My father was self-employed. As a kid, I remember watching my mother struggle to keep track of all the receipts, invoices, and vendor payments my father had to pay every month to stay in business. She really needed an expense tracker.
Instead, she laboriously entered every item line-by-line into an Excel spreadsheet. She worked in accounting, so these things came naturally to her. Too bad some of that didn’t rub off on me.
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What expenses used to be like
When I started my own business, I thought to be a writer meant I had no overhead because I had no products to sell or services to complete that required expensive supplies. WRONG!
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Back in the stone ages of freelance writing, I spent a crazy amount of money on paper, printer ink and stamps…The horror!
Today, I buy printer ink once a year and I think I haven’t cracked open a ream of paper in at least eight months. I still buy stamps, but only to send cards to new clients. Boy how things have changed!
My current expenses
Technology makes things move faster, but it’s not cheap. Here is a snapshot of my current monthly expenses (minus the actual dollar amounts):
- Broadband internet
- Yearly web hosting
- Domain registration
- Contract labor
- Group coaching subscription
- Office supplies
I have to admit, my expenses are on the low side. But the one thing I didn’t realize, until I downloaded an accounting app on my phone (with an expense tracker feature), is that I spend a lot more money than I think.
Why tracking business expenses is important
I love having the ability to take pictures of receipts from my phone without having to input any of the details.
It makes it so easy to capture small purchases I might have blown off otherwise. Being meticulous about your expenses means your business will show less of a profit when tax time rolls around.
Though being less profitable may be bad for your ego, it’s great when your tax bill is significantly lower than expected.
Of course, if you’re paying quarterly taxes you should have a pretty good idea of where your finances are on a daily basis (or at least four times a year).
Wrapping it up
Managing finances causes anxiety in everybody, not just awesome creative freelancers like us 🙂
If you apply the same financial management principles to your business finances that you do to your personal ones, you’ll find it’s not so scary after all.
Just be sure to keep accurate records of your income and expenses and use an accounting software program designed for freelancers (like AND CO).
Would love to hear your thoughts on what works for you when it comes to tracking your expenses.
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