Financial Literacy Month for freelance writers: tracking business expenses
April is Financial Literacy Month and even though I’m a writer, this is an area where I am passionate. I’ve even taught a class on some areas of tracking finances (more on that in a post scheduled in two weeks).
As a freelance writer, I realized that the number of cats I was herding increased immediately from the moment I started that first paying gig.
Keeping track of finances required a lot more organization on my part than when I was working full-time. One of the big reasons why: TAXES.
I know. Scary. I hate taxes, too.
This year, they weren’t nearly as horrendous even though I also have a small music contracting business in addition to my freelance writing. (Plus, my husband’s good job, our household, kids, etc.)
I want to share with you one of the organizational strategies I now have to better handle one area of my taxes: business expenses.
Tracking business expenses
Previously, I kept a file on my computer where I saved all receipts for business expenses, whether they were scanned in or came through email. This worked fine enough, but it still required me to open each file and go through them one at a time to determine how much, what it was for, and what kind of tax category it should go into.
Today, I use an Airtable database to keep track of this AND it categorizes everything for me. Huge win at tax time! Here are a few reasons why I prefer it:
- It’s free! (I don’t have to pay for a monthly accounting service like Quickbooks or Xero.)
- The app on my phone makes it simple to grab a pic of a receipt.
- It can group expenses into categories that match up with those I’ll use in TurboTax.
- It gave me the chance to work with a database, which is something I miss from my previous career!
- But you don’t have to be database savvy because, once set up, it’s just like using a good ol’ spreadsheet.
I’ve gone into details about Airtable in a previous post, if you’d like to dive deeper into this awesome cloud-based tool, but below is a brief, high level description of my Tax Information Base.
A few Airtable terms:
- base: a database, which is a group of related tables (created for one specific project or interest)
- tables: these are like worksheets on a spreadsheet
- views: like reports that display your data in a different way
- fields: like a spreadsheet column, with rich content (examples: file attachments, emails, drop-downs)
- records: like a row in a spreadsheet
Now you got it, right? Totally! Here’s what my Tax Information Base does for me:
- I store each business expense as a row.
- Each row has important information I need for my records: date, $, seller, description, receipt, and tax category.
- The tax categories are a drop-down list that matches categories in TurboTax.
- I can switch to a view that displays these grouped in categories.
- Come tax time, as I’m entering in anything under “Advertising”, I simply look at that group from my table and fill them out in TurboTax.
- And finally, I have a digital record of my receipts.
Try it for yourself!
Give it a whirl and see what you think. I created a copy of my Base (without my personal information, of course), if you’d like to check it out.
Simply stop in right here: Tax Information Shared. It also includes a table for payments received, while I’ll explain next week.
If you’d like to use it for yourself, simply create a duplicate of the Base and have at it! (You wouldn’t want to use this one since anybody with the link can edit and change things. Talk about lack of privacy and security, yo!)
What do you think? Helpful tool? Are you familiar with Airtable yet?