800/year for 250 sq/ft

filesmost creative professions require you to store something,

~ Web hosting - $388/year

whether its vector graphics or project briefs. Digital storage

~ Accounting Software - $300/year

comes at a price too, whether its hard drives or the cloud.

~ Internet - $1080/year

~ Phone - $1200/year

Once youve calculated the hard costs, its time to factor in

~ New laptop every 2 years - $600/year

the cost of labor. This is where things can get tricky for a new

~ Promotion & marketing - $1200/year

~ Miscellaneous software - $348/year

~ Accountant fees/tax prep - $1000/year

~ Healthcare costs - $5615/year

~ Self-employment tax - $5700/year

~ Total yearly expenses: $23,231

creative professional. When starting out, you might be tempted

to try and and lure in new clients by offering your services at
a price that barely covers your expenses, let alone the cost of
your time. Thats not the smartest way to think about running
your business, according to Freshbooks CMO Shawn Cadeau.
When youre in business for yourself, time is your most valuable asset, Cadeau told Format Magazine. There are never
enough hours in the day.

Sarah Pabst

DONT SELL YOURSELF SHORT

12

Understanding the value of your time means understanding the

Coming up with an hourly rate that you feel your time is worth is

real value of your skills. When setting cost of labour, it is easy

subjective. Whatever amount you decide on, your work should

to undervalue yourselfespecially when you love what you

reflect that. When youre taking on your first clients, this wont

do. But this could be to your own determent. For every piece of

be an astronomical figure, but as your reputation builds, so

work that you do, you should know how much time it will take

should the value you place on your time.

you to deliver the final product. From showing up at a shoot,

to editing, to travel time, you need to consider pre- and post

Keep in mind that you are not charging your client the hourly

production in your calculations.

rate you decide onit is only one component of the formula. If

youre charging by the hour, youre leaving money on the table,

How many hours per week do

you work on freelance projects?

and making it harder to take on multiple projects at the

same time, writes web creator Mat Vogels for WebFlow.
Charging an hourly rate will not always match up to your

Full-Time Freelancers

evolving skills. If a project takes you 15 hours to complete

27.6%

in your first year as a professional, it might only take you five

22.6%
Percentage

20

10

by the time you reach your second year. To make the same

17.7%

14.7%

amount of money youll have to increase your hourly rate

9.0%

8.5%

0
<10

1120

2130

Hours

3140

4150

>51

to a higher number, and that could be off putting for your

currentand futureclients.
The ideal pricing model takes into account your overheads,
your material costs and your carefully considered cost
of laboradd them together to get the total cost of your
next job. From here you need to add in your desired profit
percentage to the amount and there you have ityouve got
your final sale price.

DONT SELL YOURSELF SHORT

13

Put your profile to work with client proofing

Client proofing is a part of you day to day business. Why not make the process seamless and easy
for your clients by adding proofing to your portfolio?

Share private proofing galleries

Review client feedback

Make your client proofing sessions painless by integrating them

Showing your clients unedited photos and allowing them to

with your online portfolio. With a few clicks of the mouse, you can

choose their favourites can save time and money. With client

present images to clients professionally and privately. Galleries

proofing, you can receive client feedback instantly. Favoriting

can be password protected, customized to your needs and shared

makes it quick and easy to see which images they liked best.

directly from your site.

DONT SELL YOURSELF SHORT

14

Enable downloads

Watermark your images

Cut out an extra step in your sales process and enable full or

Protect your images from unauthorized distribution by using

restricted image size downloads to let your clients download

Formats built-in watermark tool. Or upload your own watermark

directly from your site. Set notification to be alerted when your

to feature of all of your images.

clients have downloaded an image to stay in the loop.

Try Proofing

DONT SELL YOURSELF SHORT

15

Adding profit is very subjective. You need to have an accurate

understanding of your works worth and the value you bring to a
project overall. When calculating your profit percentage consider:

While you might think that

just covering your expenses is
the best way to make yourself
appealing to clients, it can suggest
something entirely different to
potential clients.

~T
 he quality of your work and how you package your
finished product
~T
 he perceived value of you and your products in the
marketplace
~ How confident you are in your skills
Take stock of the other creative professionals in your area
what are your peers charging for the same kind of services and
products? Your clients will be doing this, so why not get a leg up
and ensure youre priced competitively? While you dont have
to completely change your pricing model, research will help you
to be aware of your local market.
Pricing will differ from one job to the next. While it is helpful to
have package offers on the ready, remember to stay flexible
when it comes to pricing (especially when you are starting out).
Always remember, dont undersell yourself. While you might
think that just covering your expenses is the best way to
make yourself appealing to clients, it can suggest something
entirely different to potential clients. Basement-level pricing
can suggest that youre not particularly good at what you do.
Your prices suggest your own sense of worth, and that needs
to reflect a confidence in your abilities.

