Organizing Your Tax Information

With 2009 underway, we have officially closed the books on our earnings in 2008. The only thing left to do now is gather all the information, wait for 1099s to come in the mail and procrastinate until April 15th. Hopefully, you won't be left trying to figure out what numbers to put where and trying to figure out how it is you owe so much more than you thought you were going to on tax day, and one way to decreasing the stress of taxes is to get organized.

Mandi showed us a wonderful template for keeping track of your work as we go through the year and went over the benefits of having it available to you. This is a wonderful place to start off the new year and will ensure that all your information is in order when it comes to do your taxes for 2009. If you don't have a system like that in place already, make sure you start now for next year, and don't panic. While it may be more difficult to gather your information, it isn't mission impossible.

Things to take care of in the next month:

1. Gather all your 1099s as they come in from your contracts and keep them together. It is a good idea to record the numbers in an electronic format as well so you have them to reference easily. Make sure you get a 1099 from all the necessary companies, and figure out the additional income you earned from anyone that would not be required to send you a 1099.

2. Look at your business expenses for the past year, gather receipts and make a detailed list of deductions you are able to take. The IRS site provides a complete list of what is and what is not deductible as a business expense. If you are ever in doubt as to whether something is deductible, it is always a good idea to contact a CPA to answer your question.

Getting your information together early will reduce any stress you may have over filing your taxes in April (or whenever you choose to file them), and it will also help guide whether or not you need to be filing quarterly tax payments for 2009.

Recordkeeping for 2009

Do you have a system to keep track of each file and how much it pays? While this is something most of us would agree is very important, it's also an easy area to let slip. I didn't keep very good records until 2007, which meant there was no way to confirm or reconcile my 1099s for the previous years.

However, reconciling 1099s is not the only reason you should be keeping good records. Having a running work log also makes invoicing easier, helps you track payment on your files and gives you an idea of how much you're earning on a daily, weekly, monthly and yearly basis without having to constantly do the math in your head.

If you don't currently have one set up, I encourage you to take a few minutes right now and set up an Excel spreadsheet. You can worry about formulas and functionality later, but for now, set up a tab for each company you work for. Double click on the tab to rename it so that you can quickly see where each company's information is kept.

At the top, decide what information you want to include. I use:

Date, File Name, Length in Minutes, Pay Rate Per Minute, Total

(Of course, if you're paid by page, word, etc., you'll have to adjust those)

Enter your files here each and every time they're assigned. You can use this to track your workflow as well by settng up a color code or adding another column to keep notes about the file. Whichever system you choose, you can mark them as pending, in progress, completed, invoiced and paid so that you always know what's outstanding.

I'll share more about how you can increase the functionality of your log later on, but for now, it's enough to just start tracking those files!

Oops – QuickBooks Simple Start

It was brought to my attention that I forgot to link to QuickBooks Simple Start in my post yesterday, and it can be a difficult thing to find if you don't know where you're looking.

Additionally, I looked on Amazon for old versions of QuickBooks and found that you can buy a full Pro 2008 version of QuickBooks on Amazon used starting at $99.99 and new for $129.00, which is as much as half off the price of the Pro 2009 version that recently came out. For those of you that may not know, QuickBooks upgrades their software every year, and several companies and accountants also upgrade every year; however, the difference from year to year is minimal, and there are an equal number of people that choose to use an older version for several years before investing in a newer one. This website details what's new for the 2009, just in case you find yourself questioning which would be best for you.

And finally, I also saw that you can buy the Simple Start Plus Pack used starting at $13.29. The addition of the Plus Pack includes online backup, the ability to write checks and a training CD to help you use the software more effectively and to its fullest potential.

I hope this helps everyone find the correct version of the software they are looking for, and if you're in the market for either the Pro version or the Plus Pack, the prices on Amazon are really a great deal. I'd encourage you to take advantage of them.

Software Review – QuickBooks Simple Start 2008

We recently talked about all the other things you need to do as an independent contractor, and keeping good records is definitely important. If you're not extremely Type A and organization isn't your strongest trait, having a program that helps you keep administrative things together may be for you.

