As we approach tax season here in the United States (that’s April 15th for all you out-of-country fans of the blog), I have a confession: I’m spectacularly bad at simple math. I have a form of dyscalculia, to be completely honest. I have to be extra careful to do things right and then double-check the numbers with someone else. This also means that I must generally keep things organized with a passion that borders on obsessive compulsion. Thanks to my stepdad, I’ve gotten some great advice regarding this “business” of writing (actually he couched it for any business but many of the rules are the same) and I’d like to share with you three of the best tips he ever gave me.
Your personal finances and your “business” finances should be separate entities.
Dad always said don’t treat your personal finances and your business finances as the same thing, don’t keep the paperwork together, and if at all possible don’t keep the finances together in the same bank account. A friend of mine in the accounting business often tells me some of the general bookkeeping nightmares she has to deal with around this time of year. I’m sure that if I asked her of her biggest complaint, she’d say that it was people who bought their dog food (or some other personal item) at the same time they bought their business-related expenses.
Checking accounts (and business accounts in particular) are relatively easy to come by these days and typically take mere moments to open. By having a separate account for your writing-related expenses and using that account religiously, you guarantee that your personal finances and your business finances remain separate. Better still, you’ll have at least one official record of those business finances in the form of a bank statement that tells you exactly what you spent and where. Tax time? Pull out the bank statement and you’re already half way to knowing exactly where your money was spent.
Use your bank card and your credit card for your business expenses. Don’t pay cash.
Most checking accounts today not only offer free checking, but also offer a free debit card to go with it. Writers can really benefit from this card by using it religiously, without fail, each and every time they purchase items related to their writing business. The key is resisting the urge to lump those writing purchases in with personal purchases. Whether it’s a single box of envelopes you remembered to grab while you were shopping for groceries or a full blown trip to the office supply store, if you use the debit card tied to your business account without fail you won’t be tempted to pay cash for an item. Cash purchases only ever result in a little paper receipt that gets tucked into purses, left in bags to be recycled, or otherwise lost. You want to be sure you always have a record of your writing-related purchases and your debit card, which produces a bank statement, is just the way to have that record handy.
Call if you need help.
Mostly Dad was talking here about asking for money when I might need some once I’d left home, but from a larger perspective, he meant more than just money here. He meant advise. Realistically speaking, not everyone can call their dad when they’ve got accounting and finance questions. But the important point that Dad was trying to make here is that you should always know who you can call on for help with your finances. Consider a bookkeeper if you can afford it. Do some shopping around and find the bookkeeper that’s right for you. Regardless of what you do, get help as soon as you think you need it. Don’t wait. Don’t let financial problems fester or you’ll end up with more expenses than you had in the first place.
See Dad? I really was listening.