Minh Bui

DONT SELL YOURSELF SHORT

16

T WO

Invoicing can save you

time and money

After setting your rates, you need to have a professional way to

communicate these rates to clients so they are aware of what
they owe and when its due. Thats where invoicing comes in. It
might not sound like the sexiest subject, but invoicing promptly
and correctly is what gets you paid, and thats pretty sexy, right?
Getting paid is an important part of business, but keeping track
of who owes you money and sending out invoices is usually
not something most creative professionals enjoy, FreshBooks
CEO Shawn Cadeau told Format Magazine. Being neglectful
of invoicing is the worst thing you can do for your creative
businessinvoicing should always be a priority.

Melissa Cowan

INVOICING CAN SAVE YOU TIME AND MONEY

17

Fourteen percent of freelance professionals say their biggest

When building your invoice, be sure to include an invoice

daily obstacle is their cash flow, an issue Cadeau feels can be

number, contact information, payment terms, amount due and

rectified with proper invoicing practices. Cash flow is one of

an itemized list of services. Remember to throw in a thank you

the biggest killers of small businesses, so its important to stay

and keep your tone friendlyresearch conducted by Fresh-

on top of it. The sooner you send out an invoice, the sooner

Books found that polite language on your invoice results in you

youll get paid, he shared.

getting paid 5% faster.

Make sure your invoice echoes your brand as wellremember
you are a creative professional, youre invoice can reflect that.

What you should include

on your invoice

~ Invoice #helps both you and your client

stay organized

At a minimum, include your logo. Cadeau noted invoices with

a logo were 10% more likely to be paid. With proper invoicing,
youll reduce your headaches when it comes to getting paid.
Stay on top of things, and soon your business will be thriving.
I used to create folders on my desktop with potential and

~ Your company name and contact information

booked clients to keep track of the info I sent out for each

~ Client contact information

inquiry, explained wedding photographer Frances Morency.

~ Itemized list of servicesitem/service

But as more contracts poured in her folder system suddenly

description, hourly/project cost, etc.

~ Amount duesubtotal, tax, and total

~ Payment termspayment due date, clarity around

how youd like to receive payment: checks, credit

couldnt keep up. Imagine a year of interactions with a client

changes, timelines, privacy request, contract changes
its endless. And unless you have a system in place, you can
make some serious mistakes.

cards, bank transfers, etc.

~ A thank you

~ Your logo

INVOICING CAN SAVE YOU TIME AND MONEY

18

Which Accounting Software Is Right For You?

WorkETC
FreshBooks

~ Monthly pricing starts at $10 for up to

~ Pricing starts at $78/month for a maximum of 2 users.

~ 14 day free trial.

~ WorkETC estimates to acquire all of the features they

offer independently would cost at least $478/month

5 clients, $25 for up to 50, $50 for

unlimited clients

~ Sales and Project Management features and tracking

for all customer and client interactions

~ 30 day free trial

~ Free Version with limited features

~ Time and billing services.

~ Features include an Automated Work

~ Cover every element of your business

Timer, Customizable Invoices, Payment

Processing and Automated Late Payment
Reminders and Fees

business owners

Zoho

~ Designed specifically for small

~ FreshBooks is 100% web based and is
backed by an award winning Support Team

~ Pricing begins at $0 and tops out at $30/month. Year pricing also available with 2 free months.

~ Simple, intuitive dashboard

~ PayPal and Google Checkout integration

~ Create multilingual, branded invoices that you can even send via snail mail.

~ Includes templates for estimates, time tracking features and expense recording.

~ 30-day money back guarantee

INVOICING CAN SAVE YOU TIME AND MONEY

19

As a self-employed creative, managing your time is extremely

important. From working on current projects to finding new
clients, youre days are busy26% of freelancers feel that
time management is the biggest obstacle to their success
(Contently, 2015). The last thing you want to do is spend hours
staying up to date with your accounting. Thankfully, there are
a wealth of invoicing programs available that can help you
manage your accounts with minimal time spent.
Before settling on an accounting software ask yourself what
you really need from it. Are you looking for a web-based application? Do you want something that has Project Management
functions?
Will the software need to integrate with PayPal or Google
Wallet? The answers to these questions will help you hone
in on which application is best suited for your spaecific
accounting needs.
Fortunately many of the options available offer a free trial period
so you can take each for a test drive. Remember to focus on
simplicitythe software should be making your life easier, not
more complicated.

Patty Rentschler

Jason Bassett

INVOICING CAN SAVE YOU TIME AND MONEY

20

It may seem like all these extra features are a little unnecessary

Its important to create a series of policies that help you address

and may even complicate things. After all, arent you just asking

these issues before they come up.

someone for money? The short answer: yes and no. While you
might find some of the functions dont apply to you, youd be

In an ideal world every client would pay in full and on time, and

wrong to think invoicing is just sticking your rate on a piece of

you would never have to worry about chasing down late pay-

paper and sending it off to clients. What happens if a client

ments. Sadly, that is not how things actually shake out. Creative

doesnt pay? What about discrepancies in services rendered?

Live estimates that 2% of your revenue each year will be lost to

When does a client get the work? When do you get paid?

uncollected payments. Focus on the things that you can control

in these situations. Safeguard yourself against these losses as
best you can with an ironclad payment policy.

