The Importance of Keeping Good Records
April 29, 2008 by Deb
Filed under Writing Tips
I always joke that I married an accountant because of his record keeping skills and because he handles my taxes. The truth is, his success at keeping track of the family finances, is contingent on my success at keeping good records in my freelance writing business. That’s only the start of it though, good record keeping isn’t only keeping track of money. It has to do with keeping track of clients, projects and deadlines. As a freelancer or sole proprietor, you can’t put your record keeping off nor can you let someone else handle many of the little details. It’s imperative you know what’s going on with your business at all times.
Show me the money
Ask 20 different freelancers and you’ll learn 20 different ways to handle the bookkeeping. Many like software such as Quick Books. Personally, I prefer a good old fashioned Excel spreadsheet. Every time money comes in, I mark it on the spreadsheet. Then I note whether it’s from a client, donation or advertising. Knowing exactly where my money comes from lets me know exactly what to do with that money. For instance, FWJ’s advertising revenue and donations are used to pay Jodee or invest back into the blog’s design, advertising and more. This helps me to see if I’m making a profit. I’ll also note any money used for outsourcing (which is rare) and images. Any purchases attributed towards my blogs such as flash drives or even my Flip camera are noted as well. Now I can see "at a glance" how much I’m earning, how much I’m paying out, and how much of a profit is coming in. When it’s time to do the taxes, I only have to print this out for my husband accountant, give him the receipts and we’re good to go.
And speaking of
Receipts
Again my manner of keeping receipts is rather primitive. I have an envelope for each month and in each envelope are that month’s receipts. Some months don’t have anything in the envelope, while others have it quite full. This isn’t as much for accounting purposes as it is to cover my butt in the event of an audit.
Clients
Each client has a folder with our contract, important correspondences and even notes from me. I might note an important day such as a birthday, or even likes and dislikes. If a client dislikes when I used certain words or prefers a certain type of article or post, I’ll keep that information in his file. I’ve done this throughout my career and it helps. Clients appreciate your keeping track of the minute details and not having to remind you of everything.
Jobs
As previously noted, I keep an editorial calendar listing the day’s topics and tasks. On another calendar I have my deadlines listed. I make a note of top priorities or important details. I’ll also list deadlines. I owe much of my success to my ability to meet my deadlines and stay on top of clients’ needs. You can’t do any of that without keeping good records.
Time
How much time do you spend on each project? This is important to keep track of so you can determine whether or not you’re receiving a reasonable rate of pay.If the work you do for a particular client doesn’t justify the amount of money you receive in return, this will enable you to make a decision as to whether or not you should ask for more money, drop the gig or keep on keeping on.
At Network Blogging Tips, I blogged about the importance of having an administrative day. Busy freelancers need to set up at least a couple of hours each week to go over payment, work and more. I guarantee, your work and life will flow smoother with good records.
Tell us about your record keeping system.
I was recently told about TraxTime – it’s an online time-clock set up – to use for my clients. I’ll be purchasing it with my next project. The website is http://www.traxtime.com.
I’m not organized enough for monthly envelopes, but I do have one file folder in my desk, and one in my email, for yearly receipts for writing expenses. I also have folders for invoices, and a spreadsheet of projects which shows the project duration, payment method and amount, and other details.
I do the Excel thing, too. I have a main page that lets me look at overall earnings for the year, an invoice tracker, where I put everything in great detail, a page for monthly income tracking, a page for income from individual clients, and one to keep track of expenses and mileage. I keep tabs, too, to make sure all the totals on the income pages match. I keep folders for receipts, contracts, and pay stubs. My biggest work at tax time was making sure that the tax forms from individual clients matched my recorded income totals. I then print out the sheets with the annual total, the client totals, and expenses, and hand them over to our accountant. He loves my system, and it is really easy for me to keep track.
Oh yeah, and I do keep folders for each client, and in some cases, individual projects.
My record of accounting is no where near where it should be, I admit it! I’m in the process of reorganizing my system, so all of these wonderful suggestions are great. Thanks for sharing everyone!
I’m a MS excel person, too. I like your idea for keeping tabs on clients – I’m going to have to try that one day!
Excel spreadsheets and monthly envelopes for reciepts are both things I do also!
I’m like Kristy but this is the first year I will really need to get a system together. I have some accounting software on my pc but I haven’t used it yet but I am also an old-school Excel kind of girl… so who knows but luckily it’s early enough in the year that I can go back without too much trouble and get all of this together.
Debbie,
The envelope system works fine, I used it for years, but I would be covered in paper if I continued to use it now, 15 years into the business. So I scan receipts, bills, everything into PDF files and store them electronically.
I also use an old version of ACT! (new one is a memory pig) for contacts, and QuickBooks for accounting. Excel can work, and I’m sure a lot of the functionality in QB comes from spreadsheet-type calculations, but I prefer QB higher functionality. I’ve had some basic accounting courses, so I can usually recognize an error quickly in QB (misrecording a liability or an asset), otherwise I might use Excel.
I’m piggy-backing on my husband’s law practice, so I use TimeMatters for timekeeping (which I hate) and QuickBooks for accounting, which I’m getting used to. I’ve started invoicing in QuickBooks, which saves a lot of time now that I’ve made my own templates. I also balance my business checkbook in QB, and it downloads transactions from my bank, which also saves a lot of time. The reports are great at tax time.
Thanks for the tip about TraxTime — it’s cheap enough that I’m tempted to try it.
Hi Deb:
I’m an excel girl, too. I have three spreadsheets – one for income where I record invoice number and date, client invoiced, amount invoiced for, and date received (and amount received which can differ sometimes). Then I have a mileage spreadsheet, which I catch up on every couple of weeks. I track my mileage in my date book and then transfer it in…and finally I have an expense spreadsheet which has several columns for itemization.
My accountant (dad!) loved it when I printed those out and handed them to him (he wouldn’t be able to handle me emailing them). My business is still new enough and small enough that this simple system works for me.
Hi! I’m new to freelancing and have an invoicing system I’m happy with. I don’t know, however, how to set up my spreadsheet to keep the books – perhaps this is very obvious to some, but not to me! I’d prefer not to pay for software, because once I have the sheet set up, I’ll have everything I need for my accountant.
What I need to track are:
invoices outstanding
invoices paid
funds paid to myself in salary
funds put aside for tax & pension
funds paid out to other freelancers (sub-contractors)
commission paid out to myself on the above jobs
expenses
Could you advise?
Thanks!
PB