In another life I did accounting work for a CPA. I became quite used to using different accounting software, especially QuickBooks">QuickBooks. When I started working for myself I wanted to use QuickBooks to manage my own work expenses and income. However, I did not want to spend $199.95 on the full version. Lucky for me, QuickBooks now has a stripped-down version of their product available for download for free.

The Simple Start version has several of the same features as the full version. Some of the things you are missing are downloading bank and credit card transactions to import directly into QuickBooks, the ability to track bills and set due dates, export data to Excel, just to name a few. I do miss the ability to export to Excel, and I actually use the 1099 feature, so I am unable to use that if I'm only using the Simple Start and not the Pro version.

For a free accounting software program, I really don't think you can beat the versatility and functionality of QuickBooks Simple Start. I use mine to track all purchases I make through my business account and to enter all my invoices and incoming deposits. My favorite use is to keep track of personal client income when I use subcontractors.

While you may need to watch the tutorial and find your way around QuickBooks Simple Start to realize its full potential, it is definitely worth it come tax time. There is nothing like doing all of your taxes in a matter of an hour or two rather than spending hours getting everything together for it. Plus, you always have that information available if you need to refer to it throughout the year to check which invoices you have outstanding, to figure any quarterly tax payments and more. I definitely recommend giving it a try if you are looking for a way to become more organized.

Getting Started – All That Other Stuff

While the majority of our posts cover the basics of transcription and the actual transcribing process, there are several other things that also come into play when scheduling your time. Earlier this week, Mandi covered pricing structures for audio, and while that is one way to figure out your income, you also need to remember the other time consuming aspects that don't pay as part of being a business owner.

One of the things that you need to leave time for is invoicing because, let's face it, if you don't make time to invoice your clients and contracts for the work you completed, the probably aren't going to pay you. For some companies your invoices will be due on certain days, setting the time you need to be invoicing, while other companies may leave it up to you to decide when to invoice. I personally try to set times each month for invoicing and keep them consistent. That way I keep those responsibilities in my calendar and keep up to date so that my cash flow remains consistent for the work I'm completing on a day-to-day basis.

Another thing that is important you set aside time for is keeping good records. Records are incredibly important in this industry, especially when it comes time to invoice the client or contract or – gasp – do your taxes after the first of the year (or on April 15 itself). Keeping good records will make both of these things much easier when it comes time to tackle them.

There is also the process of communication to take into account when scheduling your time. Writing all those emails back and forth and communicating about files in a variety of ways takes time. Not only do the emails about files take time, but there is also the process of accessing and downloading audio files, checking audio and proofing.

Make sure you set aside time for all these "other" activities when you are setting up your time commitments and figuring out what your week is going to look like. Each and every one of them is important and needs to get done, and you don't want to start jeopardizing your extracurricular activities (like SLEEP!) to make time for them because you didn't properly plan them in. You'll thank yourself for being organized later.

Desktop Organization

I know you are all interested in what my desktop looks like after the product review of my monitor, so I decided to give you a glimpse of what I look at all day.

This is my desktop when I sit down every morning:


This is what my monitor looks like shortly after I sit down and am ready to work:


I really do enjoy my monitor, and it has a lot to do with the space I have available. However, we deal with what we have. I worked on a 15.4" laptop widescreen for the first two years of doing this. Since purchasing my monitor I have been loving the ability to organize. (I mean, if I can't organize my house, I may as well organize my work.) Being organized with work makes me more productive, and productivity equals income in this industry.

Guest Post: The Importance of Quarterly Tax Payments for the Self-Employed

I'm so pleased to present our first ever reader guest post today by one of our most frequent commenters, Margi Lowry!

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Disclaimer: I am not a tax professional - I don’t even pretend to play one on TV! Please do not consider any advice in this article without consulting a tax professional!

It was in 2002 when I first started contemplating working from home. To be honest, I didn’t think it was possible in my profession – Legal Assistant/Secretary. I just didn’t see how it was possible without a ton of pavement-pounding and becoming a “Virtual Assistant.” I had, admittedly, had a lot of trouble with my previous brick-and-mortar employers because, as a single mom with two school-aged children, I was habitually tardy and/or absent from work when I should be staying late and after-hours. Thus, I was working through temporary agencies and hating every minute of it.

