Posted in Business Side of Writing, The Nitty Gritty of Children's Writing

More on Writing Expenses plus Income

bookkeeping-615384_1280.jpgI decided it was time to add to what I’ve learned about keeping track of writing business expenses. You can see my initial post here.
First, I have a checking account dedicated to my writing business. This makes it easy to use my writing account debit card for business expenses. My expenses still go into a spreadsheet, but I have easy backup and confirmation with those debits on my banking statement.
Same goes for income. Writing income gets deposited into that account (or it’s related savings account). I’ve also got an income spreadsheet which shows what I earned. It includes when, where and/or what, and I have them classified by categories such as my teaching income for the Institute of Children’s Literature (ICL), book royalties or flat fees, magazine and online articles/stories, critiquing, and speaking. Having a column for an entity such as ICL makes it really easy to compare the total to my 1099 after year end.
But the last few years I started some additional spreadsheets to help me keep track of mileage expenses. One is a writing day/morning spreadsheet. It shows date, where we met, and who I met with. The second is a critique group spreadsheet. Besides the previous information, it also shows what manuscript I brought for critique, or if none, it says NA. This adds validation to my expense spreadsheet and gives me a double-check. If I start looking at either of these sheets and see blank spaces where there shouldn’t be, I check my email since most of our arrangements for these meetings are confirmed via email. And I throw those emails into a “Finances” folder. Again, backup if I ever get audited.
And speaking of mileage, each year at the beginning of the year I note the mileage on my car in a spreadsheet. For example, in 2017 the total mileage for my little car was 4704. (As a family we drive the other car most of the time.) 1274 miles were writing related! The total mileage and business-related mileage are questions the IRS wants answers to. It’s good to be prepared before you go to fill out the tax form.
Back to my debit card. Someone once asked me about the validity of using my writing account for beverages at a coffee shop when I’m having a writing day. Or a meal for another type of writing event. If I stayed home, I would not have those expenses. The IRS only allows 40% of those expenses deducted. But 40% helps. For example, in 2017 I had almost $500 in meal expenses. The majority were for out-of-town trips. 40% of $500 is $200 deducted.
Something unavailable to us in 2013 when I wrote my original post was email receipts. Many restaurants and businesses will now email you your receipt or at least offer that option. I’ve found a number of coffee shops use Square which automatically emails the receipt based on my debit card number. I just have to update the info when I get a new card.
I also have a separate PayPal account for writing related income and expenses. This is very helpful when I’m collecting from individuals for paid critiques or editing. It shows the payment from my client and the fee for receiving payment via PayPal. But then I don’t have to worry about a stranger’s check bouncing after I do the work. (Although I do collect 50% in advance when I haven’t worked with someone before.)
It’s work to keep track of all this information, but I’ve definitely found if I keep up on it, it’s not very time-consuming. And since spreadsheets can be set up to do automatic calculations, it sure makes tax time easier.
If you have any tips to share, I’d love to hear them. Just enter them in the comments.

Posted in The Nitty Gritty of Children's Writing, Tools

Writing Business Expenses

picture courtesy of Jane M Sawyer on
Every year I plan to do better at keeping track of my expenses than the year before. The area I struggle is recording all those trips to the post office or writing events. Often, I remember to record the event or trip, but forget to enter the actual mileage. So then I have to dig for the mileage I wrote down on a piece of paper or the map showing my route.
In 2012, I did pretty well at keeping it up-to-date.
Until I discovered I’d left off something else . . . a conference fee. And the taxes were already filed. Hmm, unclaimed expense from previous year? I think there’s a spot for that–must check it out when preparing 2013 taxes.
Several of my writer friends are just starting out with keeping track of writing business expenses. When I shared my personal info, one was shocked to see how many miles I deducted for 2012. I did a lot of travel by car, but the majority of it wasn’t big trips, just a lot of small trips adding up. For example, last year I joined a critique group that usually meets weekly. Let’s do the math. If roundtrip mileage averages 20 miles per week and the group meets only 42 weeks out of the year, then that is 840 miles in 2013. The IRS mileage deduction tax rate for 2013 is 56.5 cents per mile. That would allow a deduction of $474.60. for a legitimate business expense. (Read IRS publications for full details. Start with Publications 334 and 583.)
Conference fees, travel, hotel and meals add up really fast, too. Not all are fully deductible, but if you don’t know what you paid, how can you know how much to deduct? Accurate record keeping is necessary.
So how do I keep track of my expenses? With a spreadsheet. I have columns that I created long ago using a Schedule C as my model. My column headings are:

  • date
  • expense item (e.g. roundtrip mileage to event, address; postage to submit manuscript)
  • publisher/magazine (or those extra details, if needed, such as to whom and what I’m submitting)
  • miles (you also must keep track of the car mileage at the beginning and end of the year)
  • other car expenses (tolls or parking fees)
  • advertising (e.g. website)
  • office supplies (those things you need to run a home office: paper, postage, etc.)
  • taxes (e.g. sales tax on any books you sell yourself)
  • travel (airfare, taxis, hotel)
  • meals (while traveling–only a portion is deductible)
  • misc (where I put conference fees)

Someone else might need different columns. I am by no means a tax consultant!
I find if I don’t immediately enter trips to the post office in my spreadsheet, I forget when I did them. That means I lose out on those miles that I actually took. So what’s a writer to do? One writer says she puts her trips on a calendar–at tax time she can go back and garner the information from that. I thought I might try something new and that’s a mileage tracker app. There are a number of free ones. Looks pretty easy to enter appropriate information. But again, it’ll only work if I actually do it.
Right now I have some receipts I haven’t entered. I’d better go do that. And photocopy the receipts for my records as receipts fade. Besides it’s easier to have standard size sheets with several receipts than those small strips of paper.
Hope this has been helpful.