In Dollars and Sense for Writers, I devote several chapters to working with the numbers your writing business generates.  The primary reasons are: the information will be needed for tax return preparation and for year-end analysis of our business.

At the end of Chapter Five, I address recordkeeping. With the many changes to tax law (particularly state law), it is critically important to maintain good records.  All our income and expenses should be documented.  In addition, in Chapter Ten, I recommend writers evaluate the business year with an eye toward making improvements.

Generally speaking, neither your accountant nor the IRS is concerned with how you keep your records.  They only care that the records are kept and are accessible.  I know writers who list their income or expenses on green columnar paper and the receipts go into a shoebox. There are others who use software like QuickBooks or Money and scan their receipts into a computer file.  These methods are at opposite ends of the technological spectrum but they work for the writers who use them.  The key is to be consistent and to do what needs to be done in order to have records that work for you.  I recommend you use some type of computer software. Even something as straightforward as a spreadsheet can help you generate reports for tax prep or business analysis.

Remember to keep track of your business mileage.  When you go to meetings, promotional appearances, and interviews, the mileage for the trip is a deductible expense.  At fifty cents or more per mile, that can add up.  I know several writers who missed an important tax deduction because they didn’t make note of all the miles they traveled for business. 

Part of managing any business is keeping good records.  It may seem like a pain in the butt at the time but you’ll be glad when you start wondering whether or not your writing efforts are producing results.  And you’ll be very happy with your recordkeeping labors when tax time rolls around.