Bookkeeping Tips to Make Your Life a Little Easier

For many writers, bookkeeping can be a drudge. But there are ways to streamline it and make it easy enough that it won’t dominate your life.

No matter which of the three bookkeeping systems you choose—simple checkbook, single-entry journal, or the more complicated cash-disbursements journal—you’ll also need to have an easy way of filing  backup receipts. You should have something—receipt, invoice, canceled check or petty cash ticket—for every expense. Make sure before filing these receipts that they indicate all of the important information—date and amount paid, to whom paid, check number or cash payment. Keep these receipts for business expenses filed separately from any personal expenses. You can use one of those accordion files divided into 12 compartments—one for each month—or 12 envelopes or a box in which you store receipts in monthly bundles. Whichever way you choose, be consistent.

The first step in recording your expense receipts is a program like Expense Director from Iambic.com. This program allows you to record your expenses on your smartphone or personal assistant. Then you can sync the device you’re using to your computer to save and store your expense notations. After you record your expense amounts, place the receipts for that month in a box. Make sure to put a check mark on each receipt after you record it. At the end of the month, bundle that month’s receipts for storage.

A program like Expense Director allows you to create spreadsheets of monthly expenses easily and quickly. You can also sort your expenses so that you have all like expenses together. If you don’t have a spreadsheet program, get one. It comes in handy for lots of other records, too.

All funds received or disbursed from your freelancing business should pass through your business checkbook. Your monthly bank statement should be balanced against your receipts/disbursements spreadsheets, as well as verifying your checkbook balance.

Record all cash receipts in the proper column by category. If you're working part-time, you can keep the data in the same spreadsheet, but keep the receipts in a separate column. If you regularly receive rent or other such income from another source, separate those receipts also.

Record gross receipts and net receipts, if you have both, at the same time for more ease in figuring your taxes. Be accurate when you record figures across the page. They need to balance both horizontally and vertically. You’ll want to balance each page monthly, then record the balances on the balance spreadsheet.

You’ll find it handy to have a calculator with a printout tape. It’s also helpful as proof of balances during any tax audit. As you balance each page of your spreadsheet, you can file the tape with your backup material—receipts, invoices, petty cash tickets, etc.

If you’re following the above procedures, you’ll be able to check your accounts receivables each week which will let you know if you have any slow payers. You’ll also be able to check you accounts payables, your bills, to see if you can pay ahead to take advantage of any discounts.

And every month, you’ll need to post your income and expenses and balance your books. You’ll also need to prepare a profit and loss statement, balance your business checking account, balance and file any petty-cash receipts, and do anything to prepare for taxes. And one last thing: You’ll need to rebill any slow payers. Doing all of this should keep you on financial track.

Making Book on Your Business

No, you’re not headed down to your local bookie to make a bet, although sometimes it may feel that way as a freelancer. This business is fraught with risks, so why not take control of one from the start. Keeping a record of your income and expenses, known in the business world as bookkeeping, is an off-putting subject to many writers. But in fact, it’s an essential tool you shouldn’t do without. As for the idea that it's just a drag on your creative prowess, get over it. If you want to make a success of your business, you’ve got to keep records. It’s as simple as that.

Most people think bookkeeping is only for tax purposes. True, keeping good records certainly will help you at tax time, whether you do your own taxes or have someone else do them for you. But record keeping has other advantages. It can tell you where you’ve been and perhaps where you’re going. It gives you a heads up when things aren’t going as well and let’s you know when to breathe a sign of relief when they’re going better.

If you don’t keep good records, you’re allowing forces other than yourself to run your business. For one thing, whether your freelance operation shows real profit or not will he evident in well-documented books. Losses won't hit you as hard since they’ll appear in time for you to make needed alterations in your work habits or markets. On the positive side, if your income is growing, you might he edging toward a higher income-tax bracket. By noting this possibility early, you'll be in a better position to make the decisions that will save money and offset your tax liability.

How you keep control of the financial end of your business is totally up to you. You decide whether you want it to be easy or a constant headache. But it doesn't have to be the latter. Much depends on how you lay out your initial plans and how willing you are to diligently record the necessary information. Whatever system of keeping track you choose, you'll want it to he simple to use, easy to understand, reliable, accurate, consistent, and designed to provide information on a timely basis. The IRS doesn’t require any particular accounting system. All it requires is that you keep track of income and expenses.

Today, you have many digital accounting programs, both independent and online, to choose from. In most cases, these are meant for larger businesses. You want to keep things simple—at least in the beginning. You’ll need nothing more than a simple record hook using a single-entry system of recording expenses and income. You can pick one up at your local office supply store.
If you’re more inclined to work digitally, you could create a simple spreadsheet or multiple ones showing the necessary information. Whatever system you decide to use, you want to make sure it allows for expansion and ease of input.

One thing you’ll have to learn to do is a profit and loss statement. This should be done at the end of each year. Such a statement not only helps you see where you’ve been, but can also help if you need to get a loan as most lending institutions require one. There’s no special form. Just list all the money you took in and the expenses you paid out in various categories. By employing the expense categories set up by the IRS on Schedule C, you can just transfer those amounts to your statement. The difference between what you earned and what you spent is your profit or loss. This may or may not be the same as the total on your Schedule C of your tax return as there are other items involved on it.

