One question that I'm often asked when I lecture on freelance writing is if PayPal is legit. Sometimes my audience can reflect a demographic that is not comfortable with sites that link to their bank account. I tell them that about 90% of my payments come via PayPal. This can often lead to a discussion about ways to be paid as a freelance writer. So, let's break down the basics of being paid.
Freelance Writing Invoice
A freelance writing invoice can be as simple as an email sent that details HOW you want to be paid (paper check, PayPal, peanuts, etc.), what you worked on, how many hours you worked, total due, and date due. These things should have been established by your contract. Alternatively, an invoice might be its own piece of paper, such as a Word document or a PDF. This is the method I like and use right now, as I've simply found it to be the easiest method for me. Another option for invoicing is an automated program such as Freshbooks or any other number of software/online systems out there. I've not used these personally for billing, but I've had my contractors (I hire proofreaders, translators, etc.) use them to invoice me. They are ok, but the issue that I've found is that I now have an invoice in my email box, when I really want it to be in the project folder on my desktop. I do have the option to open the link and print the invoice, but again, a hard copy isn't what I want. I arrange projects by folder on my desktop, and I like everything in one place. So far, this has held me back from using it (and the fact that, well, a PDF invoice is FREE. Why purchase something when I'm currently doing it free, successfully?)
Freelance Writing Payment PayPal or Paper?
At this point, the client then pays me. Again, I would say that about 90% of my current client load pays via PayPal, but that changes based on the client. Websites, individual authors, online magazines and smaller clients tend to use PayPal. Established print magazines, publishers and large companies generally use paper checks…still. This is because they have an accounting/finance department that has its records and its processes well ensconced.
So, how does PayPal work? I've had a PayPal account for close to 10 years now. It probably got started via Ebaying! You sign up using your unique email account. You then connect your PayPal account to a bank account using all your personal numbers. So, my students first concern is- Is it safe? Yes. PayPal is an accepted, secure, legitimate website. I've never had an issue with my PayPal account in the ten years of using it.
Now, there are fees. And if you're accepting payments in the thousands of dollars, they can certainly add up. Keep this in mind when you choose a payment method with your client. United States-based readers should note that you could write off those fees from your taxes, though.
Once your client's payment shows up in your PayPal account (you will get an email), you can go to the site and ask for a withdrawal. I then transfer the amount into my business bank account.
Business Bank Account
So, why have a specific, dedicated business bank account? Well, you're a professional aren't you? Anyway, for tax purposes, you must keep your freelance writing income and spending separate from your personal spending. That means that when I go to the office supply store, I use my business account. When I go to the post office, I use my business account. When I pay my contractors, I use my business account. Look, you'll have to pay Uncle Sam (US-based freelancers) once you start making money, so you may as well carefully take the deductions from your taxes that you are allowed. If you are ever audited, this bank account is going to help you to keep everything on the up-and-up. You can open a business bank account with no fees, and no minimums. You just have to look around.
Of course, you then want some of that profit to go into your personal account, so you can buy shoes or purses, or whatever it is that men buy. Or pay your mortgage. Some banks will allow you to set up an electronic transfer system in between them. I generally will simply write myself a paper check from my office account to my personal account. Once your business gets going and you have some positive cash flow, you can get to the point where you pay yourself a set salary on a set day. This helps with budgeting and saving.
As you can see, payment systems are simple. Finding the processes that work for you may take some time or some trial and error, but once they are established, they tend to be somewhat automatic.