Accepting Money for a Favor
This week, one of my colleagues asked me if I would edit a document he’s working on – and he offered to pay me to do it. I said that I would help with the edits but turned down the payment offer twice and we left the money issue unresolved. I’m still not sure what to do.
I feel a little strange accepting money from a friend for what I consider to be a favor. I help friends and colleagues with reading/editing requests whenever they ask, and thankfully my services are not popular enough that it’s become too time-consuming (I don’t advertise or anything). I’m certainly not a professional, but I have a natural ear and I can easily help out friends whose first language is not English. I even read for Kyle, who is an excellent writer, from time to time – it’s helpful just to have another set of eyes.
I actually used to consult on pieces of writing when I worked in my college’s writing center. That was primarily higher-level analysis of theses and arguments and such, not the kind of close editing that my colleague wants (and actually straight up editing is easier). So I was paid for this sort of work at one point in my life, but I’ve done plenty of it on a volunteer basis since. Other people are paid for editing all the time; I frequently see advertisements around campus from editors of various kinds of documents.
I’ve also had a friend offer to pay me for financial coaching, which I turned down – that is, I coached her on her finances but I didn’t accept any money. And it was really fun!
Part of my dilemma is that I have no idea how to value my time. My job is salaried (kind of) and I have no real limit on the expectation of my hours of work. I also have this nagging feeling that I shouldn’t be paid to do something I really enjoy, like editing and PF coaching. I guess that’s sort of crazy, to think that I should only be paid for things I’m not willing to do for free. I could ask what my friends who edit professionally charge/are paid per document/hour.
My other hesitation is that I don’t want to deal with the tax implications of being paid for this kind of work. I suppose this would be considered contract work, which means I’ll have to pay self-employment payroll as well as income taxes on it – just for a bit of cash! Kyle says that he refuses to go through that rigmarole for a small amount of money and in the past I wouldn’t have, but now that I know more about taxes I feel I can’t ignore this sort of thing.
However, something my colleague said when we were discussing the arrangement has made me reconsider my disinclination to accept money. He said he wanted to pay me so that I would focus and do a good job with the document (well, he said it in a less blunt way than that!). I can really understand that. Money, in addition to our friendship, is a string in the agreement and makes me less likely to flake or do a crappy job. It’s a way to ensure that my colleague gets what he asked me for, and of course I benefit as well.
I’m still not sure how I’ll resolve this particular situation, but I know that these are important questions I need to work through for my life and career.
When you do favors for friends, do you accept a monetary payment? How do you decide what your time is worth?
photo from Free Digital Photos
Filed under: income · Tags: coaching, editing, favors, friendships, payment, volunteer
What Would You Do If You Really Needed Money?
I Don’t Work for the Money
Grad School vs. Blogging vs. Career vs. Money
What Would You Do If Money Were No Object?35 Responses to "Accepting Money for a Favor"
Leave a Reply
Recent Comments
- Adam on Home Equity Is Funny Money
"Hi Emily - I just stumbled upon your blog. Great post! Up in Canada this is a…" - Emily on Home Equity Is Funny Money
"I agree that an appraisal is the best number to work with. I can't think of why …" - JL on Home Equity Is Funny Money
"I only note it as round numbers, in $50k or $100k estimates. I also usually upda…" - We Maxed Out All Our Retirement Accounts for the First Time! - Evolving Personal Finance | Evolving Personal Finance on Avoiding an Expensive 401(k) Plan through Self-Employment
"[…] was the first year that we contributed to Kyle’s expensive 401(k…" - Business Goal Tracking for Week 8 of 2022 - Evolving Personal Finance | Evolving Personal Finance on Business Goal Tracking for Week 6 of 2022
"[…] Done as of two weeks ago! […]…"
When it’s a friend, usually we don’t pay each other money… we just pay each other back in turn at some point. I love editing (it’s a weird obsession of mine) and so my friends turn to me quite frequently – especially when their papers are being submitted to journals, or their theses are getting proofed. I can’t say I would accept money from them unless it was extremely lopsided in who was helping the other friend. Even then, it would just be a token gesture, not an hourly wage I would charge for the services.
For example, my friend is around the same stage in her thesis as Kyle (last legs, must. finish. writing.) and she read my thesis last year. This year I’ll be combing through hers.
Alicia @ Financial Diffraction recently posted..make the most out of student discounts.
The thing is that with international students, they are generally not going to pay you back in kind with editing, at least not the same kind of editing that you’re giving them (just for the language). Kyle and I have a back-and-forth on reading each other’s writing, so I don’t have to ask anyone else to help me usually. Good point about the money, if there is any, being a token instead of a real hourly rate.
