The Tax Season Shuffle

Photo by Images_of_Money on Flickr

Oh, month of March, how I dread you! This is the time of year when I assemble all of my tax information; I just finished, so all of this is fresh in my mind (and annoyingly in my dreams!). While I really ought to—and every year resolve to—tackle this project in February, I will seek out pretty much every possible diversion (down to pencil sharpening, which I don’t even do during composing procrastination!) to avoid the drudgery. Preparing tax returns is one of my least favorite activities on planet earth.

However, when the organizing and tallying of income and expenses is over, I have nice, neat lists of the previous year’s financial landscape. The good news: my income has gone up (almost) every year I have been claiming independent composer-hood. The less-good news: as one might expect, expenses as a whole also go up! The interesting part, from an “historical” perspective, is how the level and type of expenses have varied over the years; it’s not only a sort of personal financial journal, but also a reflection of changes in technology and in career development. It would be interesting to see a ten-year-or-so analysis of expenses incurred by a selection of self-employed artists at different ages and career stages. A few alterations in my own recent expenses popped out this year:

Postage expenses have plummeted, especially in the past two years.

Hurray for digital submissions! It makes me smile every time an application process can be completed totally within the digital realm, not to mention when a request for music can be fulfilled by attachments and/or links. Weirdly, I still feel like I visit the post office a lot, but I spend less than ¼ of what I used to over the course of 12 months.

The same goes for office supplies.

Again, yay digital submissions! Buying fewer padded envelopes and fewer spindles of blank CD-Rs is wonderful, as is having a little extra shelf and closet space as a result.

Travel expenses have gone down.

This is not so much because I travel any less, but more because travel expenses are more often reimbursed. Needless to say, this is awesome! (Note: Even if airfare and hotel are reimbursed, it’s still possible to deduct the GSA M&IE per diem rates for the days spent away from home.)

Meals and “Entertainment” are up.

Another function of age and career advancement, I suppose, is that now there are more actual work-related meetings over nice meals.

Contract labor and professional fees are up… a lot.

Sometimes a lawyer needs to be involved in a negotiation. Sometimes a composer needs a copyist. Or a PR consultation. I am accustomed to having a collection of 1099-MISC forms in my tax documents, but 2012 was the first year I have had to prepare them for others!

Anyway, what I’m really curious about is what your methods of keeping track of all this information are. How do you do it? Do you manage your records on a weekly, monthly, or yearly basis? Do you use one software program, several, or maybe just pencil and paper? I find these forms very helpful, but I have a hard time keeping expenses updated on a monthly basis, and end up spending a long time dealing with most of the previous year (which involves information scattered over several sources) in March! Help!