Navigating small business recordkeeping can be challenging. Bookkeeping Basics
for Freelance Writers by Brigitte A.
Thompson (Crystal Press, 2009) addresses issues writers face daily such as how to deduct travel
expenses, determine taxable writing income, and claim home office deductions.
This book is written exclusively for those of us who earn money by
writing. It includes useful information to help interpret the complexities of
our federal tax code, proven techniques to reduce taxable income and the information you need to develop
a successful writing business.
Following is an interview with author Brigitte A.
Thompson.
Tell us about Bookkeeping Basics for Freelance Writers.
Writers
have many important questions about income and expenses, but no single
source for answers. I created Bookkeeping Basics for Freelance Writers, 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. Plus, each part works together to assist in
forming an overall business plan. The chapters take the writer through a
comprehensive process that works as a building block towards a successful
writing business.
Why
is it important for writers to understand bookkeeping?
Writers are earning money and this money needs to be reported as income on
their income tax return. If writers do not have any expenses to claim,
their taxable income will be higher and they will owe more income tax.
Understanding what can be claimed as business expenses when you are a
writer and how to properly document these expenses will help ensure the
success of your business.
The most important
thing you can do as a writer is to become organized. There are many books available on how to organize your
writing, but this is the best book available about how to organize the financial
side of your writing business.
Do freelance writers require a different set of bookkeeping rules than other businesses?
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. My book addresses the universal tax rules as well as
the infrequently discussed rules that apply specifically to freelance writers.
Learning how to document expenses and how to track income will give writers the
best chance at overall business success.
What are some tax deductions
that freelance writers might not be aware of?
There are many tax deductions available to writers. 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, consider the
following:
Mileage: Trips made in your vehicle to pick up office supplies can be counted as a
business deduction if you record the proper information to support it.
Meals: Treating your agent to a restaurant meal with the discussion
focusing on your next book can also generate a tax deduction when properly
documented.
Shipping: UPS charges and
postage used to mail a query or review copy of your book can be a small
expense, but it should still be tracked.
Those small deductions add up and every penny spent as a qualified
business expense will reduce the amount of income tax you owe.
Bookkeeping Basics for Freelance Writers devotes an entire chapter to
expenses, including a comprehensive listing of expenses and detailed information
regarding what documentation is required to support each one.
What are some of the most common accounting mistakes that writers make and how can we avoid
them?
The most
common misstep I’ve seen with writers is not taking themselves seriously as
business owners. This can lead to financial pitfalls. Many writers have been honing their craft for years so it’s
hard to identify an official starting date for their self-employment. Without this point to mark the
beginning, it is easy to put off tracking income and expenses. This can be an
unfortunate mistake.
The IRS
will consider you to be in business when you are actively pursuing projects
intended to generate income and expenses. This means they will expect you to file a tax return to report those
transactions. 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. Will this book make these easier to understand?
Yes, my book breaks down complicated number crunching into easy to follow
steps. Readers will understand why
it's important to keep certain receipts and how those pieces of
paper factor into the overall success of their writing business.
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. My book explains it all in a reader friendly format.
What are some common bookkeeping points of confusion for writers?
I found the most common challenge writers face 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? Do they need to do something
with the Internal Revenue Service before they can be considered a
business? How do they handle self-
employment tax?
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? What information needs to be recorded to prove the
expense?
These are all great questions and they are addressed in the book.
Obviously, your book is a
great place for writers to get information on bookkeeping. Are there are any
other resources you recommend?
Yes, I recommend writers visit the IRS web site (www.irs.gov) to research
specific tax issues and the Small Business Administration (www.sbaonline.sba.gov) for general
business information.
I also recommend joining professional associations for writers such as American Society of Journalists
and Authors (www.asja.org), The Authors Guild (www.authorsguild.org) and
National Writers Union (www.nwu.org).
There are many groups to choose from so consider the benefits of
membership before joining.
I was interviewed recently by Freelance Success (http://www.FreelanceSuccess.com)
which 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.
Where is your book available for sale?
Bookkeeping Basics for Freelance Writers is available through Amazon.com
and my publisher (www.CrystalPress.org). Any local bookstore can order my book
by ISBN-10: 0963212389 or ISBN-13: 978-0963212382. List price is
$17.95.
* * * * *
Brigitte A. Thompson
is the founder and President of Datamaster Accounting Services,
LLC in Vermont. She has been active in the field of accounting since 1986 and
is a member of the American Institute of Professional Bookkeepers and the Vermont
Tax Practitioners Association.
She is the author of several finance books for business owners, contributing author
to two business books, and a freelance writer whose articles have appeared nationally
in print and online publications.
Learn more:
Brigitte’s Blog for Writers: Writers in Business
http://www.writersinbusiness.blogspot.com
Amazon Link to Bookkeeping Basics for Freelance Writers:
http://www.amzn.com/0963212389
Brigitte’s Web Site for the Book:
http://www.BookkeepingforWriters.com
Publisher Web Site:
http://www.CrystalPress.org
Brigitte’s Accounting Business:
http://www.DatamasterAccounting.com
