Writer Finances: Business, Bookkeeping, & Big Picture

Last week I wrote about getting my personal finances (and our family’s finances) in order.

I believe having personal finances under control can really help give you the room to think more intentionally about your creative finances (both income & expenses).

So if your personal finances feel overwhelming, I encourage you to check out last week's post first.
 
This week I’d like to share some concrete ways I approach my creative endeavors from a more entrepreneurial angle rather than what the IRS (not me) would call a “hobby”.

​In particular, I'll share the way I track and manage income and expenses related to my creative endeavors. 

WRITER FINANCES

Table of Contents

1. OVERVIEW: BUSINESS OF BEING AN AUTHOR
   
2. DAY-TO-DAY FINANCIALS: BOOKKEEPING, END OF YEAR REVIEW, & TAXES
   
3. BIG PICTURE: ESTATE PLANNING FOR AUTHORS

DISCLAIMER: I am NOT a financial or legal advisor. The anecdotes and recommendations below should not be taken as specific financial or legal advice for your situation. If you have financial or legal questions, you should consult professionals.

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1. OVERVIEW: BUSINESS OF BEING AN AUTHOR

Step 1, as usual, was learning as much as I could.

I've consulted several sources when it came to wrapping my head around the more financial aspects of the writing life. Below are a few of my recommendations.

Books
You can find several books on this Bookshop List, Writer Finances (Personal & Professional):

On of the standouts in this list is Jane Friedman's The Business of Being a Writer, which I highly recommend:

Podcasts
I also listened to several podcasts, particularly ones that focused on indie authors (who are by definition more entrepreneurial). Here are just a few good ones:

• The Creative Penn Podcast
• Create If Writing Podcast
• DIY MFA Radio
• The Smarty Pants Book Marketing Podcast

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2. DAY-TO-DAY FINANCIALS:
​BOOKKEEPING, END OF YEAR REVIEW, & TAXES

Once I started selling online courses, I began managing the money related to my creative projects more intentionally.

Here is a quick breakdown of my regular money managing procedures.

Banking & Expenses

• I opened a dedicated Writing checking  account. I use and like ALLY Bank.
• I designated one of my credit cards as my “business” card — no other types of purchases go on that card, only writing related ones.

Bookkeeping

Before I dive into my bookkeeping process, I highly recommend this Bookkeeping 101 podcast series (9 brief episodes). This series breaks down bookkeeping step-by-step and can help give you a clear picture of whether or not you may need to start taking your bookkeeping more seriously.

Software

• I opened a free account on Wave, a bookkeeping software that was pretty easy to set up, learn, and manage on my own.
• I linked the writing checking account, and writing expenses credit card to my WaveApp account. I also connected my Business PayPal and Stripe accounts to Wave.

Monthly Systems

• As I make purchases, I email / submit via mobile app any receipts directly to Wave.
• 2-3 times a month, on what I call “Financial Fridays” I take 30-60minutes to login to WaveApp, categorize any outstanding income or expense transactions, reconcile accounts, and take care of any other bookkeeping tasks.
• As needed, I revise and add additional expense and income categories into Wave, matching them to tax related categories as much as possible

Annual Financials:
​End of Year Review & Taxes

• At the end of the calendar year, I print out a P&L (profits & loss statement) from WaveApp
• I use the P&L to write up and share a Financial Year End Review on the blog. Here’s my 2020 Year-End Review.
• I use the P&L info to fill out a draft of my Schedule C for writing related expenses. I send both the P&L and draft Schedule C to our family’s tax preparer/accountant, so they can use the info to file our taxes

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3. ​BIG PICTURE: ESTATE PLANNING FOR AUTHORS

In last week's blog post I discussed how estate planning was a valuable way to get a handle on the big picture of our family's finances.

For creatives, it is especially important to think about how they'd like their creative "assets" managed after they are gone.

Here are some resources to get you thinking about your creative life Estate Planning.

Estate Planning for Authors (podcast episode & book)

• Podcast Episode: Estate Planning for Authors with M.L. Buchman
• Book: Estate Planning for Authors by M.L. Buchman:

Blog Posts

• Are You Prepared? Estate Planning for Authors 
• Estate Planning for Your Indie Author Business 
• Final Drafts: Selecting a Literary Executor 
• Estate Planning Series (very thorough series for writers) ​

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NEXT STEPS

​I hope this post has inspired you think more intentionally about how to best manage your creative finances.

Please don't feel like you have to dive in and do "all the things."

If you're just getting started, here are two simple first steps:

1. Pick up The Business of Being a Writer.
2. Open a dedicated bank account for creative related income / expenses.

Let me know in the comments what's helped you manage your creative finances.

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Before You Go

• Read more blog posts about Creativity & Finances
• ​Check out these books on Writer Finances:

TAKE ME TO THOSE BOOKS