Personal accounting + irregular creative income
December 13, 2018 9:15 AM Subscribe
I'd like to get better at financial recordkeeping and personal accounting. I have a creative practice that brings in income (but which I have no interest in monetizing), and which I often file a Schedule C to claim deductions for. If you're someone in a similar situation, I'd like to know how you handle personal accounting, what software you use, and anything else I should know.
Last night, on the occasion of sending off my first ever invoice, I idly started trying to tally up all my income from the past few years. (I publish regularly, but payment bureaucracy is usually completely out of my hands.) To my absolute surprise, I actually earn a a significant portion of my income from writing. I knew that, of course, but I'd somehow never really understood how consistently, year-by-year I've made a living from writing. I'd like to get better about tracking this, and in general tracking my spending and savings.
Some extra context that might be handy: I'm a writer, but it's a creative practice that I'm not interested in monetizing; my goals with it are solely creative ones, and though I'm always thrilled when they lead to money, I don't actively seek out opportunities for their earning potential. I do earn money off of it regularly (sometimes a lot -- in the relative sense! -- and sometimes abroad in contexts where I don't have US tax liability), but I have a day job that pays the bills, and which I'm lucky enough to be able to take long stretches away from when I'm earning enough as a writer to want/need to focus solely on that. Maybe it's wrong to resist thinking of myself as a freelancer, but very little of my money comes from pursuing work; it's more often via grants and fellowships that produce a feast-or-famine situation. For what it's worth, I tend to be pretty meticulous about recordkeeping in other aspects of my life and am trying to get better at it with finances, too; this is a curiosity-driven project, not something outside forces (like tax laws) demand of me.
As for software and actual recordkeeping solutions, from a little bit of Googling it looks like Quicken is probably ideal. I'd gladly use Excel or Google Sheets, but I just don't know enough about accounting to create a system that isn't unusably idiosyncratic. I'm also involved in a few non-personal projects that would benefit from having one more person who knows QuickBooks around to pitch in (though I can't really afford QuickBooks and it's much too powerful for my needs -- and I'm sorta grumpy about non-essential digital subscription services, anyway).
Finally, if there's a good book I ought to read about this sort of thing, or a website, probably aimed at creative people who are not freelancers would you point me in the right direction?
Last night, on the occasion of sending off my first ever invoice, I idly started trying to tally up all my income from the past few years. (I publish regularly, but payment bureaucracy is usually completely out of my hands.) To my absolute surprise, I actually earn a a significant portion of my income from writing. I knew that, of course, but I'd somehow never really understood how consistently, year-by-year I've made a living from writing. I'd like to get better about tracking this, and in general tracking my spending and savings.
Some extra context that might be handy: I'm a writer, but it's a creative practice that I'm not interested in monetizing; my goals with it are solely creative ones, and though I'm always thrilled when they lead to money, I don't actively seek out opportunities for their earning potential. I do earn money off of it regularly (sometimes a lot -- in the relative sense! -- and sometimes abroad in contexts where I don't have US tax liability), but I have a day job that pays the bills, and which I'm lucky enough to be able to take long stretches away from when I'm earning enough as a writer to want/need to focus solely on that. Maybe it's wrong to resist thinking of myself as a freelancer, but very little of my money comes from pursuing work; it's more often via grants and fellowships that produce a feast-or-famine situation. For what it's worth, I tend to be pretty meticulous about recordkeeping in other aspects of my life and am trying to get better at it with finances, too; this is a curiosity-driven project, not something outside forces (like tax laws) demand of me.
As for software and actual recordkeeping solutions, from a little bit of Googling it looks like Quicken is probably ideal. I'd gladly use Excel or Google Sheets, but I just don't know enough about accounting to create a system that isn't unusably idiosyncratic. I'm also involved in a few non-personal projects that would benefit from having one more person who knows QuickBooks around to pitch in (though I can't really afford QuickBooks and it's much too powerful for my needs -- and I'm sorta grumpy about non-essential digital subscription services, anyway).
- I have a Mac and would sorta prefer a downloadable program to a monthly fee-based service, if possible.
- I already use Mint, which I like -- though the input interface sucks and I'd use it meticulously if it weren't such a pain in the ass. I'm not wedded to it or anything. Being able to tab through fields without one million mouse-clicks is so much nicer. Plus I can't delete/modify its dozens of categories that are absolutely irrelevant to my life (I don't have a mortgage, or own a car, for example).
- I'd like to be able to download (years of) my bank data in .csv format and import it.
- It would be neat to use this as a budgeting tool, too, but my primary goal is recordkeeping (I'm fine at keeping an eye on my month-by-month spending/saving habits without imaginary envelopes), though I also have no idea how these habits vary over the past few years.
- In terms of my personal finances, I have a few credit cards that I do all my spending on (but no debt; I've never carried a balance) and a couple bank accounts, all in the US.
Finally, if there's a good book I ought to read about this sort of thing, or a website, probably aimed at creative people who are not freelancers would you point me in the right direction?
Along the lines of what jraz suggests, it's a good first (and in your case perhaps last) step to have a 'business' account and a 'business' card that you use to receive and spend money related to your writing, exclusively. These don't have to be branded as business accounts, you can just use a personal account exclusively for your business needs. That in itself will make your accounting easier and transparent with regard to how much money is going in and out with regard to your writing, without really any additional effort. From time to time you can pay yourself a 'salary' out of the business account so that you can use the money that you earn without polluting your transaction history with non-writing-related credits or debits.
posted by Kwine at 10:08 AM on December 13, 2018
posted by Kwine at 10:08 AM on December 13, 2018
Segregated “business” account and link it to Wave. It’s a basic, business focused, online, free accounting program. Having a separate account to run income and expenses through is by far the easiest way to start tracking this though.
posted by notheotherone at 9:24 PM on December 13, 2018
posted by notheotherone at 9:24 PM on December 13, 2018
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The only more complicated variables would be if you have costs that are split between business and personal (such as car costs, housing, internet, etc.). I have decided not to count expenses unless they are fully business. For instance, I do include what I pay for my website hosting and for renewal of my domain name, but do not include the cost of Verizon Fios. My accountants says I can choose to calculate those split costs, but I have decided the juice is not worth the squeeze.
It's a pretty basic system, but I've found that it is more than sufficient.
posted by jraz at 9:58 AM on December 13, 2018