A record of furniture, fixtures, and equipment in a separate section of the same record book will be an added convenience when, at tax time, or perhaps during any problems dealing with an insurance company, you need to see quickly what you purchased, from whom, when, and for how much. With all of this together you can then also record by which means of depreciation you are operating—another bit of information the IRS requires of businesses. All equipment needs to be depreciated according to IRS rules.

You can also keep a record of payments to your retirement fund, your savings account, insurance payments, dividends received, receipts from medical and disability insurance, details on payments and subcontracts, accounts receivable and payable, loans, leases, etc. Only your own particular situation and your accounting preference will dictate what is or isn’t included. Generally, as a freelancer, you don't have to be concerned about most of these details but, if and when you do, the same record book is expandable to include them and you have, as near as is possible, a complete financial accounting of your situation in one handy book.

NEXT WEEK: Some bookkeeping tips to make your life a little easier.

Discipline Can Be a Good Thing

Discipline is all important to becoming a successful freelance writer—self-discipline, that is. No one will scold you for doing something wrong. You have no boss. You are the boss. So the only way you’ll get anything done is to make yourself tow the line.

To get ahead, you need to control the elements that might play havoc with your work schedule. To do this, you’ll need to anticipate problems and prepare ways to counteract them so your work won't suffer. The way to do this is to recognize patterns.

Keeping a daily or weekly journal for the first year or two of your freelance venture will help you see patterns developing. By writing down your progress—both the good and the bad things—you’ll begin to notice that they form patterns. Once you recognize the patterns, you’ll be able to take measures to break your bad ones and take advantage of your good ones.

Professional writers know all too well the pattern deadlines follow. Like trucks on a superhighway, they seem to travel in packs. It doesn't matter that you've planned them to arrive at intervals. They overtake each other and you if you don't remain vigilant.

Knowing this, professional writers build tricks into their planned writing time to minimize deadline crashes. The first step in this process is to create a Work-in-Progress chart or spreadsheet. For each project, create columns with the following headings (for non-fiction): Job Name, Publication, Query Written, Query Sent, Deadline, Research Completed, First Draft Completed, Revising Completed, Manuscript Sent, Date Sent, Payment Received, Date Received. If you write fiction, just change the headings accordingly. Then check off each item as you complete it for each project.

Let’s say you have three simultaneous deadlines. To avoid wasting time, do something for each job. Perhaps for Job No. 1 you’ll begin searching the Web for information on your topic. For Job No. 2, you’ll concentrate on interviews. And for Job No. 3, a relatively easy article, you’ll begin writing the first draft.

Professional writers follow this simple rule: As soon as you have a firm assignment to produce, take the first step immediately. By doing so, you’re on your way. The other steps follow without requiring anywhere near the effort of the first. In the case of writing a book, try starting with the easiest chapter first, no matter where it is in the book, then work on the others.

Once you've recognized patterns in your own working habits, you, too, will be able to do as the pros do. For example, you might devote your early mornings to the toughest writing chores because you know this is your most creative time. If you’re at your creative peak at some other time during the day, you should adjust your work schedule accordingly. During this time, you shouldn’t allow anything or anyone to interrupt you. With the heavy-duty work out of the way, you can devote your afternoon hours to making necessary phone calls, trips to the library, online research, or bookkeeping.

Another trick to help your self-discipline is to set a timer or alarm clock as you approach your chores. Break the job, whether it's actually writing the text, revising and editing, or diving into a pile of accumulated research, into reasonable segments, then set your timer and work against it. You'll be amazed at how much you you’ll be able to accomplish with the clock ticking away.

Yet another way to keep the work flowing is to create a daily or weekly to-do list. As you complete each chore, cross it off. At the end of the day or week, you’ll be surprised at how much you’ll get done.

Or you could compare your output with that of a more successful writer. Keep track of how often his or her byline appears not just in the markets where you'd expect to find it, but elsewhere, too. Is this writer getting into a new and promising field? Perhaps it’s time for you to consider opening up new horizons for yourself?

Also consider enlisting the help of a close friend. Tell your friend about a particularly ambitious project you're thinking about starting. Explain you're really taking a chance and that you may need reminding, now and then, about how you’re doing. If you’re friend asks “How’s that book idea you told me about coming along,” you’ll have to answer honestly or feel guilty afterwards. Be sure to choose a friend that’s action oriented, otherwise you may find yourself just talking about your plans instead of carrying them out.

All writers have ways of tricking themselves into the proper mental and emotional state for high production. Some people require the wolf to be knocking at their door, others just the opposite.
How you discipline yourself to juggle your time and work load may work fine for a while, then suddenly you find what you had been doing is no longer adequate. Your bank balance will immediately register deficiencies in your methods of discipline. Once that happens you'll have to do some fast shuffling of priorities and techniques to keep from going under. Be flexible, but remember that patterns lead to other patterns. And discipline rules.