One of the most overwhelming parts of owning my own freelance writing business for me are the bookkeeping processes. It’s all fun and games when you are doing what you love while getting paid for it, but that all changes when you have to start keeping track of finances. When I was just starting out and making a part time income, I wasn’t too concerned about it, but it has grown to a point where I have to start thinking about tax preparation time.
Just the word “taxes” is enough to give any entrepreneur the chills. Not only is it physically painful paying in almost 30% of your hard earned income, but the terms and conditions are sure to send me into a cold sweat. How do you keep track of your expenses? What expenses are eligible as business write-offs? How do you keep track of your income when you have payments coming in from multiple sources at random times of the week? It is overwhelming, that’s for sure.
Taxes don’t have to be as scary as they seem. If you take it one step at a time and do your homework it will all be ok. Whether you are a pen and paper kind of person, or tech savvy, it can be simplified. Break down your income sources, and then break it down into payments. Track every payment transaction as you go. At the same time, track every single expense you incur while operating. There are many different expenses that you can deduct come tax preparation time, so track each and every penny you spend on your business. Once you have these two figures you can determine your net profit or loss. It is also a good idea to track your working hours each week, so you can break down your hourly rate if need be. These things can be tracked on Excel, certain bookkeeping programs, or other spreadsheet platforms.