Tag Archives: accounting

The bureaucratic burden of telling clients “pay me”

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It’s the first day of a new month, and that can only mean one thing for my e-mail: more .pdf attachments than usual in my outgoing messages, in the form of invoices for one freelance client or another.

Close-up of the 4 / $ key on a Mac keyboard, without which I would struggle to invoice anybody.

Instructing these companies to pay me for work done over the previous month should be easy after 11-plus years of not having a real job, but there’s still some struggle attached to this chore during and after the invoicing process.

The easiest part of it involves longer-running clients, where I just need to open the invoice document from the previous month, change the invoice number and the date, update the work done and the sum due, and attach the new file to an email.

But with less-frequent clients, I need to remember if there’s some wonkiness with a P.O. number or payment instructions that I may or may not have remembered to save in a previous version of the invoice file.

Others require their own format, usually a Google document or form or an Excel spreadsheet. Not knowing what kind of file a company will want me to produce before it will send me money is one of the things that’s kept me from following advice to use a professional accounting app like QuickBooks… another thing being my own apathy.

This routine can get more complicated if I’m away from home, since all of these invoice templates live on my Mac and since my Windows laptop doesn’t have a PDF-editing app equivalent to Apple’s Preview (sorry, Drawboard PDF). But keeping these financial documents in one folder on one computer allows for a simple accounting system: Right before I e-mail an invoice, I save it to an “Invoices – owed” folder, and once it gets paid I move it to an “Invoices – paid” folder.

It’s not the most sophisticated system, but it still seems to work after 11 years and change. At least when I remember to prepare and send the invoice in the first place. Which reminds me that I still have one invoice to finish for one client and a second to create for another, and of course they’re not in the same format.

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I survived yet another year of self-inflicted tax prep

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The annual exercise in accounting self-abuse that is me doing my own taxes ended three months later than originally scheduled and yet still on time, thanks to the IRS pushing Tax Day back to July 15 to make up for the coronavirus ruining everything.

That delay taught me what I’d needed all along to make this math masochism easier: a dress rehearsal a month and a half before the real deadline. Here, my thanks must go to the Virginia Department of Taxation, which extended the deadline to pay state taxes but only by a month–from May 1 to June 1–and left in place the automatic six-month extension to file state returns.

I didn’t want to send too much or too little money to Richmond, so I needed to get our federal taxes close enough to done for me to plug the relevant figures into our Virginia return and get a reliable estimate. I plowed through TurboTax, as usual needing much more time to calculate my business profit after expenses than for any other part of the return. As much as I miss having itemized deductions make a large amount of our tax bill vanish, getting them right did eat up a lot of hours.

(Side rant: My TurboTax labors also went faster than usual because I finally figured out the freakshow workaround required to import statements from some old American Funds holdings. Without that, I would have had to type in those figures by hand because the PDF download this inept investment firm provided was a giant image without any selectable numbers.)

That work yielded nearly-final figures for the federal return that I could flow into a Virginia return in TurboTax. Then I double-checked that result by redoing the state math in Intuit’s woeful Free Fillable Forms online app, what I actually use to file because I refuse to reward Intuit for its rent-seeking strategy of getting states to retire their own online-filing tools.

In past years, TurboTax and Free Fillable Forms have agreed on what I’d owe Richmond or what Richmond owed us. This year, the stone tablet of spreadsheets said we’d owe $10 more than what TurboTax estimated for our Virginia bill. I ignored that at the end of June but went back through all the numbers again this week without finding any reason for the difference. Which is fine–maybe we paid Virginia a Hamilton we don’t owe, but I’m sure my state could use the help these days.

After going over our federal returns one last time Wednesday night, I had them e-filed before 10 p.m. Wednesday, then had the state returns dispatched an hour later. That left one last tax-prep chore: tweaking the Google Docs freelance expenses spreadsheet template that I shared here two winters ago to make it a little clearer which home-office expenses should be added together.

Here’s the Google spreadsheet I use to track my expenses

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A friend of mine started freelancing at the end of last year, so I decided to give him a boring but useful present: a blank copy of the Google Docs spreadsheet I use to track my expenses.

old calculatorA systematic, easily smartphone-accessible way to record the costs of doing business–organized so you can copy the year-end totals into your Schedule C tax form–is exactly the thing I needed when I started freelancing almost eight years ago. Instead, I had to survive some excruciatingly stupid accounting practices and eventually thumb-wrestle my way to marginal competence.

