@madpilot makes

I’ve been freelancing under the moniker of MadPilot Productions on and off for nigh-on 7 years now and I’m the first to admit that making the books balance wasn’t always at the fore front of my mind. I’m a web developer – I need to develop! Unfortunately, running your own business means at some point you will have to deal with accounts and invoicing and the tax department. After all those years of battling my way through and making (expensive) mistakes, I have compiled a number of simple hints and tips that can help take the pain out of the financial side of things.

First my disclaimer: I’m not an accountant (ha!) and this might not be the most optimal way of doing things – but it does make it easier and is working for me. This is Australian specific, although I’m sure the general ideas will translate to other countries.

Register as a proper business

In Australia this is a really important step because you won’t be able to deal with Goods and Services Tax (GST) if your aren’t a registered business. You can register as a sole trader, which means you don’t need a company behind you. This is the easiest way, and usually isn’t going to cause to many headaches. I’m not going to cover the other types of business you can create (such as partnerships etc) as that can start getting complex, and you should really be taking advice from an accountant and/or a lawyer.

Once you have registered as a business you can apply for an Australian Business Number (ABN) and register for GST. Getting an ABN is optional, but I’d recommend doing it – it doesn’t cost you anything and if you don’t have one, other companies that you deal with are entitled to keep 46.5% of your invoices. So just get one.

Although you don’t need to register for GST if you are going to be making less than a threshold (it is currently $75,000) I would still do it. If you are small and you are good with you accounts it doesn’t take that much work, and it means you get to claim the GST back on any business related expenses!

All of this is explained in full at http://www.business.gov.au it also have links to the necessary forms to get you on your way.

Get a separate bank account

I personally find this the easiest way to manage expenses for your business. Having a separate statement at the end of the month is much easier than trying to sift through one HUGE single statement. It also means you can partition business money and personal money. If you ever get paid by cheque, you will need one as more often than not the cheque will be made out to you business name, not you personally – you can’t cash it if the names don’t match. Basic business accounts are usually pretty cheap and they are well worth it. Most banks will allow you to link your personal and business accounts via their online interface so transferring money between the two is easy.

When you are starting out, getting a business credit card can be nigh on impossible, but in this age of the web having one makes life MUCH easier. The solution is get a personal one (you are the only person using it if you a freelancer anyway) and pay any business expenses back from your business account. Many banks also have Visa or Mastercard debit accounts so if you don’t trust yourself with credit, this is another option. Unfortunately, these cards are generally only available to individuals not businesses, so you will still need another business account.

Get an accounting package

This is something that most new freelancers don’t think about, because they aren’t free and it seems like an expense that is hard to justify. Hopefully this will justify it: The accounting packages will help you see hidden expenses that you have forgotten about, such as TAX! When you work for someone else, they take care of the tax you need to pay. Unfortunately, since you are now your own employer, you are responsible for paying it. How much do you need to pay? No idea – that is what the accounting package is for.

There are many options – in Australia, MYOB and Quicken are the most popular choices, but have interfaces that suck. Thankfully there are some other options, such as the online system: NetAccounts which is what I use. These have a myriad of options so can take a little work to get used to but it is worth it, especially at Business Activity Statement (BAS) time – you click a button and it tells you how to fill it in – well worth the couple of hundred bucks you need to lay down to get it.

Get an accountant

You wouldn’t trust an accountant to do their own website, why should you do your own tax? They know the tax system better than you, so let them deal with it – if you follow my previous piece of advice and get an accounting package it should be a walk in the park for them. It’ll probably set you back a couple of hundred, but it could cost you a lot more if you did it wrong.

Get income insurance

If you get injured and can’t work, you are pretty well screwed. This is where income insurance can be really helpful. If you are in low-risk industry such as IT, it can be pretty cheap (mine is about $13 a week) and if you get injured they will pay out 75% of your income until you are fit enough to go back to work. Have a chat with an insurance broker – they can point you in the right direction.

