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Financial Literacy Month: keeping track of payments by client

On April 12, 2019 by Lauren Elkins

April is Financial Literacy Month so I wanted to share some things I’ve learned after working as a freelance writer for a few years . Running your own business requires managing your accounts and keeping track of it all for taxes, too!

Income tax returns are the most imaginative fiction being written today.

Herman Wouk

This is the not-so-fun side of business at times, but as you’re handling your accounting remember: it’s hard work because you’re making money and that’s a good thing.

Through trial and error, I’ve learned a handful of important things that I need to do in order to keep track of payments from clients. This helps me run my writing business smoothly and stay organized come tax time:

1. Keep an accurate record of payments received
2. Save those with my invoice attached
3. Group them by client
4. At tax time, validate my numbers against 1099 MISC forms from my clients
5. Set up a recurring appointment with myself to do this regularly

In previous years, I had to use my household budget spreadsheet to figure all of this out for taxes. It took far too long going through the spreadsheet and my PayPal, Venmo, and checking accounts, hunting for all of the payments over the previous year.

Different clients will prefer different methods of payment. Even though it’s harder for you to keep track of it all, providing them with convenience means you’ll get paid. That’s important!

This year, I have a brand new system for keeping track of it all in one place. What I like about my system: it’s free; it doesn’t include lots of other functionality (like using online bookkeeping software); and I set it up for exactly what I needed.

I know there are some awesome apps and services out there for freelance writers to track all of this. I do use Quickbooks online for my music consulting business. For some writers, those are must haves for a variety of reasons, but for me, I didn’t need to pay the monthly fee when I could create my own, well-organized system, without the cost.

Look, Quickbooks and others (Freshbooks, Xero, WaveApps, etc), automate things such as syncing with your financial institution, but the time it requires me to manually enter my information for payments received is so small, it’s not worth the monthly fee. I totally understand if you prefer using that software. Find what fits.

Using Airtable for tracking payments

Okay, here’s where I finally get to the point: what I use for my system.

I set up a base in Airtable. If you want more details on this cloud-based tool, there’s tons of helpful videos and how-to’s already out there.

Or, grab my free, visual guide on how to get yourself started with this awesome tool!
[gumroad id=”laurenlovesairtable” type=”embed”]

Airtable is a database-spreadsheet hybrid that offers a great, free version and then paid services for more users with premium add-ons.

I don’t need the premium stuff so having free fits.

Here’s how I set up my Base (Airtable’s version of a database):

1. I named it Tax Information Base
2. In that Base, I have a table called Payments Received (clever, I know)
3. I use it to keep track of just the necessary information: date, amount, client, service, invoice, and year
   1. Date: the date I was paid
   2. Amount: how much moula
   3. Client: who paid me
   4. Service: what I did for them
   5. Invoice: the PDF that I sent them
   6. Year: this is for creating a report based on the tax year I need
4. I also have a view (a.k.a report) which displays the payments by client
5. I create a new view for each year, because that’s what matters for taxes

Now that I have my system in place, when it’s tax time, I open up my base, click on the view for that year and it displays the total amount I received in payments by each client. This will match with the 1099 MISC forms I should receive from each of them. (If they paid me less than $600 within that year, they’re not required to send a 1099 but sometimes they do.)

Do you want to see it in action? Sure you do! I created a copy of my Base and shared it for anyone with the link. Here it is: Tax Information Shared. If you’d like to use it, simply create your own copy so nobody else can access your information.

Take some time to check it out. Click on the Grid View drop down on the Payments Received table and see how it groups by client. Here’s what it looks like with some imaginary numbers and only two of my clients. See how it rolls up the total number from one client? That’s the number I’ll need at tax time!

Imagine having this all set up to use when you’re putting all of your information into TurboTax (or however you like* doing taxes). The other tables are how I keep track of business expenses. I detailed that in my previous financial literacy month post all about it.

So, what do you think? Do you like this simplified method? Would it help you out? Or do you prefer using something like Quickbooks or Xero? Share in the comments!

*Nobody likes doing taxes.