Why should you track your expenses?
1. For planning purposes. This helps you set aside funds for upcoming expenses. Imaginary example: If you spent $150 on office supplies, $120 on web-hosting, $200 on promotion items, $100 on professional dues, and $300 on everything else, you can use these figures ($870) to plan for the following year.
Maybe you decide to drop a few items. Maybe you know you'll need more for other writing expenses. This just gives you a starting point.
2. For tax purposes. Writers earning income need to maximize their tax deductions. Log your expenses and throw your receipts in a folder. Tax time won't be nearly as daunting!
This is a sampling of some of my expenses.
As you can see, I created four columns. You might need five. Or three. It's up to you!
The "Description" is who I made the payment to. The "Category" is for me to keep track of how I'm spending money. The date and amount are self-explanatory. An auto-sum formula adds all the figures in the "Amount" column. There are some expenses I won't log until the end of the year. I'll add up all of our monthly Internet bills and add the sum to the total then.
What expenses should you be logging?
Anything related to your business. Office supplies, office equipment, postage, professional organization dues, conference expenses, books on writing, books to use as comparables on your proposal, mileage to and from writer's groups, promotional items, stationery, a portion of your Internet service, any data back-up service you use, web-hosting, website costs, any self-publishing costs like an editor, cover art, stockphotos, etc...
**Check with a tax professional for a full, detailed, accurate list of exactly what you can deduct on your taxes.**
My husband and I hire professionals to do our taxes. I plan on asking them if we're allowed to deduct the entire amount we pay for Internet or only a percentage. Also I'm finding out if we are allowed to deduct anything for my home office.
The tax laws are constantly changing, so it's good to either pay a tax expert or do extensive research yourself.
Obviously, it's all fun and games to have an expense spreadsheet until you realize you haven't logged your expenses in six months. I have a solution for that too. Keep a manila folder handy. Label it Current Year Writing Expenses. Throw every receipt into this folder. Try to toss them in the front so they're in order. You can always log the receipts later. :)
Do you log your expenses? What did I miss?
Have a terrific weekend! I'll be taking Labor Day off, but come back on Wednesday for my big Critique Boutique launch!!