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How to handle the business side of commercial writing
Most professional writers soon learn the hard way that basic business practices that work for retailers and other types of business and definitely do not work for them. If you've ever had any business training, (and you should), it soon becomes obvious that you need a methodology that works for your type of business, not the textbook bookkeeping and accounting practices.
If you've ever used MYOB, or any of the other big accounting packages, it can be a real horror story, as well as a waste of time for writers. These packages are not designed to deal with the type of business that most professional writers do on a daily basis. You can actually achieve very much the same result simply using a few Excel spreadsheets and trying to be conscientious about your accounts and expenses.
As a writer, you make and spend money on a different basis. Your expenses can be very esoteric, and they can also be quite expensive. When you're buying new software, like media software, dictation software, printer ink, hardware and media equipment, you could in theory put all that into a cost centre, but let's face it, these expenses are quite unpredictable. The average monthly balance sheets of invoices and expenses will do the job quite effectively. You don't have to be an expert in using spreadsheets, just try and keep your figures accurate.
Thanks mainly to better banking practices and the ability to search electronic statements, you can in fact keep pretty good track of your income and expenses. The other side of this equation, naturally, is setting up a good invoicing system for your clients and keeping your records up-to-date as much as possible regarding your expenses.
Invoicing clients is a bit of an art form in itself. It's a good idea to have a standard online invoice format which can be adapted to any client. Set it out like a business letter, with contact details on one side, the basic subject heading and invoice number (many clients will insist on this for their own audit trails) and a very straightforward text detailing the amount being billed and any payment requirements.
Many clients do require receipts. This is not a bureaucratic process; it's a business necessity. The receipt should preferably be in much the same format as your invoices, easy to manage and easy to read.
Note: Any business record of transaction should be as simple as possible and as clearly spelt out as possible. Generally speaking, a reference number, a date and an amount are quite sufficient.
Unless you're a professional tax accountant or a masochist, make sure that you do use a tax accountant to properly prepare your returns. This is a good idea for a number of reasons but from experience, I can tell you that at one stage I attempted to calculate my own tax, and overestimated the amount of tax payable by $8000. That should be sufficient hint for all writers to leave this work to the experts.
The most important thing about doing your taxes as a writer is to make absolutely certain that your financial records are in at least reasonably good shape, and above all comprehensible. A good tax accountant will give you a valuable education in how to both manage and understand your financial requirements in terms of records and tax entitlements.
Managing your money
If there's one thing that any creative person needs, it is money. It's not quite a cliché, unfortunately, to say that many creative people are actually almost suicidal in the way they manage their money. It's critically important for you as a writer to pin down your expenses and make sure you have enough money to live a decent life as well as do your writing.
Materialism may be a particularly annoying problem on so many levels, but it's also a problem best avoided, preferably completely, if at all possible. The kind of stress which can be caused by money problems is horrendous for creative people. I know from my own experience that it’s certainly no holiday for writers, either. Whoever came up with the idea of the "tormented artist" has a lot to answer for, but this is one type of torment you really can avoid, with a bit of care.
Virginia Woolf, no slouch in her own right as a writer, mentioned in her book A Room Of One's Own how important it was to writers to have that space which she called a room and I call buffer, to be able to write at all. People both overestimate and underestimate the issue, often fatally. I spent enough time on a very low income to know a bit about this problem, and I can tell you now that managing your money will save you a lot of quite unnecessary, self-inflicted suffering. The bottom line for writers is “Make money and don’t spend it unless you have to”, and it applies until you’re making big money and a lot of it.
Manage your business well, and you can get on with your writing in peace and be as creative as you like. Get messy or don’t take the business side seriously enough, and you’re asking for trouble and your writing will be at risk, too. You don’t have to become a raving, rabid capitalist, but you do have to get it right.