Posts Tagged ‘bookkeeping’


Seven Steps to Streamline Your Bookkeeping

A fellow freelancer posted this on Facebook a few weeks ago:  “Note to self:  Do NOT wait until the last two weeks of the year to enter/organize/categorize all of your expenses for your business. I am an idiot.”

Sorry for outing you, Ms. P., but you brought up a point that a lot of freelancers have to deal with. We’re business owners so, in addition to doing the work we love, we also have to do administrative tasks for which we don’t get paid. This includes paying bills, recording mileage and bookkeeping. Some freelancers avoid these tasks like the plague, while others hire someone to help.

I’ve tried both approaches – ignoring the paperwork until it threatened to take over my office and hiring a bookkeeper to help. I’ve finally settled on an affordable, relatively painless system to handle these annoying but necessary tasks. Here’s how I do it:

1.       I have separate bank accounts for business and personal expenses.

2.       I make deposits to my business account no more than once a week. This streamlines bookkeeping when it is time to reconcile my account.

3.       I pay bills once a month through QuickBooks so all of my business expenses are automatically categorized when I make the entries.

4.       Once a week, I record my work-related mileage in an Excel spreadsheet, using my Google calendar as a diary of where I went and why.  [Sample entry:  12/23/11, Met with editor at South Sound magazine in Tacoma, 42 miles]

5.       Once a week, I record all of my business-related expenses for the week in QuickBooks, and marking the hard copy as “posted” with a stamp and then filing them by month.

6.       At the end of each quarter, a bookkeeper reconciles my accounts and double-checks my bookkeeping and estimated tax payments.

7.       At the end of the year, my bookkeeper finalizes my accounting and prepares 1099s for subcontractors, when applicable. From there, I can prepare my own tax return or submit them to an accountant for handling.

This system takes me less than two hours a month of my own time and eight or so hours a year for my bookkeeper. If you can’t afford a bookkeeper, you can do those steps yourself. I prefer not to. I’d rather do a little extra work to pay her, freeing up my time to work on things I’m good at while avoiding stuff I’d rather not do.

With a New Year upon us, this is a great time to make changes in your recordkeeping. Try these seven steps to lighten your work load and free your mind for more creative pursuits. Good luck!

 

Dana Neuts is a freelance writer, editor and marketing professional based in the Seattle area. She serves as the regional director for Region 10 of SPJ and is the chairman of the national SPJ freelance committee. In addition, she is the owner and publisher of iLoveKent.net and iLoveCovington.com, hyperlocal blogs focused on cities in South King County, Washington. For more information about Dana, visit VirtuallyYourz.com.

 

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Tracking Income & Expenses

To be a successful freelancer, you should run your operation like a business. This not only means getting business licenses and insurance, but it also means closely tracking your income and expenses. The information is necessary for your taxes, of course, but it is helpful to see where your work is coming from, who pays and with what terms and how you are investing back in your business. It can also help you identify important patterns in your business, so you can budget for the future.

For example, maybe December is always a slow month for you. If that’s the case, then in the late summer, put together a solid marketing plan to pitch stories and seek out new clients to help fill the gap.

So how do you record this info.? When I first started freelancing, I simply made up two Excel spreadsheets:  one for income and one for expenses. In the income spreadsheet, I tracked sequential invoice numbers, date of invoice, client name, project or work performed, amount due, date billed and date paid. I could then take this info. at the end of the year and sort by client or by date to see which clients were the most lucrative and determine which months were the busiest.

For expenses, I created a simple spreadsheet to record date, vendor (Staples, Office Depot, Target, etc.), item(s) purchased, cost and how paid (credit card, business debit, business check, etc.). I also created a spreadsheet to track my mileage, collecting date, reason for trip, client or prospect, location of trip, and miles driven. All of this was useful at tax time.

As my business grew from part-time to full-time, Excel spreadsheets were not robust enough to handle my bookkeeping needs, so I switched to QuickBooks SimpleStart. This special edition of QB is a scaled down version of the full program, providing tracking for income, expenses and assisting with tax prep. This was a great program – at the time, it was very affordable (less than $100) and it served my needs without giving me too many features.

After about three years with SimpleStart, I upgraded to QuickBooks Pro which is a full-featured bookkeeping and accounting program. At this point, I realized that managing my freelance business was becoming a bigger task than I’d imagined, and I hired a bookkeeper. She visits my office for a few hours each month, enters my expenses (I still track invoices and payments), reconciles my bank accounts and prepares my 1099s at year end. Yes, this is an added expense, but it frees up my time to focus on other tasks like writing, editing, business development and continuing education.

Not sure where to start? Ask other freelancers how they manage their bookkeeping and accounting or consult with a small business expert or accounting professional for advice. Good luck!

 

Dana Neuts is a freelance writer, editor and marketing professional based in Kent, Washington. In addition to writing for publication, she edits books and is the owner and publisher of iLoveKent.net and iLoveCovington.com, hyper-local blog sites. She serves as the SPJ freelance committee chair as well as on the national SPJ and SDX Foundation Boards. For more information, visit VirtuallyYourz.com.

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