More Of And The Geek Shall...Taxes!

Since it's Tax Day here in the U.S., I thought this would be timely...

A few weeks back, agent Rachelle Gardner posted a blog entitled "Writers And Taxes." Being that I'm pretty handy with finances, I felt compelled to offer a comment. One of the things Rachelle said was that you (we) should treat writing as a business. I thought back, and realized that around December of 2010 I did, in fact, make conscious decision to do just that. I have been using financial software -- first Microsoft Money and then Quicken -- for nearly two decades. But I realized that in order to make my writing a business, I needed to add the right "stuff" to Quicken.

I thought I'd put together some suggestions which have worked for me. Please pick and choose what works for you, 

At the risk of stating the biggest oversimplification ever, you can make it as simple or as complex as you want to; just don't make it more complex than you need. For example, I've had a home office for years, so I already had a category called "Home Office Utilities." But, I had it broken out into several subcategories: electrical, water, phone, etc. Then I realized that the IRS doesn't care how much the phone bill is, how much electric bill is. They just care about utilities. So I changed it to "Writing Expenses:Home Office:Utilities," and assigned them all to that one. (If you don't use categories much, let me point out that the "top level" category is "Writing Expenses," with "Home Office" being a sub and "Utilities" being a sub of the sub.)  Here is a screen shot of my Writing Expenses categories.

If you "tell" Quicken it's tax-related, the application will present the Schedule C Tax Line Item; you select it once, and then come Tax Time, you know what goes on Form 8829. Then,  when you go to OfficeMax and buy some printer toner and paper, in your credit card's "register," you can choose the correct category, "Writing Expenses:Home Office:Supplies." Something to be aware of: Quicken tries to be "helpful" and make logical guesses for you. So for example, if the last time you went to the post office -- to mail a book to someone -- you put in Advertising Expenses as the category, the next time you go to the post office -- simply to buy stamps -- Quicken will automatically fill in the same category. I wouldn't call it a problem. You just have to be aware of it.

I guess I'm making a big assumption here...that you, at minimum, have Quicken set up to record your checking account spending and (as I do) to also download transactions from your credit card companies' online sites. If you don't, it's something to look into. But even if you don't...

Another Quicken feature to leverage are accounts, specifically cash accounts. I have created one called "Other Business Expense." (As an aside, I also have a cash account for "Other Medical Expenses" for health care expenses paid for with cash, and one for "Charitable Cash Or Item Donations" for donations which are not paid with a check or credit card.)

There's not that much to the "Other Business Expense" account, as you can see.

In most cases, for me, the entries in this account are "Writing Expenses:Home Office:Advertising," which is another way of saying, "I gave a book to someone in the hope that he would review it." To go into a little more detail, on the day that I mail it, I enter it in the register, and in the memo field I say one copy of Haunting Valley to John Smith, along with the value of the book. And, for that date, there will be a corresponding entry in the credit card register for the postage used to send it. It's a nice backup. Though books are the most common entry in this account, if (for example) I were at a conference and paid cash for coffee and cab fare, I could enter it here. At the end of the year, I add an entry to zero it out and start again.

There is an option you can choose so as to have these accounts not be part of your net worth. So in other words, the $200 you spent over the course of a year sending out books does not get subtracted from your overall account balances. Again, it's not a big deal. It's just something you can do in Quicken. Go to Tools / Account List. Scroll down to it, and click on the check box for "Don't include this account in net worth total."

One of the reasons that good record-keeping is important -- something I mentioned in my comment on Rachelle's blog -- is that you must make sure to pay at least 90% of your taxes during the year they were earned, as opposed to "squaring up" the following April 15. So if you normally get a pretty good refund, and only earn a few hundred dollars, you're probably safe. But if you earn a lot of royalties and usually don't get a refund, you will need to pay taxes on the amount earned quarterly. So for that reason, you will want to create one or more INCOME categories to go with your expense categories

and log your sales. Then, it's a fairly simple matter (a discussion for a future post, perhaps) to create quarterly income report.

And The Geek Shall Inherit The Earth ...

For those of you who don't know me well, I used to be a computer programmer. As I used to say (boast), "I tell my computer what to do. Not vice versa." A nice little skill that I developed was macro creation, specifically for applications in the Microsoft Office suite.

If you're a writer, you probably face the same quandary I face: keeping track of your submissions. Who you queried, what their instructions are ("We respond to all queries" or "If you don't hear back, assume we're not interested."), and when to follow up. The problem grows exponentially if you're submitting different works to different agents and/or publishers.

So I developed a handy-dandy spreadsheet to keep track of my correspondence.