Create A Payment Policy

And Stick With It

When commercial and editorial photographer Diego Texera

~ What payment mode will you usecash, cheques or

credit cards?
~ How much should the client pay as a down payment?
~ Will you begin the work without a down payment?
~ How many days you will wait before the client is
required to pay?
~ Will you charge late payment fees?
~ When will the client receive the final workbefore
or after making payments?

his business. When the client is slow to give you a deposit

was getting his creative business on its feet, he knew that

taking a down payment from clients would be essential to
and the deadline is tight, youll find yourself putting props and
equipment rentals on a credit card to make it happen.
To avoid relying too heavily on his credit, Texera charges 5075% of all production expenses up front, depending on the size
of the job. Its important to gauge your customer and decide
whether theyre credit-worthy.
The deposit will not only help you finance the new project, it
also helps to build trust between you and the client. A typical
deposit is between 20% to 50% of the total amount of the
project. Some clients might baulk at the idea of a deposit but
you should be polite but firm. Ask yourself, if they arent willing
to pay a deposit, were they ever planning on paying you?

INVOICING CAN SAVE YOU TIME AND MONEY

21

Its important to note that even though you get a deposit, it

doesnt mean youre going to get the remainder in a timely
fashion, Texera shared. Im currently waiting on a client to pay
me for a 7-day job we did in January and were almost in June.
The deposit is only one part of your payment policy. Afterall,
it is literally only one part of your payment. Following the
completion of a project, you still need to collect the remaining
50 to 80% of the total billed amount. It is important to have
a schedule set out to ensure you are paid on time. How long
should you give clients to pay? If a client goes past their invoice
due date, should you charge late fees?

Its important to gauge your customer and

decide whether theyre credit-worthy
- Diego Texera
Thirty-one percent of freelancers in the Freelancers Union
found that one of the most challenging aspects of running
a creative business was getting paid on time. If clients are
not paying their invoices by the due date, you may run into
cash flow issues. FreshBooks found that 21 days is the
magical payment termusing exact terms like 21 days
leaves little to interpretation and results in getting paid on
time and more often.

Jason Bassett

INVOICING CAN SAVE YOU TIME AND MONEY

22

Safeguard your business with

the perfect payment policy

~ Require a 20-50% deposit for every project

~ Only start working when the deposit has been made

~ Remember to be polite

~ Give a specific payment deadline in clear terms.

Try 21 days instead of 30 net.

~ Charge interest on late payments

~ Follow up on late payments with a phone call

Diego Texera

INVOICING CAN SAVE YOU TIME AND MONEY

23

If you are constantly chasing down late payments from clients,

Online payments are becoming the norm in our society51%

be proactive and put measures in place to avoid the headache

of US adults bank online and 32% bank using their mobile

all together. In the initial contract with clients, build in a late

phones (Pew Research Center, 2013). Moving your payment

payment schedule to encourage clients to pay on time. The

solution online will save you (and the clients) time and money.

extra 1.5% late fee might be just the push clients need to prioritize your invoice.

In the online payment world, PayPal is widely regarded as

the most popular service. In just the first quarter of 2016, the

In addition to your late fee schedule, reaching out to a client

company processed close to 1.42 billion payments. Fast, easy

whose payment is past due can be very effective. A good old

and recognizable, most clients will be happy to use PayPal.

fashioned phone call can work wonders, Cadeau said. Call the

The fees charged to you are nominal and they have very strict

client on the phone, be polite but firm and listen to them. It may

fraud policies that will reassure both you and the client.

have been nothing more than an oversight that they are happy
to rectify quickly.
Your policies dont just help you deal with uncooperative
clients, theyll also make things clear and easier for the clients
you value the most. Systematic and professional invoicing
helps your to legitimize your business and ultimately improves
your cash flow.
Deciding how to take payments ultimately comes down to two
thingsconvenience and fees. A service that is convenient for
clients and costs you the minimum amount of fees is the ideal
method of accepting payment. Youll also want a service that

Google Wallet is very similar alternative to PayPal, which links

syncs with your accounting software, which will save you time

through your Google account and monitors your account

and possibly your sanity.

information with Googles fraud protection program. If you are

looking for an online payment method that cuts out the middle
man, Electronic Funds Transfer (EFT) allow you to transfer
funds bank to bank. You simply provide the client with your
banking information and funds can be transferred.

Joe Brady

INVOICING CAN SAVE YOU TIME AND MONEY

24

If you or the client prefer to keep the financials offline, there

are still solutions that are both convenient and inexpensive.
Cheques may seem a bit old fashioned, but they are reliable
and simple. Cash is also an option, but should be treated as any
other paymentprovide an invoice, charge and claim taxes,
and create a receipt.
If you want to physically be able to charge a credit card, be
aware that all card readers will have associated fees in the
2-4% range. Square is a great option that avoids the big bulky
card readers weve all experienced in the past. There are no
monthly fees, no contracts, and a compact card reader will be
sent to you for free. The fee is mid-range2.65%and the
app comes with additional features to help you manage your
creative business.

You may decide to only offer one payment method to your

clients or to incorporate a few of the methods listed above.
Whatever method(s) you decide to use, communicate this to
your clients in advance to avoid any confusion down the road.

