It’s that time of year again. Time to roll out your income and expense sheets and start getting your tax information ready. This year will be a new experience for me. I’ll be filing in a new state and as a different business entity. I’m not sure about all the issues I’ll need to understand, but that’s what accountants are for.
It is important to keep information about the income you earn from your birth business, but most birth professionals seem to be better equipped to manage the emotional needs of labor than tax forms. Here are some rules I follow, use them as a guide to help you form your own financial rules.
1. Keep a record of every client, the services they purchased and what they paid. This was important for me because I often provided education or doula services free of charge. Keeping a sheet for everyone, whether they paid me or not, helped me keep track of income and the number of births I attended.
2. Keep track of every purchase. I couldn’t really figure how much money I made unless I also knew how much money it cost to do what I did. I kept track of every book I bought, conference I attended, cost of website, copies and paper – anything I needed to do my business was an expense.
3. Don’t skip filing my papers. In my house, papers and receipts have a tendency to get up and walk away even if I have them in nice piles for filing. I needed to designate a place to keep my work, somewhere they were safe. I kept mine in a file cabinet drawer. I could quickly find everything because it was all in the same place.
4. The longer you ignore finances, the longer it takes to manage them. I couldn’t remember why I had a receipt four months later if I hadn’t already accounted for it. I got to the point where I didn’t remember every client six months later, or how much I had charged them. If I didn’t know what it was for, it took time to look through old papers and try to figure it out. At the very least, write on your receipts and use the same form for every client so you can be sure you have basic information covered.
5. Start taxes early. Up to this year I have done my taxes myself with the help of tax software. It always amazed me how it took two or three tries (every year) to get all the information in correctly. I would enter the information, print it out and read it only to find something was mis-entered or I hadn’t gathered everything I needed yet. It was then back to the software to look for the way to edit it and try again. I usually gave myself three or four days to work on it, separated by at least a week to be sure I was checking for completeness and correctness with fresh eyes. I couldn’t have done this if I started the week before taxes were due.