When you don't know when is the next paycheck going to arrive, now is the best time to get your finances straight and make use of the following bits of advice for freelancers to avoid getting into stressful financial traps.

Get Organized

For tax purposes, you are considered self-employed. Since business expenses are tax-deductible, you should make good recordkeeping a priority.

Basically, "anything you spend money on with the purpose of helping your business, you'll want to keep track of," Mr. Gellis says. If you work from home, you may be able to deduct a portion of your utility and rent payments as a home-office expense.

Devise a decent filing system for your records and set up a separate bank account for the business, suggests Mark Luscombe, a principal analyst for the tax and accounting group at CCH, a unit of Wolters Kluwer. "Just like any sole proprietor, [free-lancers] don't have an employer to sort out what's business and what's personal," he notes.

Because free-lance income is typically not subject to withholding, you'll need to pay estimated taxes four times a year, says Howard J. Samuels, an accountant in New York. To figure out what you owe, "you are basically doing a mini tax return every quarter."

Estimated taxes include income tax and self-employment tax. The latter combines the Social Security and Medicare taxes, which are 12.4% and 2.9%, respectively. (Regular employees only pay half those amounts because, by law, employers pick up the other half.)

For more information, go to www.irs.gov/pub/irs-pdf/f1040es.pdf. Consider seeking help from an accountant who specializes in self-employed returns.

Insure Your Health

You may have health insurance through a spouse or, temporarily, a former employer. If not, one option is coverage through reputable trade associations and other groups.

According to Sara Horowitz, founder of the Freelancers Union, a national nonprofit organization for independent workers, its 50,000 members can expect to pay between $125 and $360 a month in health-insurance premiums.

If you're relatively healthy, you may be able to find a less expensive individual policy. For example, a 25-year-old nonsmoking woman can buy health insurance in New York for $260 a month, according to eHealthInsurance.com.

Some states, including Massachusetts and New York, offer subsidized health insurance to residents with limited incomes.

Save for Retirement

When you're self-employed, you have different retirement-savings options than when you work for a big firm. Many free-lancers look to Simple individual retirement accounts and Simplified Employee Pensions, or SEP IRAs. You might also consider an individual 401(k) plan. For more information, go online to 401khelpcenter.com.

via The Wall Street Journal