Sarah Pabst

INVOICING CAN SAVE YOU TIME AND MONEY

25

THREE

How to handle an
unhappy client
The inevitable has finally happenedyouve heard from an unhappy client.
This is not the end of the world. In fact, most businesses will only hear from 4% of
their dissatisfied customers. Look at this as an opportunity to turn an unhappy client
into a loyal client, who you work with regularly. Your reaction to an unsatisfied client
speaks volumes about you and your creative business.

Mishandling an unhappy client can have serious ramifications

65% of consumers have cut ties with a brand over a single bad
customer service experience. It costs six times more to attract
a new clients compared to retaining an existing one, so client
retention should be a priority.
Every time you interact with a client, your professional standing
is on the linethe associated risk is amplified when your client is
unhappy. Your reputation might suffer, your projects will become
infinitely more stressful, and it could make it harder to get the
client to pay for your services.

Jason Bassett

HOW TO HANDLE AN UNHAPPY CLIENT

26

The good news is that 95% of unhappy clients will do business with
you again if you are able to resolve the issue in a timely manner (Lee Resource Inc, 2015). It is important to learn how to diffuse situations, and
when its best to cut your losses when managing unhappy clients.

Always work on nurturing existing relationships so they

dont go stale. Make new connections, but pay attention to
the ones that are already clients because word of mouth is
ultimately the best way to get new clients.
- Diego Texera

No matter how hard you try, you cant please everybody. There are any
number of reasons a project can start to fall off of the rails. The Con-

These are the most common

customer service complaints
according to the Consumer Federation
of America:

sumer Federation of America reported four main customer service

complaintsmisrepresentation, unsatisfactory work, billing disputes
and unprofessional behaviour.

~ Misrepresentation: The customer thought they were getting

one thing but they got something else.
~ Unsatisfactory work: The customer feels the delivered work
is not up to the standard they expect.
~ Billing disputes: The customer has a different understanding
of how much the service and products cost.
~ Behaviour: They feel as if you didnt provide a safe and
professional service.

HOW TO HANDLE AN UNHAPPY CLIENT

27

Dont compromise too much. Stick to what you think youre

making, and keep making it until it works for you. Never
change just to try and get work; itll hurt you in the long-run.
(However, remember theres always going to be a bit of give
while working for a client!).
- Polly Brown, photographer

HOW TO HANDLE AN UNHAPPY CLIENT

28

There are disagreements and there are deal-breakers. You

have to have the discipline to balance your needs and theirs,
knowing when you will and wont bend. The clash of ideas
can break down barriers and form something fresh.
- Jason Bassett, photographer

Jason Bassett

HOW TO HANDLE AN UNHAPPY CLIENT

29

You have to be flexiblesometimes clients will

totally change directions in the middle of a project.
It happens, but you deal with it.
- Indy Lytle, graphic designer

Indy Lytle

HOW TO HANDLE AN UNHAPPY CLIENT

30

I always try to be very clear with a client.

Effective communication is key to any business
relationship. The details should be hammered
out before a project begins. That way I can avoid
any disagreements moving forward.
- Min Bui, photographer

Minh Bui

HOW TO HANDLE AN UNHAPPY CLIENT

31

Be patient, be nice and be willing to work hard.

And most of all, be responsibleanswer your emails
on time and be organized.
- Sarah Pabst, photographer

Sarah Pabst

HOW TO HANDLE AN UNHAPPY CLIENT

32

As a creative professional, most client complaints will be subjectivethere is no right or wrong, only opinions.
And while you may indeed have a better grasp on your craft than the client, ultimately youre providing a service.
Its your job to mediate between client needs and creative quality. More often than not, if you can empathize
with your client youll be in a better position to find a satisfactory solution for everyone. Navigate these tense
experiences with these five steps:

Listen

To avoid a complete breakdown in communication,

take the time to listen to what the client is saying.
Many people will have a strong vision of what they
want, but might be lacking the tools to describe
it effectively, so be patient. You have to act as the
translator in this situation.
The client will be able to tell if you are distracted
or only half listening. Make sure you pay close
attention and actively listen to the clients issue.
If the unhappy client is acting outwardly rude, keep
your calm. If you are meeting in-person, ensure
that your body language also reflects a calm and
open attitude. Are you meeting in-person? Use a
pen and paper to write down specific points that
will help you identify the issue.
When it is your turn to speak, reiterate the points
the client has made and ask any follow-up questions you have. Reiterating what the client has said
shows that you were listening and that you respect
what they were saying.

Communicate

Youre already dealing with a tense situation, so

communicating with an unhappy client needs to
be handled with care. Choosing the right method
of communication is almost as important as what
youre communicating.
Emails and text messages can be a fastlane to
misinterpretation. People can easily misread the
voice and tone of an email, and before you know it
youve made a mountain out of a molehill. Maybe
an in-person meeting or phone call with an angry
client doesnt sound appealing to you, but in the
long run, it can save you from additional problems.
If you choose to meet in person to resolve a dispute, pay attention to your body language. Make
eye contact, nod to show you are listening and
maintain an open posture to demonstrate that
youre open to finding a solution. If an in-person
meeting isnt possible, consider a Skype or Google
Hangouts video call. Youd be surprised how much
a face-to-face interaction will help to diffuse the
situationthe client will be able to see the concern on your face.