That’s an interesting situation to be in. From what I read from others, finding an acceptable rate for your services can be hard.
With helping people with their finances who are kind of broke–I could see doing that for no cost. The copy editing I see as a good way to get some side income, even with the hassle of reporting the earned income. I’m sure that you would get more clients through word of mouth if you decided to do it for real.
And if there was still an issue accepting the money, you could always donate it to your church or favorite charity. 🙂
Tara @ Streets Ahead Living recently posted..Aren’t you shopping this weekend?
Thankfully the person I did financial coaching with was doing very well and just needed some additional structure! I wouldn’t even think of accepting money from someone in a desperate money situation – if they really wanted to pay me we could barter.
I agree editing would be good side income. I’m keeping my eye on a local company that hires for contract editing work, but I’m not sure if I would have to sign some kind of noncompete agreement.
Ugh, technically donating any money I receive wouldn’t get me out of paying taxes on it – certainly not SE but not even income because we don’t itemize our deductions. I know too much about this stuff! But morally, yeah, that would be a good solution!
I would never accept money for a favour from a friend. If I’m working for somebody who isn’t a friend or a family member, then it’s work, not a favour, so I’d accept it then.
Daisy @ Add Vodka recently posted..What Could HR Teach You About Money Management?
I don’t know exactly what your business is, but has there never been a situation where a friend or family member wanted to hire you? I’m sure at some point the amount the fee would be would become something you wouldn’t pass up (or they wouldn’t let you).
In theory I would say refuse payment once and if they continue to insist then accept payment. In practice though, it’s a bit trickier.
Stefanie @ The Broke and Beautiful Life recently posted..Failing to Plan Ahead Destroys Budgets
Even if I accept payment we still have to agree on the amount! Awks…
In general I do think you ought to be compensated for a service like that. But, the rub is that it’s a friend. Favors themselves are typically the currency in friendships. I will help a friend move for free with the idea that he pays be back with other favors later. It would be weird if he paid me to move his stuff.
Done by Forty recently posted..Government Assistance and Backwards Incentives
In our last two moves, our friends helped us load and unload the rental truck. We did “pay” them with pizza, though, and I would have felt weird not doing anything for them right at the time, even though we’ve helped others move plenty of times in the last few years. Kyle actually suggested that we take all our mover-helpers out to dinner after, which I thought was way overkill and we might as well be hiring professionals at that point.
I do favors for really close friends and family, but if it is going to take me hours and I would rather be doing something else, then I would accept a payment. I did some translation work for a friend, she didn’t pay me and it took me 10 hours or so, then she dropped her project and all my work was for nothing so I was annoyed.
Pauline recently posted..9 tips for UK expats
That is a frustrating situation! Even if your work was verbally appreciated, if it didn’t amount to anything that is a disappointment.
If people really want to pay me for things like that (I tend to help a lot of people fix their vehicles), I tell them to take what they wanted to pay me, go to the grocery store, and spend it on nice belgian beers, smoked porters, and russian imperial stouts. Then we sit down after the work is done and have a beer or two.
David W recently posted..A Closer Look at Cash Value vs Term Life Insurance
Haha you and I have different tastes but that is a great suggestion!
I never accept money for a favor. I always offer my friends money as well but they never accept it. But I guess it also depends on what they need/want and the amount of time that the service would take.
Michelle recently posted..Debunking 5 Myths About Renting out a Room to a Stranger
How much time do you think you would put into a favor before it would become burdensome – especially now that you are getting a better idea of the value of your time since you are self-employed? I’d say 5 hours – and I don’t think this editing job will take that long!
A friend of mine at work asked for some help with a project and I worked on it for a few weeks in between my other work. It turned out really well, but it was still all done on company time so I kept refusing him when he was offering to get me something. In the end he surprised me with a nice scarf at Christmas, which was nice, but definitely not needed.
Your post reminded me of this profile of a Wharton Business School professor that appeared in the NYTimes earlier this year: http://www.nytimes.com/2013/03/31/magazine/is-giving-the-secret-to-getting-ahead.html?_r=0
While I’m sure I’m not as giving as that professor, in general I think I try and offer services and time without expecting anything in return. Karma will work out in the end, in my opinion.
Mrs. Pop @ Planting Our Pennies recently posted..Happy Friday – Happy Money: Pay Now, Consume Later
That is nice of your friend to offer and then to get you the scarf – but yeah if it’s a work project there was no need to offer a reward.
I agree with you that doing for others is right and will reap rewards in their good favor toward you, at a minimum.
