Thursday, February 14, 2008

Getting Organized: Accounting, Taxes, and the Freelance Writer

First of all, I’m not an accountant, so don’t think I’m doling out tax advice – this post is about organization. I do recommend finding a good accountant – not just a tax service – to help you with the legalities of everything. Don’t mess around with taxes.

If you make money, you have to pay taxes on it. So keep good records. (Again, I’m not going to tell you which records to keep, because you’re going to ask your accountant about that, right?)

These records need to be kept for filling out your schedule C, schedule SE and schedule @^#&%*.

So I have three super-secret weapons to help me with taxes, and I’m going to reveal them to you.

1) I want to make an argument for the shoebox. If you, like me, have a fledgling writing business, you might not need a 4-drawer cabinet with color-coded files just yet. The shoebox is great for containing receipts and check stubs. (If you absolutely must, you could buy yourself a proper storage box.) I prefer this to the filing cabinet, because receipts can tend to slip out of open folders and get lost at the bottom of the drawer. I hate losing a receipt; it’s like throwing away good money.

The point is, really, whatever method you use, keep it simple so you will, indeed, use it. For me, the shoebox works. Whenever I come home with a tax-deductible receipt, it’s the easiest thing in the world to toss it in the box. (At the end of the year- I mean month, all those bits of paper are organized and stored properly in nice, orderly file folders.)

2) Do you want a free software program that allows you to keep track of your invoices, payments, expenses, bank balances, and client contact information? Okay. Here you go: Quick Books Simple Start Free Edition.

(I don't get any money for the click. Don't worry, no ulterior motive. Although, I wonder if I should. Maybe I really, really should be getting money for all my promotional efforts. Suze says not to put myself on sale EVER again. She says so in her book she gave away for free on Oprah yesterday. Yeah, click here before 5 p.m. today and download it for yourself. I've begun reading it, and I think it is great. No complex trading tips. This is real-life useful stuff.

I’ve never been a fan of accounting software, because ugh, none ever seemed to fit my situation. Either they were far too simplified for a self-employed person, or they were designed for big businesses with payroll and inventory. Simple Start Free Edition is the Goldilocks solution for me. Um, and “free” is the right price.

No accounting software will work if you don’t input your information, but they’ve made this one so easy I have no reason to procrastinate. I do have some complaints about it though. (This is why my parents never gave me a gift-horse.) It’s a little slow to open, and very, very slow when it tries to sync up with Outlook to send an invoice. I also can’t find where the program stores the invoices on my hard drive. This bugs me because I file each invoice in the same folder as the article and assignment details. The workaround is fairly simple though: I email the invoice to myself. It arrives as an easily save-able .pdf.

3) Third secret weapon: Download forms, brush up on regulations, even apply for an EIN. Yes, it’s fun for all ages. Best of all, it’s searchable, unlike the 900 lb. print version of Tax Guide for Small Businesses.

Okay, your turn. What method do you use to stay organized for tax time? And do you like it? Or do you wish you had something better? What’s your biggest challenge when it comes to taxes (besides paying them, lol)?

1 comment:

Serenity Now! said...

I have two tax times. About now I'm doing my personal taxes, which are actually very easy... put forms together and file.

But in the summer I do my business taxes. My year end is May 31st... or is that June 30th?

Anyways. I use Quickbooks Pro and I try to keep all my papers in order. There's no real trick to:

a) keeping all your receipts and writing the info on the receipt.

b) keeping all bank records and credit card bills

c) matching up receipts with credit card bills

I don't always do it properly, but I try my best! I'm a writer, not a math person!