I have always been a pen and paper person, but I love technology and the ease it brings to my life. Bookkeeping is no different for me. I started on pen and paper, well a pencil and paper, and progressed from there. Write RN started with $0 and made $15,000 it’s the first year, working less than 4 hours a week.
Since then, wrapping up 2019, I grossed $30K, working less and enjoying life a heck of a lot more!
I have always been a numbers person, and a saver, so building a business has been scary because of the risk involved. I am very “Type A” when it comes to my bookkeeping and this post will tell you how I do my books for Write RN and my recommendations for you!
How To Do Bookkeeping for Your Freelance Business
I use a pencil and paper when I am tracking income and expenses, and create a spreadsheet in the first week of the next year for my accountant/tax guy. (Thanks, Matt!)
I am a very small business, with one employee, me. So, when I invoice clients, I always invoice at the end of the month. Some freelancers do invoices and won’t start any project until it is paid. If you trust your client and have a contract in place, you are safe to wait until your work is delivered.
What To Track on Bookkeeping
In your business, you can come up with many things to track, but when it comes to money, you better be on target. In bookkeeping, expenses and tracking I do include:
- Major Expenses – This includes a new computer I purchased this past year, a business coach, a trip involving work (don’t be crazy with this, this was a work trip, not my family trip to Florida, Maine, or Chicago where I worked.)
- Track your expenses – This is everything from your office supplies, printer ink, decor, coffee with a client, events, lunch, car mileage, you can even claim part of your home for expenses like electric, gas, and your cell phone if you use it for business. I am not an accountant or a tax advisor, so speak with a qualified person before taking such deductions.
- Record Deposits and Keep Checks – Every invoice I make and send, I mark in pencil in my spreadsheet. When the invoice is paid, I erase my pencil and put it in a pen. When all invoices are paid, I add up the income that month. I also save every paper check I receive and deposit via mobile deposit.
- Move Tax Money – I have said it before if you have a business, create a business checking account. One of the biggest mistakes new business owners do is mix their personal and business money together. When you have a business account, save part of your paycheck for taxes and expenses in your account and put the rest into your personal, if you have any left.
By putting aside money, you won’t be overwhelmed when your taxes come due. Be sure to know which automated payment software platforms or bookkeeping products you are signed up. When the renewal comes due, you want to have that expense available.
- Watch Your Invoices – Remember I said, I write those invoice totals in pencil? If it has been over 30 days, I email the client to be sure they
1. Received my emailed invoice
2. What they need from me in order for payment to be processed.
This is usually all I have to do when I have an outstanding invoice. Usually, it’s because the person didn’t process it yet, aka, they forgot.
When to add an accountant into your business
This past year, the company I worked with called the Healthcare Marketing Network hired an accountant / CFO to manage the money in the account. The accountant provides analysis, reports, reviews, and interprets financial information on a larger scale. The Healthcare Marketing Network paid over 70 freelancers this year, so bookkeeping can become messy (remember Write RN is solely me).
I also notice a lot of freelancers (and I recommend this) using accounting software like Freshbooks or Wave. I will draft invoices in Paypal or Excel, but I still prefer paper and pen myself, but I am odd.
Do you use accounting software in your business?
Have you tuned into Itunes for our Podcast called The SavvyScribe?
I hope this article was insightful for you on how to add bookkeeping into your freelance business and what you need to do to get started. Good luck this year, and let me know if I can help you in any way.
Like what you’re reading? Take a listen to our podcast called The Savvy Scribe Podcast!
Interested in taking your health writing business further? Join us in the Savvy Scribe Growth Lab!