Bookkeeping for Writers

Brigitte A. Thompson is author of eight financial books including the just released Bookkeeping Basics for Freelance Writers published by Crystal Press.

As writers, many of us may not think about the bookkeeping and financial side of our business. After all, we are creatives—we don’t have time to crunch numbers, and many of us don’t even like numbers.

This is an important point..."writing is a business." During interviews with other writers, the question I was asked the most revolved around this very concept. Most writers didn't really consider themselves to be in business. It's a disadvantage because income needs to be reported at tax time and without the expenses to offset the income, tax liability is greater.

Tell us what Bookkeeping Basics for Freelance Writers is about.

Writers have many important questions to ask about income and expenses, but no single source for answers. I created this book to be that source. It is an easy-to-understand guide to organizing a writer’s financial life.

This book addresses issues writers face daily, such as how to deduct travel expenses, determine taxable writing income, and claim home office deductions.

Have you found that writers require a different set of bookkeeping rules?

Many bookkeeping rules are universal, such as the requirement to record income, but there are some areas of the tax law that are of more interest to freelance writers. This includes dealing with royalty payments, bartering, personal property and agent fees.

What are some tax deductions that writers might not be aware of?

Some expenses are common, such as the cost of purchasing a case of paper or paying for a computer software upgrade. Other costs incurred in the operation of your writing business may not jump out at you as expenses when they could be. For example, mileage, meals, and shipping.

What are some of the most common accounting missteps and how can we avoid them?

Not taking yourself seriously as a business owner. The IRS considers you to be in business when you are actively pursuing projects intended to generate income and expenses. Keeping track of your income and expenses from day one will enable you to pay the least amount of income taxes on the money you earn.

Many people find numbers, especially when related to bookkeeping and taxes, intimidating.

My book breaks down complicated number crunching into easy-to-follow steps. Sometimes knowing the reasoning behind a task makes it easier to complete. Writers can take advantage of some wonderful tax deductions, but only when they are aware of the possibility and know how to accurately document the expenses.

What are some of the challenges writers face?

The most common challenge revolves around what they can claim as income and what counts as a tax deduction. For example, if their first job is writing the school newsletter, is the money received really income?
The second most common concern for the freelance writers is related to proper documentation. What receipts did they need to save? How should they be kept and what information needs to be recorded?
Why is it important for writers to understand bookkeeping?

Writers are earning money and this money needs to be reported as income on their tax return. If writers do not have any expenses to claim, their taxable income will be higher and they will owe more income tax.

Obviously, your book is a great place for writers to get information on bookkeeping. Are there are any other resources you recommend?

The IRS web site (http://www.irs.gov/) to research specific tax issues and the Small Business Administration (http://www.sbaonline.sba.gov/) for general business information.

I also recommend joining professional associations such as American Society of Journalists and Authors (http://www.asja.org/), The Authors Guild (http://www.authorsguild.org/) and National Writers Union (http://www.nwu.org/).

Freelance Success (http://www.freelancesuccess.com/) offers an insightful newsletter for their members. There are also online groups for writers such as MomWriters (http://www.momwriters.com/) offering networking opportunities as well as camaraderie.

Bookkeeping Basics for Freelance Writers is available through Amazon.com and Brigitte’s publisher (http://www.crystalpress.org/). Learn more at her website http://www.bookkeepingforwriters.com/ and her blog http://www.writersinbusiness.blogspot.com/
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A native Montanan, Heidi Thomas now lives in Northwest Washington. She has had her first novel published, Cowgirl Dreams, based on her grandmother. Heidi has a degree in journalism, a certificate in fiction writing and is a member of Northwest Independent Editors Guild. She teaches writing and edits, blogs, and is working on the next books in her “Dare to Dream” series. The sequel, Follow the Dream will be released this year.