Respond
and present
solutions

Once youve taken your clients feedback and concerns to heart, its time to find a solution that benefits both you and the clientwithout unnecessary
expense to you. The listening and communication
stages are integraloften an empathetic ear is
enough to resolve the problem. Exhibiting a willingness to compromise and resolve the issue can
be what matters most to the client.
Present your client with multiple resolutions to
give them a chance to choose which is the best fit.
At a loss for ideas? Ask the client to identify what
will work best for them and let them know youre
happy to work on a solution that satisfies everyone.
You may not agree with your clients feedback and
that is okay. But you should consider their happiness important for your business. According to
the White House Office of Consumer Affairs, bad
customer service reaches twice as many ears as
praise for good customer service.

HOW TO HANDLE AN UNHAPPY CLIENT

33

Follow up

After completing revisions on your work, make

sure to follow up and get feedback from the client.
Send a quick email or make a phone call to ensure
all issues have been resolved and to reassure the
client that youre available if other issues arise.
Consider going above and beyond by offering your
client something special. Throw in a couple extra
prints or a discount on their next purchase to help
rebuild the trust youd originally worked to establish.

92% of people trust recommendations from

friends and family when making a decision to buy
something. And 48% of clients will share their negative experiences with ten or more people. That
means that every client who leaves an interaction with you dissatisfied will tell at least ten other
potential clients. But all hope is not lost. Lee Resource Inc. found that 70% of clients will work with
a business again if they are content with the resolution of their complaint.

Be prepared to accept that not all issues have a

resolutionas a creative professional, sometimes
your vision will not match that of the client. Be fair

Now those 10 people are 10 potential new clients.

Thats how a well handled disagreement can actually work in your favour.

92% of people trust recommendations from

friends and family when making a decision to
buy something.
but firm when dealing with unhappy clients. If a client becomes angry or abusive, stand your ground.
Know in advance what you will tolerate and what
you wont.

Learn

After dealing with an unhappy client, take time to

reflect on what led you to the situation. What have
you learned from the experience? What can you
do differently moving forward? Negative feedback should be a positive learning experience and
should help you improve your services and grow
your creative business.
There are clients that will test your patience, explained Diego Texera. But while working with clients like Cirque du Soleil, Gatorade and Visa, Texera learned the importance of fostering a positive
end experience for the client. Just because the
client is burned doesnt mean you dont finish your
work with pride and professionalism. They might
still recommend you to some else. Crazier things
have happened.
Unhappy clients and unfavourable feedback is unavoidable, but how you handle it speaks volumes
about your character and business. Always remain
calm and dont be defensive. Offer solutions that
will help your client base grow and improves the
quality of your work.

HOW TO HANDLE AN UNHAPPY CLIENT

34

FIVE

Take control
of your taxes
If an impending tax deadline sends chills down
your spine, you are not alone. In 2016, 80% of
American millennials and 60% of adults were
afraid of filing their taxes. Taking into account that
the United States boasts one of the more complex
tax systems in the world, its not surprising that
so many people dislike tax time.

Filing individual taxes can be confusing enoughnow that

youre operating your own creative business, things are going
to get a little trickier.
Youre working for yourself and that means new forms, new
rates, new taxes, and new payment schedules. There is a lot of
tax talk that comes with running your business. Dont panic
with a few simple tips, youll be able to make sure that you and
the IRS stay on friendly terms.

Sarah Pabst

TAKE CONTROL OF YOUR TAXES

35

Why you need an EIN

Up until now, your Social Security number has been doing double
duty as your tax identification number. As a taxpayer, your Social
Security number is all that is needed to file personal taxes. As
the sole proprietor of a business, though, it is in your best interest
to register for an employer identification number (EIN).
But if you can continue to work and bill clients through your
business using your Social Security number, why would you go
through the effort of registering for an EIN? It comes down to
security and protecting yourself.
As a freelance creative, you will be working with many different
clients. Without an EIN, you will need to give you Social Security
number to every client that needs to submit a Form 1099 before
paying you. If, in a single month, you work with seven different

If you answer yes to any of the following

questions, you must have an EIN.

clients, there will be seven different entities with access to

your Social Security number. Even if you trust all your clients,
there is no guarantee that their files will not be compromised.

- Do you have employees?

You are putting your personal identity, as well as your personal

- Do you operate your business as a corporation or a partnership?

bank accounts and credit history, at potential risk.

- Do you have a Keogh plan?

- Do you file Employment tax returns?

An EIN can be used in place of your Social Security number,

protecting your personal information. It will also allow you to
open corporate bank accounts a credit cards which will help

already have employees, you will require an EIN. If you are

you keep your personal and business finances separate. An EIN

currently a one-person operation, having an EIN from the

is also the only way youll be able to pay employeesif you

get-go will help make any future expansion much smoother.

