Keeping Track of Your Finances
It finally happened… you sold one of your creative works. For money. Real money. Not a lot but enough to make you grin from ear to ear.
Staring at the cheque, your mind begins to make some calculations. “If you can do this on a regular basis, you can begin to get a consistent income,” your brain tells you. “From there, perhaps you can scale back your ‘day job’ hours so you can devote more time to writing. Then, you can eventually write full-time as a professional! Next…”
Stop!Before you imagine yourself as the next internationally lauded creative writer, it’s time to get your house in order. No, not your literal residence, but your financial “abode”.
Yes, it’s time to start tracking your writing income.
For many creative writers, the thought of producing, maintaining, and analysing even a simple income/expense spreadsheet strikes a chord of fear and panic. But rest assured that keeping a handle on your writing-related finances isn’t as complicated as you may fear. In fact, you can do it by hand or (preferably) with your computer in very little time.
#1: Track Your IncomeEven if you only get a few cheques or payments in a calendar year, make sure you keep a thorough record of the transactions. (At this point, there’s no such thing as “too much information”, so feel free to be as comprehensive as you can.)
Write down the name and type of the item you sold (i.e., a poem called “The Rebellion”, a short story named “Hotrod”, a greeting card slogan on the topic of motherhood), followed by when the creative work was published (or sold, if that’s more applicable). End with two numbers – what you expected to make on the project, and how much you were actually paid.
This income chart will give you a basic idea of the money you’ve made over a specific period of time, critical for tax purposes.
#2: Track Your ExpensesJust as you wrote down all your writing-related income, it’s important to do the same with all your writing “business” expenses.
For instance, if you bought a new laptop and use it exclusively for your creative writing ventures, you will probably be able to deduct the purchase on that year’s income tax. Similarly, if you invested in paper, pens, or other office supplies, they could be “written off” as tax deductible expenses, too.
(If you’re making a substantial amount of income, you might want to seek out some accounting advice, as there could be countless tax deductions related to your writing that you’ve never considered.)
#3: Check Up on Past Due PaymentsIf you’re not tracking your finances carefully, you could actually miss a payment that you’re owed. Rather than realising an editor or client hasn’t paid you after months and months, you’ll know immediately if you don’t receive a cheque within a timely fashion if you’re keeping abreast of all your assignments.
Should someone refuse to pay you, make certain they are or have not used your work. If this has occurred, they may have violated your contract, as well as copyright laws. At this point, depending on how strongly you feel about the piece, you may want to seek legal assistance.
#4: Follow Your SuccessOne of the greatest results of tracking your writing finances is that your income success can be followed relatively easily. And there’s nothing as motivating as seeing your numbers rise quarter after quarter. Plus, after a few years of keeping spreadsheets, you’ll be able to pinpoint your “high seasons” and “dry spells”, which could be beneficial in your personal fiscal planning should you decide to become a fulltime freelancer.
Now, get out there and celebrate your most recent sale…!