So when I was contacted by an international law firm with an offer to consider contracting as a work-from-home transcriptionist, my thought (after checking to make sure they were really a legitimate firm!) was that it was the answer to my prayers. After a long “getting acquainted” phase with the firm and equipment coordination, I would log into their computers, type, send my results via email. I eventually became quite good at “problem dictators” – understanding difficult speakers. I was also becoming known for my ability to burn the midnight oil for rush jobs. I loved it!

And then – my first self-employed tax season rolled around.

What I knew, intellectually but did not plan for, was that when you are a contractor, you are responsible for your own taxes. And not just the “employee” portion of your taxes, but the “employer” portion as well. That year, I ended up with a tax bill of $3,000.00 (give or take) when you add in interest and penalties. I spent the next three years recovering from that first tax season!

It’s really very simple – as someone who is self-employed, you are responsible for (currently) 15.30% of the “employer” and “employee” portions of the FICA – 12.4% for Social Security and 2.9% for Medicare – of your self-employment income of “$400 or more.” I especially love how the IRS states: “Only the first $94,200 of your combined wages, tips, and net earnings in 2006 is subject to any combination of the 12.4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Only the first $94,200.00. Hah!

The IRS wants you to play nice and send at least quarterly tax payments “Estimated Taxes” if your projected tax liability exceeds $1,000.00. The easiest way to accomplish this is to grab your last years’ tax return, look at how much you owed last year, and then if you think your tax liability will be comparable to last year’s, divide by 4 or 12 and send those payments in quarterly or monthly. If you’ve had a substantial increase or decrease in income, you’ll need to figure that in. According to the IRS, you should, ” Multiply your total earnings subject to SE tax by 92.35% (.9235) to get your net earnings under the regular method. See Short Schedule SE, line 4, or Long Schedule SE, line 4a.” The IRS has a very informative Small Business/Self-Employed section on their website at http://www.irs.gov/businesses/small/index.html.

The easiest way to make your estimated payments is to make them via the Electronic Federal Tax Payment System, or EFTPS. For information on how to enroll in EFTPS, you can click here. I find that monthly payments are a little more manageable with our tight budget and needs and thanks to EFTPS, tax season isn’t so stressful anymore!

Margi Lowry has been self-employed as a transcriptionist since 2002 – the first time she was bamboozled by the phrase, “How hard could it be!?” A Heckler at heart, she refuses to grow up, nor will she ever take life too seriously. Her personal, very amateurish (nothing professional about it!) blog can be found at http://margilowry.blogspot.com.

If you're interested in contributing a guest post, please contact us at transcriptiontalk (at) yourvirtualdesk (dot) com. We're open to any transcription-related topics!

Setting Up Your Office...If You Have One

I know not everyone in this industry has an actual office. Let's face it. We are relatively portable if we work on a laptop. I have taken my work to my in-laws', to the hotel on vacation, and to a cabin in the Boundary Waters Canoe Area (where I worked and turned in a file using the wireless internet from one of the lodges near where we were staying). However, when at home I tend to be a little bit more organized, and I do like my own private workspace and use a docking station for my laptop to hook up to all my toys and my extra large monitor.

We just finished an addition to our house, and one portion of that is going to be my new office. I'm really excited to be setting it up, deciding where I want things and what it is that I want, and while doing so, this article helped me make a few decisions when planning my space.

Getting Set Up

Choose a work location
It is important to identify a safe and efficient location in your home as your work space. It should be quiet and away from heavy "traffic patterns" so you can spread out and work without interruption. It should be well lit and comfortable. It does not have to be an entire room. However, do not try working on the couch in front of the television. The dining room table may not be a good choice either. A distinct area will also help send the signal that this is where work is done.

My new work location will be adjacent to a large room where I have a play area set up for the kids and a TV area just beyond that. I do work with my kids home, and this allows me to spread them out and have them working on activities if I am working while they are up where I can supervise and be available if they need me.

The desk
A conventional desk is usually 29 inches high. The recommended height for a computer desk is 26 inches high. Your desk should be sturdy enough to handle the weight of any equipment you are using.

I opted for building my desk directly into my workspace so I could have it exactly what I wanted, where I wanted it. I went for a 29" desktop with a keyboard tray set at 26".