Track your time

This is especially important if you change by the hour. It is all too easy to lose track of time and go over budget on a project. If you track your time well, you can warn a client if they are about to hit their budget limit BEFORE it happens and it also allows you to go back through your records when you are quoting in new jobs. If the job you did two months ago took 10 hours and is similar to the new job request you just got, you have a pretty accurate estimate.

Many people use spreadsheets for this, which I hated – so I wrote 88 Miles which is a simple time tracking system specifically for freelancers and small businesses. There I’ve plugged it!

Treat yourself as an employee

Ok, this sounds weird, but hear me out. A good general rule of thumb is that 2/3 of the money you bring in is going to go straight back out as expenses and tax (sucks huh?) so if you work that out as your wage you are less likely to find yourself short when all the bills come around. At the end of each week (or fortnight or month – what ever is easiest based on your cash flow), transfer 1/3 of what you brought in to your personal account. This is your money, and you can do with it what you like. Paying rent and buying food is always good and hopefully you have some left over to have a bit of fun.

DON’T TAKE ANY MORE OUT OF YOUR BUSINESS ACCOUNT! The business account if for the business – I can’t stress this enough.

If you have regular enough income, you can even setup the payroll facility of your accounting package to allocate you your pay each pay period. The benefit of this is it will take into account tax and superannuation. If this is the case, you can work on paying yourself 2/3 – the extra 1/3 will most probably end up going to the tax department, so you won’t see it anyway.

Example:

You are charging $50 an hour. Let’s say you can manage 5 hours of billable work a day and that you want to take holidays at some point (the standard is to treat one year as 260 days) you will be bringing in $65,000 a year. 1/3 of that is about $21,000 a year. The tax on $65,000 is roughly $15,000 so our estimate is close. So you will have $400 per week in your pocket for living and about $400 a week for running your business.

The great thing about this method is that you should have money left over, which means you should be able to go on a little spending spree at the end of the financial year, but more importantly if you get sick or want to take holidays, or god forbid the work dries up for a period, you still have some money in the bank to cover your expenses (for a while).

Hopefully this can help you freelancers out there run a successful business. The industry is pumping at the moment, so there isn’t a better time to go out on your own – just make sure you are smart about it.

Below are a list of some of the presentations that I have given.

Out of the way JSON!

If CSS can be un-obtrusive, so can JavaScript

I made this presentation at the Port80 Mini-talks. It is a quick overview of how to use un-obtrusive JavaScript (AKA Hijax) to cleanup your HTML markup, and make your JavaScript more re-usable. Presented 07 February 2007.

View the S5 slides and listen to the podcast.

Crazy Hijax!

Clean up your code with smatterings of AJAX

Presented at BarCamp Perth in 2007. An more in-depth look at un-obtrusive JavaScript. Presented 30 June 2007.View the S5 slides

Introduction to Ruby on Rails

A joint presentation with Matt Didcoe from BarCamp Perth 2007. We present an overview of Ruby on Rails. Presented 30 June 2007.

View the S5 slides and view the video.

Canvas Test Replacement

sIFR without flash!

This was my WebJam presentation I gave on 15/08/2007. Canvas Text Replacement uses a SVG to Canvas convertor to render fonts. This allows you to use arbitrary True Type Fonts in your web pages with out relying on images or flash. The code presented is proof of concept.

View the S5 Slides

A Web 2.0 business of your very own

I gave this presentation at the ICT Conference at Bentley in Western Australian on 13 October 2007. The slides don’t make much sense with out the video – I’ll be posting that very soon!

View the Slideshare slides

Web 2.OMG!!1!

This presentation was given to the PRIA Young Guns in a group of talks around PR2.0. I covered a more technical view, as well as including some actual definitions. The presentation was given on 16 July 2008.

View the Slideshare slides

Abusing JavaScript for fun and profit

This presentation was given at the GO3 Conference on August 2 2008. I outline some of the cool stuff that you can do with JavaScript, including building a old skool 2d side scrolling platform game!

View the Slideshare slides

OpenID, OAuth and Webservices – a Developer’s guide

Web Directions South is without doubt Australia’s biggest web conference, held in Sydney in the September each year, and I was privileged enough to speak in 2008.

