{"id":3143,"date":"2012-02-25T05:58:57","date_gmt":"2012-02-25T10:58:57","guid":{"rendered":"http:\/\/www.allandouglas.com\/blog\/?p=3143"},"modified":"2025-04-21T01:56:41","modified_gmt":"2025-04-21T05:56:41","slug":"this-business-of-writing-setting-up-accounts","status":"publish","type":"post","link":"https:\/\/pineymountainfoster.org\/thoughts\/this-business-of-writing-setting-up-accounts\/","title":{"rendered":"This Business of Writing: Setting Up Accounts"},"content":{"rendered":"
\"business,
All rights reserved by iStockphoto<\/figcaption><\/figure>\n

This is the second in my series of articles on the business side of being a writer.\u00a0 Originally I planned to use this series as part of a book on this topic, until I discussed the book with a CPA\/Registered Investment Counselor\/Author.\u00a0 He thought the book was a needful thing, for many authors seem under-prepared to deal with the financial side of their chosen career, but he suggested that I market the book as a sleep aid<\/strong>.\u00a0\u00a0 Bookkeeping just isn\u2019t exciting (unless you\u2019re writing fiction about a bookkeeper who is a sex-addicted, vampire\/zombie, who goes around murdering people.\u00a0\u00a0 That, people might buy.)\u00a0 To see if he was right I decided to try out a series of articles here on my blog and judge your reaction to them.<\/em><\/p>\n

As I was preparing this series I was contacted by\u00a0Brigitte A. Thompson, President of
\nDatamaster Accounting Service, LLC<\/a> and author of Bookkeeping Basics for Freelance Writers.\u00a0 Brigitte offered me a series of posts on accounting for authors in exchange for the opportunity to promote her book. \u00a0 Since she is an accounting professional and an author, her advice would be more accurate and probably <\/em>more valuable than mine.\u00a0 So, starting with my regular post on Monday we’ll launch into Brigitte’s series on bookkeeping for authors.\u00a0 But first, I’m going to slide (most of) the post I had written for Monday in here today because I think it has some things to say that some of you may need to hear and don’t seem to be covered in detail in the upcoming series.\u00a0 Brigitte’s series starts on Monday.
\n<\/em><\/p>\n

Setting Up a Chart of Accounts<\/h1>\n

If you\u2019re using bookkeeping software it will probably set up a chart of accounts for you based on the \u201cindustry\u201d you select while installing the program.\u00a0 But I\u2019ve found this to not be the most expedient way to do this, especially if you plan to file your own taxes.\u00a0 I find it much easier at tax time if I have may chart of accounts set up to reflect the IRS Schedule C<\/a> form.<\/p>\n

Bookkeepers tend to like a richness of detailed information, breaking general accounts down into specific sub-accounts.\u00a0 Office Supplies might be subdivided into paper supplies, software, refreshments, cleaning goods, etc.\u00a0 The IRS doesn\u2019t care about that, as long as you can document that all were legitimate Office Supply expenditures, they just want the total for the category.\u00a0 Business owners and bookkeepers may want to know the details to track spending trends: if the expense for coffee and donuts triples one month they\u2019ll want to know why, but as a self-employed author, you probably don\u2019t want to mess with this.\u00a0 Keep it simple.<\/p>\n

I like to take my chart of accounts directly off the Schedule C.\u00a0 I even use their names for the accounts instead of the names suggested by the software.\u00a0 Then when tax time comes, plugging numbers into the forms is a snap.<\/p>\n

Business Cash Accounts<\/h1>\n

You will want to set up a checking account and possibly a savings account for your business.\u00a0 Mingling business money and personal money in one general purpose account is a bad idea.\u00a0 While it\u2019s true that as a sole proprietor all income is your money, mixing personal expenditures and business expenditures in one account vastly complicates things as far as accounting goes and is a major red flag should the IRS ever have you in for coffee.<\/p>\n

The Name Game<\/h2>\n

When you set up bank accounts for your business, you may want to set them up under a business name.\u00a0 If you want a business account rather than a personal account, some banks will insist on a business name and an EIN (Employer ID Number<\/a>).\u00a0 Whether you use a personal account or business account will depend on the bank you choose, its fees structure and allowed uses. \u00a0Shop around, compare several banks, and choose the one that best suits your needs.<\/p>\n

