Feb 022010
 

These bookkeeping tips are for freelance writers and bloggers who make money writing. If you’re earning an income, you need to keep accurate records of your income and expenditures. These bookkeeping tips for small businesses are simple yet important, and they’ll save you time and frustration at tax time…

Before the tips, a quip:

“Writing is turning one’s worst moments into money.” ~ J. P. Donleavy.

Even if you only earn a couple hundred dollars a month from writing or blogging, you need to start putting these basic bookkeeping tips to work for you. Later, when you’re making thousands of dollars a month as a freelancer, you can think about hiring an accountant or bookkeeper to keep your finances organized. Think big, fellow scribes! Read Start Your Own Freelance Writing Business and More: Copywriter, Proofreader, Copyeditor, Journalist for more info about writing for a living.

And, here are several small business bookkeeping tips…




6 Bookkeeping Tips for Freelance Writers and Bloggers

1. Keep your business and personal finances separate. To save time and avoid hassles at tax time, clearly differentiate between your different types of bank and credit card accounts. Deposit all your blogging, web writing, and freelance writing income into your business bank account. If you use your PayPal account for both personal and business transactions, make sure the different types of transactions are clearly marked. Pay your business expenses with your business checking account or a business credit card.

2. Open a US dollar savings or checking account if you’re Canadian. I live in Canada, yet most of my freelance writing and blogging income is in US dollars. So, I transfer my PayPal income (which is in US dollars) to my US dollar savings account, and then transfer those funds to my Canadian checking account when the US dollar is strong. The exchange rate can be a significant source of passive income for starving writer like me!

3. Neatly file every invoice, proof of payment, etc related to your business expenditures. Even if you’re not sure whether you can write off a particular service or good against your writing or blogging income, keep the receipt or proof of payment for tax time. And remember that every little thing you buy that supports or furthers your writing career – writing resources, time management software, bookkeeping for small business books, web hosting fees, etc – is a potential write-off. Read Income Tax Tips for Freelance Writers for more info.

4. Learn what expenses are tax deductible. Writing off certain expenses will lower your net taxable income – but don’t wait until the night before your taxes are due to frantically figure out what you can write off! Keep your property tax, home maintenance, and insurance and utility bills because they’re probably tax deductible. Keep your car mileage receipts, writing or blogging course receipts, restaurant bills, and library fine receipts. You’d be surprised at how fast those small investments in your writing career add up to save you money at tax time!

5. Develop a system for organizing your paperwork. Set up a tidy filing system, and keep your freelance writing or blogging invoices separate from your business expenses and tax writeoffs. File your papers every week or month – don’t let them pile up! Keep everything related to your writing or blogging career, but keep everything organized in labeled files or binders. Also, enter your bookkeeping information in batches to save time.




6. File your tax compliance reports on time. Okay, this is where my simple bookkeeping tips for small business get more complicated! If your writing or blogging income is high enough, you’ll have to set a specific reporting period and pay different types of taxes, depending on the country, province, or state you live in. This is where I jump ship! My next article will discuss this in more detail, and explore several signs it’s time to hire an accountant or small bookkeeper.

If you have any tips or questions about bookkeeping for a small business, please comment below…

  14 Responses to “6 Bookkeeping Tips for Freelance Writers and Bloggers”

  1. I thought you had great bookkeeping tips. I hadn’t considered that freelance writers/bloggers might not realize that they needed to pay taxes on their earnings.

  2. There’s nothing worse than scrambling at tax time…I hope these bookkeeping tips for writers help!

  3. Thanks for the great tips. I have many clients that just don’t seem to “get it” and come tax time find themselves scrambling.

  4. Thanks, Zara…it’s good to know that an experienced bookkeeper thinks these tips for writers are solid…it’s great to hear from you!

  5. Very Great tips !!
    even if you only earn a couple hundred dollars a month from writing or blogging, you need to start putting these basic bookkeeping tips to work for you. Later, when you’re making thousands of dollars a month as a freelancer, you can think about hiring an accountant or bookkeeper to keep your finances organized.
    Thanks :)

  6. These surely are a great tips for us bloggers but some are not applicable to me as I don’t earn that much yet :(. Thanks for these tips, I find some useful and will put to use.

