Today, Dear Reader, we continue the series on the business of writing and welcome back Brigitte A. Thompson as she shares her professional advice as an accountant and author.
Bookkeeping is an essential part of the business of writing and includes storage of receipts, invoices, statements as well as all the required documents to substantiate both income and expenses.
Business Recordkeeping Options for Writers
To justify expenses, it is important to establish a system of recordkeeping that works for you. Some things need to be recorded daily, while others can be done weekly or monthly. It is imperative that you get into the habit of saving and recording everything related to your writing business. All invoices, receipts, credit card slips and bank statements are essential documentation that should be kept.
Some people find it helpful to create a system for their financial transactions using envelopes and lined paper. Transactions can be recorded on sheets of 8½” by 11” paper attached to the front of a large clasp envelope with supporting documentation stored inside. This system works well for many writers because it is simple to set up and only requires the purchase of paper and envelopes.
If you prefer computerized bookkeeping, these transactions could be recorded on a spreadsheet and receipts could still be kept in a clasp envelope. Microsoft Excel® provides an easy-to-use program which can help organize your records. Google® Docs is another option.
If you would like to go a step further, QuickBooks® is a user-friendly accounting program which generates financial statements and budgets using the data you input. Receipts would still have to be kept to document your transactions. FreshBooks is another program to consider.
The choice is yours. Any system that works for you is acceptable to the Internal Revenue Service as long as the pertinent information is recorded and retained. Learning what to record as writing expenses as well as how to properly document each transaction is important to the success of your writing business.
Learn about common writing expenses in my next post!
© Brigitte A. Thompson, Datamaster Accounting Services, LLC
Author of Bookkeeping Basics for Freelance Writers available on Amazon
The information provided is intended to be general and based on the Federal Tax laws of the United States. As such, it is subject to change. This information is not intended to be used as a substitute for financial or legal advice. Be sure to consult your tax advisor on all tax matters.
More About Brigitte
Brigitte A. Thompson operates an accounting firm in Vermont and is the author of several recordkeeping and tax books. She is a member of the American Institute of Professional Bookkeepers and the Vermont Tax Practitioners Association. She has been in the field since 1985. Brigitte is President of Datamaster Accounting Service, LLC
http://www.DatamasterAccounting.com
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This is something I know I stink at. Thus is make it a point to make as many business transactions as I can online. I’m horrible when it comes to putting receipts in an envelope but I’m pretty anal when it comes to organizing and archiving (to multiple hard drives) my email’d receipts. Not perfect, but it tends to keep me fairly honest.
Thanks for your comment Rick. You are off to a great start by identifying a recordkeeping system that works for you. The IRS recognizes we are in a digital age and is slowly adjusting requirements. You might be interested in this article on use of electronic files: http://www.irs.gov/businesses/small/article/0,,id=238525,00.html
Great article! I totally agree when you state that every business should have some kind of bookkeeping system and as businesses grow, they should migrate into digital bookkeeping systems and software, such as Quickbooks. However, to make sure these bookkeepers work efficiently, Professional Bookkeeping Training is recommended. You already have a powerful tool…all you need is a skilled bookkeeper to utilize this tool. Great post, I look forward to your future posts.
Thanks Alex, glad you liked it. A tool you don’t know how to use is not worth much, taking a course or hiring a bookkeeper to set up your accounts and show you how to enter transactions is money well spent.