If you plan to solicit publication through legacy houses or use Indie small presses, your role in the process is strictly as Author, and using your own name in some manner makes a lot of sense in terms of publicity and the name on the check.<\/p>\n

If you plan to self-publish, especially if you plan to self-publish paper books, you\u2019ll want a bank account set up in the name you choose as your publishing house.\u00a0 Amazon and Barnes & Noble will let you declare yourself as both author and publisher, but should you want to get your print books into bookstores you will need to deal with Lightning Source as your printer\/distributor, and they are stinkers on this point.\u00a0 They want to deal with the publisher of the book.\u00a0 And the catalog listing for the book should list a publisher, not an individual\u2019s name if you want any chance of being taken seriously.\u00a0 At least for now; technology is emerging that will allow a reader to go into any bookstore or library, look through a catalog, and print a copy of any book they want in just moments.<\/p>\n

Checking<\/h2>\n

Back to your accounts.\u00a0 You will want a checking account for business expenditures.\u00a0 If you can get a debit card that will be accepted like a credit card you can use that to make on-line purchases, but check the bank’s security and fraud policies first.\u00a0 If someone swipes your account information through an on-line purchase and empties your checking account, do you have recourse while the event is being investigated?\u00a0 This can take months (I know, I’ve been through it).\u00a0 If your account is frozen and you are penniless until they determine whether it\u2019s fraud or not, you\u2019re in trouble.\u00a0 If this is their policy, get a credit card instead of a debit card for on-line purchases.<\/p>\n

Credit Card<\/h2>\n

A regular credit card allows you to use the card even when you dispute a charge, and it won\u2019t tie up all your cash while the investigation is being run.\u00a0 You will be required to make minimal payments on the account during an investigation, but you don\u2019t have to pay the full amount unless you lose the challenge.<\/p>\n

Under normal circumstances, plan to pay off the card balance every month to avoid getting snowballed by interest fees.\u00a0 You will be using the card as a firewall between your vendors and your checking account, not as a loan service.<\/p>\n

Savings<\/h2>\n

A savings account is a good place to squirrel away excess cash assets so they don\u2019t get frittered away by frivolous spending or overconfidence because you see a large checking account balance.\u00a0 Your funds will also draw a modest income from interest.\u00a0 Very modest these days.\u00a0 Other investment vehicles like CD\u2019s are better for long term storage of your cash assets, but a savings account allows ready access to your funds without penalty when you need them.\u00a0 Having on-line banking set up makes it easy to transfer funds between accounts and you can even set up automatic monthly transfers into savings if you want.<\/p>\n

Cash on Hand<\/h2>\n

Also get a cash box (or a coffee can) where you can keep some cash for those local expenditures where cash is the best route to go.\u00a0 Use this only for business expenses and reconcile the \u201ccash box\u201d monthly just like you do the checking account.\u00a0 When you need to replenish the cash box, withdraw cash or cash a check from your business checking account.\u00a0 If you take in cash sales (books sold at a book signing perhaps) deposit the excess into checking.<\/p>\n

Next Time<\/h1>\n

On Monday I’ll turn the helm over to Brigitte A. Thompson, accounting professional and author of Bookkeeping Basics for Freelance Writers<\/strong><\/em>.\u00a0 Please stop in and give her a warm welcome.\u00a0 Until then:<\/p>\n

\\\\\\\/\/\/ Write long and prosper.<\/p>\n

Save<\/span><\/p>\n

Save<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This is the second in my series of articles on the business side of being a writer.  Originally I planned to use this series as part of a book on this topic, until I discussed the book with a CPA\/Registered Investment Counselor\/Author.  He thought the book was a needful thing, for many authors seem under-prepared … Continue reading “This Business of Writing: Setting Up Accounts”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[2,47,3,34,6],"class_list":["post-3143","post","type-post","status-publish","format-standard","hentry","category-tools","tag-author","tag-bookkeeping","tag-books","tag-business","tag-writer"],"_links":{"self":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/comments?post=3143"}],"version-history":[{"count":1,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3143\/revisions"}],"predecessor-version":[{"id":21607,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/posts\/3143\/revisions\/21607"}],"wp:attachment":[{"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/media?parent=3143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/categories?post=3143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pineymountainfoster.org\/thoughts\/wp-json\/wp\/v2\/tags?post=3143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}