“I gotta say, I kinda rock at accounting. Hard to believe but I actually like it.”
The scary thing is that I totally understood what this person was saying. Okay, I didn’t exactly love accounting in school (especially a certain teacher who will not be named) but I did like the precision of calculating financials.
That said… accounting has become one more thing to add to my already overly long to-do list as an author. The business of being an author goes soooo much farther than simply writing and editing. This is only the tip of the iceberg. Just like any small business there is the financial end of the business to consider.
As any author will tell you, money begins flowing out long before it ever flows in. First there might be classes you take to improve your craft. As well, every writer should belong to an appropriate writing organization. I belong to three – Romance Writers of America, Rose City Romance Writers, (a chapter of RWA, but paid for separately) and Willamette Writers. Next there are conferences you attend to network, pitch your work and again improve your
writing skills. These can set you back hundreds of dollars. And finally there is the cost of marketing yourself and your writing; website costs, business cards, material to give away (like bookmarks), book trailers, author photos… the list goes on and on.
The good news is that, if you can prove you are actively engaged in the business of writing, not simply doing it as a hobby, many costs are tax deductible (okay, here is where I write the disclaimer that much as I like accounting I am not actually an accountant and you should check with one before writing off any expenses!)
The bad news is that unlike when you work for a company or as an independent consultant, there is no one else picking up these costs for you. Because of this, writers should always track their expenses and then create, even in the simplest way, a cash flow statement (with income and expenses) as well as a balance sheet with assets (ex. your books, $ sent aside for marketing, your computer) liabilities (the contracts you have for your books, taxes owed,
credit card debt owed) and equity (the amount you, as an author, are worth = assets-liabilities). Overwhelmed? Read more here: http://www.moneyinstructor.com/lesson/linkincomebal.asp
Tracking your financials in this way helps you to better understand both how to spend/invest your hard earned money and also makes you appreciate and not take for granted the very important assets that often get overlooked by everyone, including spouses… your talent and your creative imagination.
Thankfully these are the very things which save you from being an accountant in your day-job.
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