If you’re just starting out as a freelance writer, you may not have a lot of money to spend on fancy accounting software. Luckily, you don’t have to have a big budget to track your income and expenses when you’re starting out. You can do this with Google Sheets. I’m going to show you how to set up Google Sheets to track your expenses.
Why should you track freelance income and expenses with Google Sheets?
Before we dive into this topic, let’s talk about why you want to track your income and expenses. Why you would want to track your income is obvious — you need to know how much you’re making.
You also want to track your expenses so you know how much you’re spending on the tools you need to keep your freelance writing business working properly. These could include tools like an Evernote account, website hosting fees, and any money you pay to other freelancers to edit your work or create e-book covers if you write e-books.
If you live in the US, this is important because freelancers can write off their expenses. If you spend more on your expenses than you earn, you could get a refund from the IRS.
Now, let’s start talking about the steps
- Create a new workbook — call it something like “Freelance Writing Income and Expenses”
- Label the first three tabs “Main Worksheet,” “Income” and “Expenses.”
- On the Main Worksheet, in the first column type “Freelance Writing Income.” You can widen the column by clicking on the far right border if you need to.
- Go down one line and type “Freelance Writing Expenses” on the line below it.
- Skip one line and type “Difference” on the next line. Leave this sheet alone for now, we’ll use it more later.
Here’s a screenshot illustrating what I’m talking about:
6. Label the second sheet “Freelance Writing Income”. In the first column, type “Date.” In the second column, type “Source,” and in the third column type “Amount.” Feel free to center these if you want. Format the Amount column for currency.
7. Leave this sheet alone, we’ll come back to it later.
How to Track Your Freelance Writing Income and Expenses
As you complete projects for clients and have different expenses come in, enter the information in the appropriate sheets. Then you can start entering the different formulas:
- To calculate your total freelance writing income, go to the Freelance Writing Income worksheet and type “Total” in one of the cells below the freelance writing income information you’ve started entering.
- In the cell below the amounts you’ve entered type “=sum(“ without the quotes. Google Sheets may automatically highlight the totals you’ve entered. If it does, just type the closing parentheses.
- Now you should see the total you’ve earned from freelance work so far. As you finish more work, you can go to the “Insert” menu and choose “Row above” to enter additional rows above the Total row. As you do, the total will automatically update.
You’ll use the same process to figure out how much you’ve spent on freelance writing expenses. Once you’ve got these two totals, enter them in the Main Worksheet. The process is easy. Enter them so they automatically update as you put in new information.
The only extra thing you may want to add to your freelance writing expenses worksheet is a column called Category. I’ll explain how to do that in the next section
Here are the steps:
- Go to the main worksheet. In the cell next to “Freelance Writing Income,” type just an equals sign.
- Now go to the Freelance writing income worksheet and click on the cell that has the total. It should automatically add the cell reference to the Main worksheet in the space you typed the equals sign in. You may have to type a quotation mark to end the cell reference, then type an end parentheses.
- Once you leave that cell, the total automatically shows up there and update every time you update the Freelance Writing Income worksheet.
- Do the same with the Freelance Writing expenses worksheet.
- In space for the total, type an equal sign, then highlight the cells that have the income and expenses, if they’re not already highlighted. If they are, close the formula. The difference between income and expenses should automatically show up. It will change as you enter new information.
Here’s a screenshot of what your expenses worksheet would look like before you enter any information:
If you chose to add a Category column in your freelance writing expenses sheet, here’s how to set it up:
- Go to the Data menu and choose “Data Validation.”
- Choose “List of Items,” and make sure “Show Dropdown List in Cell,” is checked.
- Type the categories of your different expenses. Some ideas could be Website hosting, social media, Research Organization, and Freelance Worker.
- As you enter different expenses, choose the appropriate category from the dropdown list.
How to figure out the totals for your different categories:
- List your categories in a column on your spreadsheet.
- In the next column, type this formula: =sumif([range of cells listing at least one instance of your expense], [cell that contains at least one instance of your category], [range of cells containing the total]). In the square brackets, you’re going to add cell ranges or cell references mentioned. Here’s an example of one of mine:
In this example, the formula tells Google Sheets to look in range B2 to B30 for an example of what’s going to be listed under my category, then look in B2 for an actual instance of that category, then look in C2:C30 for an instance of the amount. Here’s what’s it returned for the amount it found:
The range B2 to B30 contains the name of the website hosting company I use, 1 and 1. Cell B2 contains the first instance of that name. And the range C2 to C30 contains the amount of that charge, $14. Since the charge occurred twice in the example data I put in, Google sheets added them together to get $28.
Here’s a screenshot showing what your spreadsheet would look like after your entered the information:
That’s how you set up a Google workbook that keeps track of your freelance writing income and expenses. If you do this for the entire year, you’ll have all the information you need next year about how much you made from different sources and how much you spent on different freelance writing business expenses. This makes it easier to itemize your deductions if you spend enough to deduct your business expenses on your taxes.
Ok, so I covered a lot of points here. By now you should know:
- Why to track income and expenses with Google Sheets
- How to set up your main spreadsheet
- How to set up your income spreadsheet
- How to set up your expenses spreadsheet
- How to create categories and calculate the totals for each of them.
If anything isn’t clear, feel free to leave a private note or respond to this story, and I’ll do my best to explain it better.
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