We’re in the middle of our “Bookeeping For…” series — all about how to bookkeep based on your industry.
We’ve talked about brand and web designers, and today comes our next installment: Bookkeeping for copywriters!
Why is this “Bookeeping For…” series so important? Because we need to make sure that our finances and our bookkeeping are tailored to our own industries. Bookkeeping isn’t going to look the same for a copywriter or a VA or an online educator.
Your offerings are different, and the expenses required to deliver them are, too.
So as a copywriter, how can you set up your bookkeeping so it is up-to-date and helps you make decisions? Read on (or watch) to find out.
As a copywriter, your profit and loss (P&L) statements will be set up similarly to everyone else. I always recommend business owners stack it with their revenue on top, direct costs in the middle, and other expenses at the bottom. This helps you get a clearer idea of how much money you actually have.
Here’s where the P&Ls differ for copywriters. I usually tell clients to split their revenue streams up by offer category, and I tend to see these the most:
Obviously, this is subject to change based on YOUR business, but this is what’s most common.
The reason I suggest doing it this way is to see what you’re earning per offer. Maybe you think your digital products are bringing in bank, but in reality, the money maker is your 1:1 services. That’s something you might not be able to see without looking at it broken down in detail this way.
It really helps to show you where to put your focus, or change it if needed.
Now that you have your categories sorted out, the next level of bookkeeping for copywriters is breaking those down into subcategories. This helps you tenfold because you’re able to see, line item by line item, where the money is coming from.
If we look at breaking down your 1:1 services (which tends to be the category with the most variability), you could split them up by:
Obviously, you want to break down your other categories too. If you have digital products, break them down by templates, guides, and educational material.
Are you starting to notice a theme here? It’s all about breaking things down as much as you can to get the most accurate picture of your income!
As any business owner knows, entrepreneurship isn’t cheap! There are so many expenses involved. But while these expenses do have small variations from industry to industry, it’s important to assess the expenses in yours.
Obviously, you will have to pay taxes and take that into consideration when working out your budget. But make sure you’re in the know about what it means for YOU based on the state you’re operating in. You may have to set aside more, or less, depending on state tax and sales tax.
You also need to look at your direct costs. These are things like contractors or hiring an assistant to help you write. Your team that is directly executing client work, essentially, no matter how small.
Finally, what you have after looking at those numbers is what you have left for other expenses. Things like:
How you choose to set up your business can also have an impact on your P&Ls. If you’re an LLC (you pay an owner’s draw from your business account and transfer to a personal one), those owner’s draws won’t ever show up on your Profit & Loss report. (I don’t make the accounting rules, I just live and breathe them.)
But if you’re an S-corp (you are an employee of your business and pay yourself a salary), your salary will show up on your Profit & Loss as an expense, in addition to the payroll taxes your business is now paying on behalf of you, the employee. S-Corps require more detailed books, people, so reach out to us if you’re making this transition from an LLC!
Maybe you’ve read all this and you feel ready to tackle those books. High five from right here! But maybe you’re still not sure how to do all this, or where to even start.
From my experience there are three telltale signs that tell me people are ready to hire a bookkeeper:
If any of those sound like you…maybe it’s time to consider it! And if so, my team and I would LOVE to help! We’re experienced, committed, and we make numbers not suck. What more could you ask for in a bookkeeper?