View the Slideshare slides

Listen to the Podcast

Stuff they never taught you in web site school

My presentation from The Edge of the Web in Perth, 2009. It lists a couple of simple techniques for making good web sites better.

View the Slideshare slides

Code references

Creative Thinking

I did this presentation for the inaugural City of Perth Thinktank session. It’s mainly about our co-working space and AWIA. It uses HTML5 and CSS3, so for best results view in Safari or Chrome, Firefox at a pinch – IE users, don’t even bother.

Slides

Smart Phone Development using Web Technologies

I gave this presentation at Web Directions in 2010, just after I release my first iPad application using PhoneGap.

Slides

Building Mobile Web Apps

Off the back of the Sitepoint Book I wrote with Earle Castledine and Max Wheeler, about building mobile web apps, I gave this talk at the Edge of the Web in 2011.

Video

First of all, let me apologise for the hideous attempt at alliteration. For those of you who have been following this blog, you would have noticed a large number of events that have been hitting the shores of the west coast of Australia. This isn’t the half of it – there are many other similar groups such as SIGGRAPH, Byte Me!, Plug and Play, WAnimate, PIGMI and Perth Massive who put on regular events.

Let me state this now – it is AWESOME. Being the most isolated city in the world we (on many occasions) have missed out on big events/concerts/sporting events and so we are often forced to put on our own events. This does create a slight problem though – quite often there are event clashes as there isn’t really much communication between all the different organisations. For example, on the 15th of August Perth is hosting WebJam, which has meant that the Perth Bloggers meetup is probably going to be rescheduled (because of the audience overlap) whilst still clashing with “Digital Content Industry Audit” that is being put on by ScreenWest and DoIR.

Now I know that things such clashes are inevitable – there are only so many days in the calendar, but I think we as industry groups (I’ve got my AWIA events hat on now) really need to make a concerted effort to let each other know what it going on. A nice flow on effect from this is that more people will hear about these events which spreads the love.

A proposal (and thank you to Kat Black for debating with me already)

This is far from well hashed out, and I would really love to hear your feedback on how we can do this.

In an ideal world there would be one central place where all events in the know Perth universe would be posted. The reason this hasn’t worked in the past is because EVERYONE tries to set these up, each one of the above bodies probably has an event calendar, which doesn’t help our cause. For it to work effectively, the owner needs to be a neutral body, such as DoIR or Central TAFE or similar. It would need to be community driven, perhaps with a trusted representative from each organisation with write access to a calendar or blog allowing them to post events on behalf of said organisation.

Pros:

• It is open – anyone can read and consume the information via the web, RSS etc.
• There is no barrier for the event owner to post an event. If they had to email an already over-worked public servant to post this information this would quickly fall in a heap.
• It is neutral – there is no ownership issue if it is driven by a neutral party who has a vested interest in ALL the groups involved.
• Builds up a contact point for all the organisations in Perth. If you want to get in contact with an organisation, their details are right there.

Cons:

• There is still some administration from the point of view of the neutral body – they need to ensure the right people have write access and will still need to monitor for in-appropriate posting and such
• For it to work, there needs to be a long term commitment from the neutral body

So why haven’t I suggested other options such as a event co-ordinator mailing list (my original idea) or a Facebook group or an Upcoming account or similar? As Kat pointed out, we are all constantly inundated with email, so adding more noise might mean the message is lost. A blog or dedicated calendar system can still feed information out via RSS or email alerts – it is simply more flexible. I would also feel more comfortable if the system wasn’t a closed one such as Facebook or Upcoming – by all means we can feed this information into these sites (automatically most of the time) but they shouldn’t be driving it.

I am more than happy to get the ball rolling on this, but I need to know if this will be of use – it will only work if those people who are actively organising stuff are going to get behind it.

Please leave me with your thoughts.

This is a quick reminder that the Australian Web Industry Association Annual General Meeting is on Wednesday 1st August at 6pm at the Velvet Lounge in Mt Lawley.

