Question and Answer Post | How to Keep Track of Income Sources

 

How to Keep Track of Online Income Sources

 

This question was submitted from one of my subscribers (if you aren’t subscribed to this blog, sign up at the bottom of the post).

Question:

Is there a program you recommend for keeping track of your income streams?

She expanded her question further, asking how to keep track of different income sources, especially since some pay out monthly and others pay out quarterly.  And in addition to that, many online income sources have a minimum payout threshold, which may take months to reach when you are first starting out.

Answer:  I use Excel/Numbers and also Outright/GoDaddy Bookkeeping.

I use two different programs to help me keep track of everything.  First, I have always used a simple Excel spreadsheet to track my income from different sources.  I switched to an iMac at the beginning of the year, so now I use Numbers, but I’m still using the same spreadsheet, like the one shown below.  I enter the amount I am paid in the month I receive the income.  This helps me see the big picture and should match up with any 1099-Misc tax forms I get at the end of the year.  I simply enter the amount I was paid, in the month I received it into my Paypal account or checking account.

The spreadsheet shown below is a sample template I made at Google Docs.  You can access it, download it, and use it here: Income Sources Spreadsheet.  Just change the income sources to your own and add your numbers.  It should automatically total the results.  If you need to add more columns for more income sources, then you might need to adjust the formula that sums them up, making sure it includes all the columns you just entered.  Clear as mud?

Income Sources Spreadsheet

 

I highly recommend that you have a separate bank account or have a business or premier Paypal account that is used ONLY for business income and expenses.  Since most of my online income sources pay by Paypal, I have a debit card for my Paypal account, and I use the debit card to pay for all of my business expenses.  If an expense is a monthly subscription, like my Jaaxy keyword research tool, then it automatically comes out of my Paypal account every month.   Having all of my income and expenses in one account helps tremendously for bookkeeping purposes.  A few income sources only pay directly by ACH or check, so I also have a separate bank account that these are deposited into.  Then I manually enter them onto my spreadsheet when I receive the income.

On my spreadsheet I have additional columns after the “Net Income” column, with which I calculate how much I need to send Uncle Sam for my quarterly taxes.  Each person’s tax situation is different and I am not a licensed tax professional, so please consult a tax professional for help with figuring out what you need to pay in taxes and whom you need to pay them to.  :)

I also have a spreadsheet in which I enter my daily income, as I earn it, so I can see how my earnings are increasing or decreasing, and so I have an idea of how much I will be paid 60 days later.  Most of the income sources pay out after a 45-60 wait time.  So instead of waiting until I get paid, I always know how much I’ve earned for the month.  That spreadsheet is similar to the one above except instead of months, it has days.

Secondly, a few years ago I started using the free version of Outright, which is a small business bookkeeping software online.  It has now been acquired by GoDaddy, and is now called GoDaddy Bookkeeping.

The software will automatically pull in your account information (debits and credits) from your Paypal account or any other bank account you tell it to.  I currently have it pull in only my Paypal stuff, and then I manually enter the few income payments that are paid to my bank account (Amazon, ShareaSale, Google Adsense, and a few others).  This is what I use to keep track of my income and expenses on a line by line basis.  Then I manually enter the total expenses on the spreadsheet shown above.  I will simply run a report showing the expenses for the month of  “June 2014” and it will show me the total amount from all the transactions in Paypal.  It also lets me assign categories, which makes it easier to add the information to my Schedule C on my tax returns.


Outright online bookkeeping for just $9.99 / mo!

I really didn’t need any software like this until I got to the point where I was having trouble keeping track of it all.  Spreadsheets worked just fine for me up until that point.  I still have a free version, which limits the number of months you can look back on your records, so if you go with the free version, it’s very important to export your data at least a few times a year, and most certainly at the end of the year when you have made sure all your income and expense entries are accurate.  Print them, save them, and save them again on a different drive.

The most important thing is that you have a paper trail of all your income and expenses.  You need to print off receipts and save copies of them, so you have documentation of your expenses for your tax returns.  As your business grows, your bookkeeping will need to evolve and grow with it.  My brother runs a small business, and he uses QuickBooks, which is more heavy duty.  But I’m not at that point yet, as I really don’t have many expenses to keep track of, and I have no employees, so I don’t have to worry about keeping track of payroll.

As with any advice on this website, this is just my personal summary of what I do, and may or may not be applicable to you and your business.  Please seek the counsel of a licensed tax professional for help with your taxes.

What do you use to help keep track of your various online income sources or small business income sources?  Please leave a comment below!

 

 


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5 comments on “Question and Answer Post | How to Keep Track of Income Sources

  1. Thank you for this :) Sometimes all I need is a nudge in the right direction so it doesn’t stay too complicated in my head.

  2. I normally just store mine in Microsoft Word. I write down what I get paid from each site each month and then total it up at the end of the year. I also keep a track of my expenses too.

    Is your 2014 income likely to be higher than your 2013 income?

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