Melissa Cowan

TAKE CONTROL OF YOUR TAXES

36

Take the Anxiety Out of Tax Season

Tax season. The dark cloud that hovers over business owners.
And every year the same fiasco: You scramble through a shoebox
of receipts, fill out long, complicated forms and hope not to be
auditedwhile simultaneously running your business.
If tax season leaves you paralyzed with anxiety, here is your
three-step solution:

Finally, accounting software made (especially)

for you, the creative professional

1. Keep records as you go: Make receipts in a shoebox a thing

of the past. Find a system that makes it easy to keep everything in one place.
2. Make sure that youre tracking and categorizing your expenses on the go.
3. Invest in a cloud-based accounting software to help manage
your small business.

Bottom line: Youre not an accountant. And thats okay. No matter how or where you hustle, FreshBooks was built to fit the way
you live, work and interact with the people around you. Everything from sending invoices to running reports has been made
ridiculously easy so you can keep building the life you want
all on your own terms.
Learn more about the benefits of using FreshBooks and try it
out for yourself. Sign up for your complimentary, risk-free 30day trial today at FreshBooks.com.

TAKE CONTROL OF YOUR TAXES

37

Deductions are your friend

Taking proper stock of your business expenses can be a great
way to save money when it comes to tax time. Many creative
professionals struggle to understand exactly what constitutes

Self-employed expenses:
what you can and cannot claim

a deductible business expense. Trust us, theres a lot more to

CANNOT CLAIM

MY KIDS ARE IN DAYCARE THREE DAYS A WEEK

SO I CAN FOCUS ON WORK AT HOME. CAN THE
COSTS BE PAID THROUGH MY BUSINESS?

CANNOT CLAIM

I BOUGHT A NEW BUSINESS SUIT TO MEET

POTENTIAL CLIENTS IN. CAN THIS BE CLAIMED
AS A BUSINESS EXPENSE?

CANNOT CLAIM

I JUST BOUGHT A NEW OFFICE CHAIR BUT I

SPLURGED FOR THE HIGH-END DESIGNER CHAIR.
DOES THIS COUNT AS A BUSINESS EXPENSE.

CANNOT CLAIM

I TOOK MY CLIENT AND HER SPOUSE OUT FOR

DINNER TO DISCUSS A BUSINESS OPPORTUNITY.
CAN I CLAIM THE BILL?

CANNOT CLAIM

and computer.

I WORK FROM HOME, CAN I CLAIM MY

HOUSEHOLD BILLS?
If you work from home you can claim a percentage of your
household bills or you can claim $5 per square foot of space
dedicated to your business.

CAN CLAIM

take into consideration than your camera, business lunches,

I SENT OUT GIFT BASKETS TO MY LOYAL CLIENTS

TO THANK THEM FOR THEIR REPEAT BUSINESS.
IS THAT CONSIDERED A DEDUCTIBLE GIFT?

Childcare is not considered a business cost and therefore

cannot be claimed.

Gabrielle Fontaine, a professional bookkeeper with

year to ensure their taxes are filed correctly. The biggest mistake
she sees? Freelance workers who dont know what they can

I AM PHOTOGRAPHING A WEDDING IN
SAN FRANCISCO BUT I LIVE IN LA. CAN MY
BUSINESS PAY FOR MY HOTEL?
If your business requires you to stay away from your
permanent residence you can claim reasonable hotel costs.

CAN CLAIM

BookkeeperDirect.com, works closely with freelancers every

Clothing that can be considered part of your everyday

wardrobe cannot be considered an expense. If you are
required to wear protective gear or branded clothing,
this can be claimed.

deduct from their taxes. The short answer is anything that

contributes to the running of your business or the production of

Start with your work spacedo you have a dedicated home

I JUST BOUGHT A NEW LAPTOP, IS THAT

CONSIDERED A BUSINESS EXPENSE?
If you use your laptop exclusively for business, you can claim
100% of the cost. If you also use it for personal reasons, you
can claim a percentage of it. So if you use it 60% of the time
for business, claim 60% of the cost.

CAN CLAIM

what you are selling to your customers, Fontaine explained.

If you think your purchase went beyond what is considered

reasonable, you can claim a percentage of the expense
for your business.

office? If so, you can claim $5 per square foot of that space, up
to a maximum of 300 square feet. Not only that, but you can
internet, heat, and electricity. Since these are home costs, you

I TOOK MY CLIENT OUT FOR DINNER TO

DISCUSS A NEW PROJECT. CAN I CLAIM THE
BILL AS AN EXPENSE?
If the main purpose of the meal was business, you
can claim 50% of the bill as a business expense.

CAN CLAIM

write off the costs associated with running that space, such as

If you can prove that the spouses attendance had a clear

business purpose, you can claim 50% of the entire bill.
Otherwise, you cannot deduct the cost of the spouse.

cant entirely write these bills off as a business expenseyou

still need to heat your home after allbut claiming a percentage
savings when you file your taxes.

I HAD TO DRIVE TO A CLIENT MEETING 45 MILES

FROM MY HOME. CAN I CLAIM MY MILEAGE?
If you use your car for business purposes, you can claim
$0.54 per mile.

CAN CLAIM

of the square footage can represent a significant amount of

You can claim $25 for business gifts per person per year.
So if the gift basket costs $50 and your client is a company of
4, then you can claim all $50. But if the same company received
a $200 gift basket, you would only be able to claim $100.