If you are an AWIA financial member, please come along so you can hear our reports for the last 12 months, as well as vote for the new committee member positions. Their are 5 vacant positions, and the nominees are:

1. Adrian Lynch *
2. Ben May
3. Bronwen Clune
4. Gary Barber *
5. Harriet Wakelam
6. Jamie Lyford
7. Jordan Brock *
8. Kay Smoljak *
9. Piotr Dancewicz *

• Indicate a current committee member.

If you want to play an active role in the AWIA, you must come along and cast your vote. If you can’t make it, you can download the proxy voting form from the AWIA website.

I have been wearing my Australian Web Industry Association event manager hat recently and have been in secret talks with some friendly people over in Sydney. Those people just so happen to be Lachlan Hardy, Lisa Herrod, Tim Lucas and Anson Parker, AKA The WebJam Team!

So with out further ado, I am proud to announce WebJam Perth!

Where: The Velvet Lounge, Mt Lawley (Where we have the Port80 meetups)

When: 15 August 2007 at 6pm

A WebJam is where the presenters have three minutes to power through a presentation – the presentations are voted on and the winner get fame and awesome prizes. You can see a video of the last WebJam here. They look like they are heaps of fun – so head over to http://www.webjam.com.au read more and more importantly register.

Let’s show the world what Perth can do!

EDIT: Fixed date

Many thanks to Stuart Greenhill for uploading the videos that he took of the day to Vidler. They are all available from the Port80 BarCamp Wiki. For those of you interested in the talk that Matt Didcoe and I did on Ruby on rails, you can watch it for yourself here. I can’t believe I was still coherent after the number of Red Bulls I had had (Both before and during the talk!)

The WA Web Awards finalists for 2007 have just been announced and both 88 Miles and Bloggy Hell made the grade! 88 Miles is nominated for the “Best online application” category and [Bloggy Hell][2] is nominated for “Best personal or blog site”. The quality of the sites this year was awesome, so it is a great privilege to included in the group of finalists.

Go and [check out the list][3] for all of the finalists.

[2]: “Bloggy Hell” [3]: http://wawebawards.com.au/previous-winners/wawa-2007-finalists/

Ok, I might be a bit of a Rails zealot now, but I still have a sweet spot for PHP. For many years it was my language of choice, and even today, server hosting or legacy applications still means that I have to throw around the < ?php ?> tag.

I just read on the official PHP website, that as of the end of this year, PHP 4 will no longer be updated, bar crucial security patches. This is a big thing, as many web hosting companies still only support PHP 4 as it isn’t possible to run PHP 5 on the same apache server with out resorting to CGI or proxy work-arounds. This basically means that you have 5 months to make sure that your webiste runs on PHP 5.

The PHP website has a guide to migration, and luckily, most of the time things are fairly smooth. Were you might get in to trouble is the new object model. PHP 5 has a brand new, closer-to-real OOP model that isn’t always completely backwards compatible with it’s older sibling. For example, the __construct() method is called as a constructor, rather than function with the same same as the class as per PHP 4. PHP 5 also supports private, protected and public accessors and methods, as well as native XML and SOAP support.

At this point if, you may want to try running all of your websites as CGI scripts via the PHP5 interpreter to make sure that they can run ok, and if they do, start moving everything over to ensure a smooth transition.

Even though I left Bam two weeks ago, we have been covertly finishing off one final client project together – Prezz E Place. Prezz E Place is an online gift shop for those people how are too busy or phsyically can’t get to a shop to buy that special gift. It features a “dreamboard” where users can place products they would like to receive as well as a built in anniversary reminder system.

Prezz E Place is built in Ruby on Rails and took just over 150 hours to complete. From a technical point of view it utilises the Ferret search plugin for all of the product search, un-obtrusive JavaScript, SEO friendly URLs, plus some of the regular plugins I use such as action_mailer_layouts, custom-err-msg and paginating_find.

Let me (or Bam) know what you think!

… well according to Mashable it is. It made the Top 12 twitter apps for your mobile phone. I suppose that means I should do some more work on it soon ;)