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The idea is, I want this party (my working year) started. Right. And quickly. So I’ve spent the weekend closing out my books for 2012 and opening my books for 2013.
This is the first time in a long time that I’ve gotten my paperwork together so soon after the start of the new year. It feels good. My end-of-year purchases are fresh in my mind, the papers piled on my desk are all still from 2012 and can be sorted quickly (right?), and as I enter expenses into my spreadsheet, I’m reminded of the annual expenses I can copy directly into my 2013 books.
Having been self-employed for practically forever, and having for years been responsible for the project budgets of my clients, I’m already good at labeling, saving, and filing receipts. It’s just the task of sorting through the envelopes and entering each purchase in a spreadsheet that I tend to put off until the last minute.
It used to be simpler to keep track, because all receipts were paper and they were in the appropriate envelopes in the appropriate manila folders, in the appropriate accordion folders. I still file receipts in envelopes, sure, but some reside in Outlook folders as e-mailed purchase confirmations and others are in computer folders as PDFs. Still others are line items on credit card receipts, and others (I admit it) exist on scraps of paper long gone or on calendar pages long turned.
This year I started a new practice of printing online receipt confirmations to PDF and saving them in a dedicated folder (I guess the correct term is directory, since it’s on my computer). I also do this with online bill payment confirmations (instead of printing them out on paper). I rename each PDF file with the date and a label (e.g., 2013-01-06_EFA-membership). I also have an Outlook folder specifically for e-mailed purchase confirmations.
There’s some duplication involved (often one purchase will result in a PDF of an online confirmation, an e-mail receipt, and the transaction listed on a credit card bill), but I’d rather that than lose track.
My income accounting is more primitive, although yesterday I was able to enter all my invoices in an Excel spreadsheet pretty quickly. I use a ledger book to record paid invoices, and write “Paid” with the date and client’s check number or PayPal transaction number on printouts of the invoices. There’s just something about writing PAID and watching the folder of paid invoices grow.
Here is a spreadsheet that you can use for entering income and business expenses. I’ve created blocks for Schedule C Part II line items and for quarterly earnings for income. You can easily add categories and rows — just make sure that the sum equations capture all the added rows before you finalize your totals.
I’ve noted the types of expenses I include in each category — this is only what I do and is not to be taken as advice. Consult IRS publications and/or an accountant if you have questions or need assistance.
I hope it’s helpful. Add your own expense tallying tips and tricks in the comments.
While we’re at it, here are a few relevant IRS sites for Schedule C expenses:
Schedule C form: http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
Instructions for Schedule C: http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
Publication 334: http://www.irs.gov/pub/irs-pdf/p334.pdf
Update — Quarterly Filing
I should have mentioned this earlier — and if you’ve ever filed estimated taxes you already know this — but for the benefit of the newly self-employed, IRS “quarters” for the purpose of filing estimated taxes are not quarterly at all:
1st Q Jan. 1 – March 31 (due April 15)
2nd Q April 1 – May 31 (due June 15)
3rd Q June 1 – August 31 (due September 15)
4th Q Sept. 1 – Dec. 31 (due January 15 the following year, unless you can get your return in and pay up by Jan. 31)
Complicating matters for me is that Delaware uses three-month tax periods. But since Delaware has a $300,000 exclusion on gross receipts, I haven’t actually owed any quarterly Delaware taxes. Yet. 🙂 Still, I have to file, so I have to calculate income for seven different pay periods.
Finally, here are two useful IRS sites for estimated taxes:
And to get back to my initial acknowledgment of Katharine O-Moore-Klopf’s blogging, be sure to check out her Copyeditor’s Knowledge Base for information and resources useful not only to copyeditors but to freelancers of all stripes.