Microsoft Excel to the rescue! I created a new spreadsheet and started a table for income. Further down the page, I started an expense form. But I couldn't format the size of the columns and rows differently. At that point, frustration roared.
I'm not the first writer to need an easy money tracking system! This shouldn't be hard. What am I missing??
Cracking open a Coke, I noticed the tabs under my spreadsheet. Duh! I'll create three tables in one spreadsheet and format them by giving them their own tab.
Why three tables? One to track my income. One to log my expenses. One to keep track of my business banking.
That's right. Business banking. As most of you know, I sold a romance novel to Harlequin Love Inspired. Next week I'm launching my Critique Boutique, a paid critique service. I also occasionally submit short stories/pieces to various publications. Since writing is my business, I set up a bank account specifically for it. This helps me set aside money for taxes, keep my business funds separate from our household's, and generally makes my writing life easier.
Let's look at tracking income.
My income spreadsheet has seven columns: Source, Date, Gross, Deductions, Net, Taxes, Total.
Source: Where the income came from.
Date: Date received
Gross: Total amount of check before any deductions
Deductions: Any fees taken out of check (agency fee, etc...)
Net: Take home amount
Taxes: Percentage of check I'm saving for taxes
Total: Total minus fees and taxes
ABC Publishing, 08/25/2014, $200.00, $30.00, $170.00, $60.00, $110.00
How did I arrive at these figures? The gross amount of the payment is $200.00. Let's say there's a 15% agent fee of $30.00. The net value of the check is then $170.00. I have to estimate how much to pay for taxes, and I have to pay taxes on the gross amount. If you pay 30% tax, you need to set aside $60. This leaves $110 for me to actually keep.
I also set the spreadsheet up with formulas to automatically add all the columns. This lets me know at a glance how much I need to have set aside for taxes and how much money I've earned.
Why 30% taxes? Well, it's complicated. I spent three hours researching taxes. As a self-employed writer, I have to pay double the FICA taxes because I don't have an employer to split the cost with me. It differs for each individual and depends on where you live. I pay Federal taxes, State taxes, and Local taxes. It's confusing!
The key to any report lies in updating it. Every time I receive a payment, I must log it into my spreadsheet or else it's useless. :)
Join me on Wednesday for a breakdown of the expense report!
Any questions about tracking your income? I'm no expert, but I'm happy to help!
Have a terrific day!