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…
I'm glad you're here! My name is Laurie Pawlik-Kienlen; my husband Bruce and I live in Vancouver, BC with our critters. We can't have kids, and are learning to accept whatever life brings - both good and bad. I have an MSW (Master of Social Work) from UBC, and degrees in Education and Psychology. I hope you say hello and share your thoughts below. If not, go well....and don't forget to come back! :-)