If you have no desire to learn about my system, go ahead and bow out now. But if you want to see my spreadsheet "in action," keep reading.

As background, this actually was based on an Access database that I developed a few years back for the same purpose. That one got a bit cumbersome, as I found that in some cases I needed a way to have a "many-to-one" and/or a "one-to-many" relationship (to use the geek terms) between a work and a correspondence with someone. To clarify, if I'm sending a query letter to an agent, that's one-to-one. But in many cases, a poetry publisher or magazine asks for five poems. So that's many works in one email. But also, if I'm querying an agent (as mentioned, one-to-one) and he or she writes back and says, "Send more," now I have one work, but many emails.

Clear as mud? I used to be a tech writer, so I hope I can still convey things like this.

So I came up with this spreadsheet. I'm sure this first image will be hard to see, so after it, I'll describe what's there.

(Please note, I use OpenOffice, which is an open-source -- meaning free -- app that works like the MS Office suite; Excel will look a little different, but functions basically the same way.)

This is the header row. 

The columns are Key (I'll explain later), Date, Follow Up Date, Response, Sent What?, Via, Email, To What?, Name, Who, Genre, Work, Details.

I tried to set it up so you can simply read it, left to right. So that would be (the column headers are in ALL CAPS)...

"On this 12/20/11 (DATE), I sent a query (SENT WHAT?) VIA email to an agent (TO WHAT?) at company NAME, and this person specifically (WHO). I sent my novella (GENRE) named Udopia (WORK). Addtional DETAILs are ...

So a real-world example would be:

And it reads, "On 12/15/11, I submitted, using an online form to an anthology named Best Fiction. The recipient was not named. I sent a short story, "Tarantulas On Leashes."

Now to explain a few things...

You'll notice there is a "Key" field. In the above example, for both lines, it is 46. This was done to solve that one-to-many problem that I referenced earlier. Every entry should have at least two lines with the same key. The date you sent it, and the date that they say you will get a response by. Bear in mind, as I mentioned above, some say "If you don't hear back in six weeks, assume no." Fine. I can still put a date that is six weeks out in the Follow Up Date field, and copy that comment into the Response field. The beauty of this key field is that if I am sending multiple works to a single entity, there is one line for each work, plus the follow-up line, all sharing the same key. As you can see here:

key 45 represents five works submitted to one anthology, plus there is the follow-up line.

If you use Excel a lot, this should be obvious, but you don't need to "do math" to get the follow-up date. The "Key 45" entity did not state a follow-up date, so I am assuming six weeks. Cell C14 is actually a formula which reads "=B45 + 42"  Seven days times six weeks = 42, naturally. Oh, and once I get a response, I delete the value from the "Follow Up Date" field, and put the date I heard back in the "Date" field. You can do whatever you want; you could leave it there. This just works for me.

You will notice that I have highlighted in red text to-do items. Likewise, if someone has said "no," I color the text gray, to fade it out.

The Email column contains a hyperlink to where the actual email lives on my hard drive. Having it here allows me to call it up at will. Please note that I use an email program (Thunderbird) which brings emails down to my PC, as opposed to something like GMail, which keeps them on Google's servers. Of course, since the field holds a hyperlink, you might be able to store the link to a webmail message. Hmmm.

Bear with me. There are only two things left to point out ...

 

In order to keep things clean, I use the "group" function of my spreadsheet. In the previous images, I intentionally omitted the left-most portion of the screen. It actually looks like this:

You will notice a little box, with a minus sign in it. What that says is that I have "grouped" rows 2 and 3, as well as rows 4 and 5.

Once 2 and 3 are grouped, I can click on the minus sign to collapse or hide row 3, like thus:

I just think it's neater to hide the details, once an entry is "closed."

Please note that there is one weird quirk about both Excel and the OpenOffice spreadsheet. Logically, I would expect that I need to highlight everything I want in a group, and then choose the "group" command. But the reality is, you highlight ALL BUT the first. So in the example immediately above, I highlighted only row 3. Going up a bit to my "Key 45" example, I highlighted rows 10 - 14 (but NOT row 9) before hitting the "group" button.

And finally, you can use filters (native to both Excel and the OpenOffice version) to create "mini-reports," if you will. Do you want to know to which agents you've sent a given work? Filter on the book's (or article's) name in column L, "Work." Do you want to know which works you've sent to a certain agent? Filter on his or her name in column J.

Had enough?

If you are a writer (or an agent) and would like a blank version, please leave a comment. I'd be more than happy to send you one. I'll even throw in free "tech support," though bear in mind, you get what you pay for.

Just kidding. 

PS: I do realize that I didn't mention macros after talking about them up top. This spreadsheet has no macros...yet!