TAKE CONTROL OF YOUR TAXES

38

Never lose a receipt

The IRS would say a business expense should be usual and

How many times have you put a receipt in your pocket or

necessary to your business, said Fontaine. So while your new

bag, only to send it through the wash or lose it? When youre

$3000 rug may look phenomenal in your home office, it isnt

self-employed, keeping your business receipts is essential

something you should be deducting from your taxes.

for your taxes. Sticking all of your receipts into a shoebox and
sorting them at a later date might seem like a great idea at

Travelling for workbe it for a conference or an uber to get you

the timewhy worry about it now? But when youre trying to

to a jobcan be claimed on your taxes as can 50% of business-

decipher the scrawled notes and handwritten receipts months

related meals. Nightly steak dinners will probably raise an IRS

later, you might rethink the shoebox approach.

eyebrow or two, but taking a client out for a meal occasionally is

acceptable. Just be sure to always save your receipts.

Indy Lytle, co-owner of Fabled Creative, has worked with the

likes of Activision, EA and Xbox. Lytle stresses that creative

You can also claim the interest of a business loan or business

professionals cannot underestimate the importance of keep-

credit cardyou wont get the entire amount back, but it

ing tabs on receipts. Even if its just for a coffee, she suggests

should still be included in your deductibles. If youre unable to

keeping it. Save every receipt, because you might not know

participate in someone elses health insurance plan, you can

what you can use for tax deductibles and youll need those!

deduct all of your health and dental premiums, as well as some

long term care premiums.

At any point, the IRS can go back six years and audit your business.
Printing out and storing six years of records can be costly.

Deductions are infinitely more difficult when you dont have

Keeping your accounting and tax information online can poten-

the proper documentation, so keep all receipts and transaction

tially save you time, money and a lot of stress down the road.

records. The IRS can strictly enforce their rules about deductions,
so make sure you accurately follow the guidelines and stay on
top of your receipts.

TAKE CONTROL OF YOUR TAXES

39

Online accounting programs are a great way to stay on top of

your receipts. You can even take a photo of your receipt and
store it digitally if you want to keep all of your accounting online.
With accounting programs like FreshBooks, Zoho, and Work
[etc], you can take your organization on the gomobile apps
allow you to enter a receipt the second you get it ensuring you
file your deductions promptly. Your receipts will be saved and all

Ask an accountant

of your accounting will be in one easily accessible location.

This is not to say that you cant manage your expenses offline
if youve decided to keep your accounting literally in the books,

Sometimes its best to defer to better judgement. You specialized in

your field, and you wouldnt want to see an accountant try to do your
job, explains graphic designer Indy Lytle. Find a tax accountant as

it makes sense to keep your receipts the same way. Come up

early as possible. While you can equip yourself to tackle some taxation

with a filing system that organizes all your receipts in one

issues, as a first time filer, here are some issues you might what to seek

place and log them daily, so they are fresh in your mind. The

professional guidance with:

IRS can decide to audit you at any time, and having copies of

Do my services require sales tax?

your receipts is integral if you are claiming an item or service

as a business expense.

~ Tax laws differ from state to state, and even city to city. To avoid a major
hiccup with your returns, consult your local government officials.
If I only work freelance in one quarter, can I only pay tax then?
~ You probably dont want to add the complexity of an Annualized
Income Installment Method to all the new tax regulations on your
plate. Ask a tax specialist.
What about retirement contributions?
~ Retirement contributions are worthwhile for any self-employed
individual. They can also be very complicated, and are best discussed
with a professional.

Sarah Pabst

Frances Morency

TAKE CONTROL OF YOUR TAXES

40

Be prepared to pay
taxes quarterly
When you were working a 9-to-5 job, you probably cursed the

There are a few exceptions for businesses that dont need to

lines of numbers at the bottom of your paycheck that listed the

pay their taxes quarterly. If you earned less than $600 from your

deductionstaxes. Now, as a self-employed creative profes-

business, if you started your business mid-way through the year

sional, its your responsibility to keep track of those lines of

or if your business generated a net loss, you can continue to

numbers. You might find yourself longing for the days when that

submit your taxes annually.

was someone elses job.

Most of the world is used to paying taxes once a year, by the
15th of April if you want to avoid any late payments in the United

How Do Americans
File Their Taxes?
How Do Americans

File Their Taxes?

States. But now, as a self-employed creative professional, you

are most likely going to be paying your taxes four times a year.
According to the IRS, As a self-employed individual, generally

37.3%

Prepare on their own

using computer software

20.2%

Turn to an accountant to file

18.8%

Use a tax preparation service

you are required to file an annual return and pay estimated taxes
quarterly. If you expect to owe more than $1000 in taxes you
should be paying quarterly estimated taxes.
Using Form 1040-ES and the previous years tax information,
you will be required to estimate what you will owe to the IRS by
the end of the year. A quarter of that amount will be due on the
15th of April, June, September and January. If you overpay, youll
get a refund in April, but if you underpay, be ready for a pricey
payment come April.

