How I keep track of expenses for my taxes #WriteTip #TaxTip

Don’t hate me, but I have all my writing/business tax data collected, categorized, added up, and ready to take to my accountant.

I discovered years ago if I kept track during the year, the end of the year was a breeze. So, whenever I incur an expense, I immediately jot down the amount, the date, and the vendor on a sheet of accounting paper. Then I shove the printed receipt into a file drawer and forget about it. Making a note of the expense means never having to look at receipts again; I only keep them in case of audit.

I track expenses on sheets of lined green accounting paper, which I used to keep in a folder on my desk. Accounting paper has handy, useful columns. This year (2017), I made a slight change. My accounting sheets are now in a notebook, divided into three main easy-to-find categories.

  • Advertising and Promotion (items such as paid ads, book tours, gift cards, special promotions)
  • Production –(Editing, cover art, formatting)
  • General  (Internet, website, phone, postage etc. These are the expenses that aren’t tied to a specific book)

Within each category, I keep a sheet for each subcategory (for instance, Production has a sheet for editing expenses, one for cover art, etc.). At the end of the year, I grab a calculator and add up the subcategories. (And actually, in June I add up the first part of the year, then at the end of the year, I just add up the second half).

Not only does this method keep track of expenses for my taxes, but it allows me to see at a glance how much I spend.  Also new this year, I started a category for expenses by book in which I keep a sheet on each book and list all expenses related to that book: promotion and production costs. It means making a double entry, once in the expense category and again in the book category, but it allows me to see how much each book costs me.

I know many business people use QuickBooks, Quicken, or make Excel spreadsheets, but I don’t know how to use those programs. Last year, I bought Excel for Dummies, intending to set all this up on the computer, but I never got around to reading the book. I’ve decided that this manual process works for me. I think it’s just as fast to grab a pen & notebook as is to open up a program and wait for it to load.

Are you old school (pen and paper) or do you use a computer program? What tips to you have to make your tax chores easier?

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9 Responses to How I keep track of expenses for my taxes #WriteTip #TaxTip

  1. Lisa Medley says:

    You math good. Everyone will want to be your tax preparer,

    • Cara Bristol says:

      Yeah, I make it pretty easy for him, I think. I used to do my own taxes, but then the book profits started adding up, we sold a house, and Turbo Tax couldn’t answer all my questions. My accountant (recommended by my hairdresser) is not much more expensive than what I was paying for Turbo Tax. So why hassle it it all? Let the professional do it. I will say that my accountant is the first one I’ve ever used who does not send me a tax questionnaire/organizer at the start of the year. Maybe he doesn’t feel he needs to since I have everything organized.

  2. S.J. Maylee says:

    What works for you is always the fastest AND least frustrating. This is so true! I’m sure you’ll be surprised that I keep mine in excel. 🙂 I used to keep them separated by book but now I have one tab for expenses that I subtotal by book and/or type of expense when curious. I completely agree that organizing it as it happens works best. That’s when the expense is freshest in my mind. Here’s to a stress free tax season!

    • Cara Bristol says:

      I wish I could be you. If I could automate it, I would. But the time I would spend learning a program seems exhausting right now.

      I do like looking at numbers. I like seeing what I’ve earned, how much I spent and how much on each line item. 2016 was very illuminating.

  3. I use QuickBooks. Helps me a lot. Also, my business account at the credit union allows me to put things in categories so repeat charges are automatically placed in the same categories as my QuickBooks and then I can upload and integrate. I have several businesses and it works great.

  4. Diane Burton says:

    I’ve used Quicken for years for family expenses, so it was easy to use it for my writing biz. I keep track of income by book, expenses not so much. That’s a good idea. I can easily sub-catergorize by book. But I do hate you for having everything all set. I still have to input receipts. What I should do is set aside an hour a week for Quicken. Great post, Cara.

  5. So very organized. I should probably start doing this now. Thanks for the tips. 🙂

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