1. the guy wants to pay
2. the guys knows that ‘paying customers’ are always treated better (or should) than a favour.
I see no reason not to take the money. I love creating web sites (it’s my hobby actually), but I don’t refuse money. Take the money, worry about the taxes later 😉
dojo recently posted..The pros and cons of eating out
Have you often made websites for friends and family? That seems like a lot of work! Is the rate you accept less than what you would charge a stranger?
I would figure out my hourly rate based on perhaps a couple of things: your current salary divided by your best guess of the hours you work, or the hours you are supposed to work; and look at what other campus editors and proof readers are charging per hour. Then take some combination of your salaried rate and what others are charging for proof reading/editing, and reduce by some percentage to come up with “friendly” rates.
Bryce @ Save and Conquer recently posted..Taking Criticism with a Smile
That seems like a very reasonable method!
If they are impressed and offer to pay, I certainly wouldn’t say no! I might not ask for it outright but I wouldn’t say no either. We can always reach an agreement on how to price it, heck, you can just google some numbers from the internet on the kind of work you are doing for them.
Taxes should stand in the way of making a little bit of cash…earn it first, you’ll be more than motivated to learn about the tax implications and how best to handle them.
Simon @ Modest Money recently posted..TradeKing Review – Exclusive Review of TradeKing Brokerage
That’s true, it is motivation! Our blog income is also spurring that.
[…] Should you accept money for something you’d normally do as a favor? It’s something that’s been on my mind lately — we could use extra cash to pay down our debts, but we also think helping our friends without compensation is just the right thing to do. Emily at Evolving Personal Finance has a fantastic post about this issue. […]
I guess it depends on how close I am with the friend and what the service is. My friend recently offered to watch our pets when we go on vacation and refused to be paid. I of course would pay her because it would have cost us money to pay for a pet sitter if she hadn’t offered. When I’m the one offering the service I typically refuse monetary payment, but will accept a trade or barter of some sort. You cut my hair, I watch your dog. Or you bake me a cake for my help editing your resume.
KK @ Student Debt Survivor recently posted..“No Heat For You!”: The Heat Nazi
We usually pay each other back in the form of other favors! I always correct my dyslexic friend’s essays, and she’ll return the favor by checking my mail for me. If it’s a friend, I almost never let money get involved. I guess it depends on the favor?
Elissa @ 20s Finances recently posted..Benefits of Living Debt Free
It sounds like you have a great reciprocal relationship there!
[…] from Stop Worrying about Money listed Accepting Money for a Favor in his […]
[…] presents Accepting Money for a Favor posted at Evolving Personal […]
[…] presents Accepting Money for a Favor posted at Evolving Personal Finance, saying, “If your friend offered you money for doing him […]
Honestly, I think you may be overthinking this. From the legal perspective, Start with an estimate of your marginal tax rate and if you accept the payment, set that part aside. Report the income on your tax return and use the portion you set aside to pay tax on the additional income. Likely for this kind of work we are considering nominal amounts, say under $1000. For a task like editing, there are unlikely to be deductions associated with the earned amounts. I am not sure what US tax forms look like, but on a Canadian tax form, this would be reported simply as “Other Employment Income” like tips or commissions.
As to the issue of feeling weird accepting money for what you would do for free: your friend is right, and there are sometimes reasons why you want to pay for your friend’s generosity. Sometimes it is important that the service you are asking for be completed with a certain degree of timeliness or quality. Payment reduces the likelihood it falls on the back burner. Some people are also very careful about feeling like they are taking advantage of someone or creating resentment or obligations to someone for favours in the future. If these are issues for your friend, offering payment is an easy way to reciprocate your favour while controlling what is offered up in kind.
It is completely ok to make a couple of attempts to refuse payment for your favour. But is it really worth making the relationship weird? I mean, you were happy to do it anyway and sometimes accepting the cash helps prevent your friend from feeling uncomfortable, isn’t that comfort worth it? As an alternative, negotiate a lower fee or a specific favour in kind: a bottle of wine, dinner, movie, babysitting… Set it out in advance so it still feels like a clear deal.
Maybe I am just clearly the friend that likes to pay for my favours up front to keep the reciprocity even and the expectations clear.
You are right, I was overthinking it – because the situation resolved itself and I don’t need to worry about taxes!
I wasn’t considering taking any deductions, but I would have to pay self-employment tax, which is not something I have had to pay in the past so I would have to figure out how to do that.
I agree that it’s not worth me making the relationship weird just to avoid being paid for work!
[…] I used the $25 gift card my labmate gave me as a thank you for helping with editing. […]
[…] “accepting money for work you enjoy doing with friend” […]