  7. These are all great tips here thank you. I live in Canada too and most of my income comes in the form of US dollars. I just convert it into Canadian dollars on my income statement, I hope I am doing that right? Thanks again for sharing.

  8. Thanks for your tip, Susan…that’s a great idea, to file your online receipts in your Gmail account.

    Hmm, that makes me think that an article about online bookkeeping tips for freelance writers and bloggers might be a good idea! :-)

    Laurie
    .-= Laurie Pawlik-Kienlen´s last blog post ..5 Ideas for Earning Money Writing – Tips From Experienced Writers =-.

  9. If your earnings from a single US-based company are over $599, then the company will most likely be sending paperwork to the IRS and you should DEFINITELY declare that income.

    I have a separate business account, but here’s a trick I used for tracking my business expenses. A lot of my expenses have online receipts (Skype phone service, registering for classes, conferences, etc.), so I set up a folder for that in Gmail. Each year gets a new folder, for instance “2010 biz expenses,” and I make sure that those email receipts get filed under the correct year. Then at the end of the year, it only takes about an hour to go through the emails and tally it up. (I have a few paper receipts, too.) Ditto on charitable donations, but I keep a separate folder for those.
    .-= Susan Johnston´s last blog post ..Open Thread: Should Writers Date Other Writers? =-.

  10. Hi Gini,

    I opened a US funds bank account at my Canadian bank. This way, I can deposit my US paper cheques there and transfer to Canadian funds when I like. However, I’ve learned that PayPal doesn’t accept Canadian bank accounts that are in US dollars….so now I’m looking into opening a US account at a US bank.

    There are US banks that do allow non-US citizens to open accounts — I’ve heard that the Harris Bank does, but I haven’t actually been to their site yet.

    The thing with not declaring earnings is that the people who pay you may declare those payments. So, if you’re earning money from an organization (or even a blog partner!!!) that files its employee payments, then the government can track your earnings that way. I don’t know how closely governments watch stuff like that, but….I suspect it’s on their radar.

    Great questions!

    Laurie
    .-= Laurie Pawlik-Kienlen´s last blog post ..6 Bookkeeping Tips for Freelance Writers and Bloggers =-.

  11. Okay, I have a curious question for you Laurie – how does a Canadian get a US bank account? I thought you had to live in the US to get an account so would be good to know how this works.

    Also, re tax declaring – from a sneaky point of view – if you don’t transfer all of your Paypal funds into your bank account but spend some on on-line purchases – then you don’t have to declare that as there is no way the Gov’t can track that is there?

    And regarding using household expenses as tax deductions – works wonderfully – I get to deduct a portion of my mortage because of my home office – plus a portion of all the household costs like electricity etc.
    .-= Gini Grey´s last blog post ..Intention =-.

  12. I enjoyed the article, thanks! Bookkeeping tips are always valuable for freelance writers, but I didn’t think bloggers had to think about incomes taxes too….good to know.

  13. Hi Jackie, sorry to say but yes you should pay taxes on it. Fact or in all your expenses and you may actually have a loss from which you can save some money on future tax payments.

    I jumped in here because our service at http://outright.com does all of this for free. We even integrate with PayPal and automatically record all those expenses and that income so you don’t have to do the bookkeeping. A tax calendar keeps that compliance on track and we even categorize expenses to help maximize those deductions. Come check it out, I’d love to have your feedback and hopefully the price is right ;)
    .-= Paul @ Outright.com´s last undefined post ..If you register your site for free at =-.

  14. Hi Laurie,

    I earned about $200 in the last 2 years combined from my blog, from Google Adsense. I haven’t been claiming that income on my taxes because it’s just a few dollars a month. I guess I should pay taxes on it….it just seems too little to bother.

    Anyway thanks for these bookkeeping tips. I don’t have invoices or receipts for business expenses yet but it’s good to know what to do when it happens!

    Jackie

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