The chair
This may be the most important piece of furniture in your home office. The seat should be adjustable and high enough that your feet are flat on the floor (usually 15-20 inches). If you cannot adjust the chair height and your feet do not reach the floor, use a footrest or wedge-shaped item, such as a three-ring binder, to support your feet. The backrest should support the back of the waist - a 15 degree back tilt is typically recommended - and should fit snugly against your lower back. If you cannot adjust the backrest, use a small pillow or rolled-up towel to support your lower back. Your forearms should be parallel to the floor when your hands are placed in the center of a computer keyboard.

Okay. So, I happen to LOVE my chair, both of them even. I have two Herman Miller chairs, and they are both the most comfortable chairs I have to transcribe in. I know they're pricey, but if you watch Craigslist you can usually find them a greatly reduced prices.

Lighting
Lighting affects comfort and performance. It should be directed toward the side or behind your line of vision, not in front of or above it. Bright light can bounce off surfaces. Northern light is considered best for both office and computer operations. If you have a computer monitor, it should be positioned at a right angle to the window.

New office, new lights. We have recessed lighting in the room I'm in, but I am installing a set of track lights over where my desk is that I can aim to provide the best lighting for working. I had this setup at our old house, and I found that it helped a lot at night when the lighting in the room was different than during the day.

Noise
No noise can be as stressful as too much noise. Some background sound (soft music or white noise) can help keep productivity up and reduce boredom. Preserve your professional image. Judgements, fair or unfair, may be based on background noises. Try to keep callers from hearing televisions, vacuum cleaners, loud music, etc.

Part of the motivation for building my own desk was that I can hide all the cables in the wall. Floating desk, no cords. Okay. You'll still see my foot pedal cord, but that is one I couldn't get rid of.

Safety
Regularly check your home office to keep it safe. To avoid injuries from repetitive motion, take frequent breaks. Use the straight hand-forearm method when using a keyboard to minimize wrist deviation.

Safety is always important, and the topic of ergonomics sounds like a good one for us to focus on in later posts. Keep reading!

Getting Organized

Whether you're naturally organized or not, organizing your office space is an important part of increasing your efficiency as a transcriptionist because it gives you more time to focus on your transcription.

The following article from Modern Mom offers some great tips on how to get organized. Don't let the site name fool you; these tips are applicable for anyone, whether you transcribe outside of your home, in a dedicated home office or on the couch. I would also add that many of the tips for paper files also apply for online files. Stay tuned for future posts on how we each keep our physical environments as well as our computer filing systems organized.

Dedicate a good portion of a day, or an hour each day for a week, to this project. Once you've finished, you'll be surprised at how energized you'll feel in your "new" workplace.

Step 1:

Go through the piles of paper, throw away documents you no longer need and make categorized stacks of those you do.

I put post-its on the floor marked "Clients", "Financials", "Interoffice", etc. and place documents accordingly.

Also get rid of any junk cute trinkets, tchotchkes, knick knacks that just take up space.

Step 2:

File away all paper. Get out a P-Touch and make neat labels for your files. The more organized and attractive your filing system is, the more likely you are to stick with and use it.

For important items, invest in a nice desktop file or paper tray.

Make sure to go through the pile that accumulates in this "Hot File" at the end of each day and put away whatever you can.

Step 3:

Keep your desktop as clutter free as possible.

Limit personal items on your desk to a few photos and / or trinkets since your phone and computer take up significant space.

Arrange pens and other accessories neatly in drawers.

If you must store some items on your desk, use storage tins and organizers to keep them out of sight. A chaotic desktop can be unsettling to look at all day. A clear space is calming.

Step 4:

Update your Rolodex.

Remove any old entries and business cards that you don't have use for and take advantage of your Rolodex to keep important information such as frequently used online passwords and account numbers.

Step 5:

Beautify your workspace with simple embellishments like a nice plant or sculpture.

Avoid plants that require too much attention. The last thing a positive workspace needs is an unhealthy plant.

Finally, stay committed to organization!

Once you've set up your space, it's easy to maintain if you dedicate a few minutes to it each day.

If you end up where you started again in a few months, repeat and try again. Practice makes perfect.