Keeping your Bookkeeper Happy as a Freelance Creative

Normally I would just say "writers" but this applies to more than just writers, and more than just artists. It applies to anyone who uses their creative talents as their primary source of income, or as a side hustle as another stream of income.

Disclaimer to keep my lawyer happy too: The opinion disclosed in this post is simply what works for me, and seems to keep my bookkeeper happy with me. It's advice. Take it for what it's worth. Not everyone's situation will be the same as mine.

Keep your creative business separate from your personal business.

The very first thing you should do as a freelancer is not mix your freelance income in with anything else. The reason for this is because your freelance income is a business of its own, even if you are using your own name and other lines that separate seem blurred. You don't have to run out and open a business specific account (*unless it's less expensive than the least expensive personal chequing account) but you should have a separate bank account for it.

You will, at the beginning, probably need to fund this account out of your personal money unless you have been freelancing for awhile and your income from the freelancing is supporting itself.

For much of what I'll talk about, you can do for either free or close to free.

Organize your Banking

What I do (** again, what works for me may not work in your situation. It's just what I do to keep things straight) is I have three personal accounts, plus my TFSA and RRSP. One is my day to day chequing account and the other is the short term savings. The third is also a savings account but is a high interest savings account in a whole other bank (the one where the TFSA and RRSP are) where I'm not even remotely tempted to touch it. The bank card for that account isn't tap enabled and the card is kept in a spot in my wallet where it isn't convenient to look for. The bank I choose for the longer term savings is even a bit farther physically, if it even has a physical location (which I doubt) to get to rather than my normal bank which is somewhere convenient and has actual physical locations I can walk into.

My personal accounts are for, and this shouldn't be a surprise, personal things like rent, food, and the other necessities of day to day life. My pay from my day job (yes, I have one) goes into my personal account.

My freelancing (writing/royalties, artwork, voice work) has its own low-fee, or even no fee, chequing account. My freelancing PayPal account is attached to it, as is my personal account just in case I want to either fund it or make a withdrawal to the personal account and pay myself. However, all freelancing expenses and payments go into that account because my freelancing is a business and I treat it as such.

So should you.

Everything that is for your freelancing should have its own account with a professional sounding (or at least related to your business) name. If you have to fund your business, transfer to your business account. Have royalties and other freelance related income routed to your business account. If you have to use money for your freelancing, use it out of that account and keep the receipts. If you have this habit of losing your receipts, download an app and take pictures of the receipt to upload to a bookkeeping app that way if any are lost you still have a record of what was spent and where.

Do not ever use your freelancing account for anything personal. If you need money from your account, pay yourself from that account like your day job would pay you to your personal account from their business account.

There is a reason I'm pointing this out and making sure it's clear.

In accounting, a bookkeeper or an accountant will use something called double entry accounting which uses a chart of accounts and ledger to maintain records. This is the industry standard method of accounting. If you have organized yourself into keeping separate accounts from your personal and business as well as banished the shoe box, you have just set up your personal business to follow this industry standard and do it in the background.

That's hours and hours of time your bookkeeper doesn't have to spend in trying to make your finances meet the standard and organize your shoe box into something that won't get you into trouble with the CRA (The CRA is the Canadian equivalent to the IRS, for my US based readers)

You can take this one step further by downloading personal finance software or using it online (your bank may even have their own) to categorize your spending into Rent, Grocery, Transportation, etc... and your freelancing into its own similar categories. Some apps will even attach the corresponding photo of the receipt to the expense, further cutting down on the time a bookkeeper needs to spend on your books.

But, Kristan, won't that put my bookkeeper out of work?

No - they will still have plenty of work. You're just making what they do more meaningful for you when they don't have to do all this for you. Much of their work is after this point. An office assistant could do this for you, not a bookkeeper. This actually isn't their job.

And you still wouldn't put the office assistant, if you have one, out of work by doing this either.

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