14%
9.7%

Prepare their taxes by hand

without any assistance
Use a mix of by hand and
online options

TAKE CONTROL OF YOUR TAXES

41

Consider your business structure

Keep in mind, even if you are submitting your taxes quarterly,

The idea of setting aside 15.3% of approximately 92.35% of

you will still need to submit an annual return. If youve filed

your net earnings might be rubbing you the wrong way. We get

quarterly, this means you most likely wont owe anything, but

ityou work hard for your money and its difficult to see so

you will have to deal with another set of paperwork.

much of it vanish. Keep in mind that everyone pays this tax, its
just given a different name for the self-employed.

Its essential that you pay and submit your taxes on time. If youre
late on any quarterly payments, the IRS will penalize you at the

And while you should be factoring the cost of this tax into your

end of the next quarterthe amount may seem small, but the

pricing schemeas discussed in Chapter 2there is another

penalties can quickly add up.

way to structure your business to soften the blow of the selfemployment tax. It might take a bit of paperwork, but the

When you are considering your taxes, keep in mind that anyone

advantages are considerable.

whose net earnings from self-employment are over $400 must

pay into the Self-Employment Tax. This tax consists of Social

Once your business is profitable and you are paying yourself

Security and Medicare taxes that otherwise would have been

a salary, the first step is to incorporate your business as an

withheld from your paycheck. Your net earning will be subjected

S-corporation (or S-corp). An S-corp is a special type of corp-

to self-employment tax of 12.4% on the first $118,500 for the

oration created through an IRS tax election. As an S-corp, you

Social Security tax, plus 2.9% of every dollar for the Medicare tax.

can reduce the impact of self-employment tax.

Average salaries for creatives in America

Photographer

Illustrator

Model

Artist

Graphic Designer

$36,580

$53,400

$27,830

$36,000

$44,150

TAKE CONTROL OF YOUR TAXES

42

Normally, a self-employed creative would need to pay 15.3% on

the entire amount of income their business makes each year.
As an S-corp, you can instead choose to pay yourself a reason-

How Incorporating Can Save You Money.

able salarythis is essentially the going rate for someone

Hussein is a portrait photographer who makes

in your field. The salary that you give to yourself will be subject

$125,000 a year. When filing his taxes, Hussein

to traditional self-employment tax rates, but the rest of your

profit will be exempt. The remaining profits will still be taxed

would pay 12.4% on the first $118,500 and

by the standard income taxes but will be sheltered from self-

then 2.9% on the entire $125,000 for a total of

employment taxes
With some additional forms, you could end up saving a considerable amount of money in taxes by switching your fledgling
company from a sole-proprietor company to an S-corporation,
especially once you start to become more profitable.
Taxes are serious business and failing to properly file can be

$18,319 from self-employment taxes. As an

S-corporation, Hussein decides to pay himself
a $30,000 salary after researching what
other portrait photographers make in his area.
With his new salary, Hussein is taxed
approximately $6,120, cutting down his overall

crippling to your new business. This guide was meant to draw

tax liability by $12,199. The entire $125,000 is

your attention to aspects of taxation that you might not have

subject to normal income taxes, but the $85,000

been aware of. It is by no means a legal guide to filing your taxes.

If you have any doubt about how to go about filing, seek out a

is exempt from self-employment taxes.

professional, and use some of these topics as talking points to

ensure you come away in the best possible situation.

TAKE CONTROL OF YOUR TAXES

43

Conclusion
Running a creative business takes more than a passion for
photography, design, art, or illustration. The business side of
becoming a creative professional can complicate things,
but it is not an insurmountable obstacle and shouldnt stop
you from pursuing your career goals.

Knowing the value of your work is an integral part of creating a viable

business plan. Set yourself up for success by understanding how to place
a value on your time and work. Take your experience, your costs and your
local competition into consideration and set competitive but sustainable
rates for your creative work.
Cash flow is one of the biggest obstacles for freelance creatives which
means your business is only as good as your invoicing habits. Make
invoicing a priority by creating a system you can easily manage, and you
wont be scrambling to figure out who owes you what and when you can
expect it.

Melissa Cowan
Maya Fuhr
Jason Bassett

INTRODUCTION
CONCLUSION

04
44

Unhappy clients will inevitably happen and the repercussions

of leaving a client dissatisfied can be detrimental to your business. It is in your best interest to be agreeable, but firm, and
work towards a solution that leaves all involved parties happy.
Approach negative feedback as an opportunity to learn and
improve your business and, if possible, to gain a loyal client.

Overnight successes are rare. If you really want to

make your passion your career, you cant stand with one
foot out the door. Your whole heart has to be in it.
- Minh Bui, photographer

Filing your taxes as a self-employed creative is no easy under-

Running a business can be challenging, but with this guide

taking. As with your client work, deadlines are king and late

you should have all the tools you need to follow your passion

submissions will cost you in the long run. Its important to know

and become a creative professional. With a stunning online

what you can manage on your own and when you should defer

portfolio, excellent marketing, and the business essentials in

to an experts advice.

your back pocket, your creative endeavours are on course to

become a thriving creative business.

Frances Morency

CONCLUSION

45

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