I was glad to give my friend a boost past that phase, and now I want to do the same for any self-employed types reading this. Here you go: Make a copy of this template (go to the File menu and select “Make a copy…”) to your Google account and get to work.

This template is organized by types of expense, with the biggest categories in my case–travel and meals and entertainment–getting their own sheets. When possible, I’ve aligned types of costs with TurboTax’s vocabulary to reduce springtime tax-prep confusion. In addition, you’ll see a box in which you can plug in the relevant numbers for a home-office deduction, but I recognize that not every 1099-income type will claim that.

I’ve also left comments throughout the spreadsheet (look for the orange triangle at the upper-right corner of a cell) explaining what goes where. If you see ways to simplify this or if you think the spreadsheet is missing an important angle, please let me know in an e-mail or a comment below this post.

I hope this helps. Good luck with your business!

Three ways to track freelance income–none of which may be right

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My work for this year isn’t done, but my income almost is. One client’s payment arrived today (having that happen less than three weeks after invoicing ranks as a Christmas miracle), another has told me to expect a direct deposit next week, and that’s all the positive cash flow I’m expecting for 2018.

Nearing that taxation-and-accounting finish line has me thinking once again of how I try to keep track of what I’m making throughout the year. I have three different models for this, and each can be wrong in their own ways.

• What I file in a month: This approach has has the advantage of focusing on the one thing I can control the most. But a lot can happen after I file my copy, by which I mean it can go through a prolonged edit that pushes back completion of the work by weeks.

Or by months: An editor’s departure at one site earlier this year left a post collecting dust for several weeks until one of his now-overworked colleagues could tend to it between other tasks.

• What I invoice in a month: Sending in the form itemizing your work and requesting payment has a pleasing finality, but not everybody sends the direct deposit or the check on the same timetable. Thirty days is typical, but USA Today and Wirecutter usually beat that number by at least a couple of weeks (having two of America’s largest newspapers turn around a payment that quickly continues to amaze me). Sometimes the same client’s payments arrive on wildly varying schedules for no apparent reason.

Last year, I also had a client reject an invoice because of a glitch with the bank deposit information I’d provided, and because the parent firm of this site picked an invoicing system for its fundamental meanness, I had to start the invoicing process for that story from scratch. Fortunately, I’ve not yet had to send more than a few nagging e-mails to get a invoice paid out, which is not a given in this line of work.

• What I get paid in a month: There’s no arguing with the numbers on a bank statement, but this can often be a fake metric because it reflects work done months later. And for every month where a round of overdue payments finally land and make me look like a business genius, there’s going to be another where a couple of invoices get processed just late enough to have that money hit my account not on the 29th or the 30th but on the 1st or the 2nd of the following month.

As it happens, it looks like I’ll get a reasonably large deposit from one site early next month. I’ll try not to let that cash flow get to my head… because I really thought I would have seen a chunk of that change by now.

The agony of absent-minded accounting

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I am in the midst of an annual reminder of my inadequacy at financial record-keeping: tax time.

Once again, I found myself staring at a stack of receipts that weren’t even in chronological order and which needed to be matched up with incompletely-tagged records on Intuit’s Mint.com. With that done (I think), there’s a largely-vacant business-mileage spreadsheet to fill out by cross-referencing my calendar with Google Maps driving-distance estimates.

I assure you that I don’t operate at a Gene Weingarten level of financial absent-mindedness. I pay my bills (though it helps to set up some for automatic payments) and I have a pretty good idea of my bank account balance on a given week. It’s just that I have a habit of letting other financial chores slide until a deadline compels my attention.

Now is one of those times.

And this year, it’s a lot more important that I not neglect any legitimate business expenses, lest I make a overly generous contribution to the Treasury Department. (I’ll leave the subject of how the tax code is stacked against the self-employed for another post.) So even though I’m officially giving up on preparing my own taxes, I still have to line up this data in formation so my preparer can plug it into the appropriate forms.

(In contrast, there’s a pleasant simplicity to my county’s business-license tax: Take your business’s gross income; multiply it by this percentage; pay. I’ll leave a discussion of how the federal tax code has become so nauseatingly complicated for another post.)

I’ll get it done. But I seriously don’t need to repeat this experience next year. Is there an app or Web service I should have been using all along? What works for you? Or should I just add these record-keeping chores to my productive procrastination workflow of things to do–like, say, writing posts on a personal blog–when I’m avoiding work?