Instead, I’m going to give you some easy-to-follow tips on managing your records throughout the month so it takes less work to figure out how much money you’ve made.

Keep track of your invoices. If you’re not invoicing your clients, start now. An invoice is just a bill that says “you owe me this much money by this date for this work.” It’s sort of like what the plumber sends after fixing your leaky pipes.

Don’t have an invoice template to use?

1. Jenn includes an invoice template in her Web Writer’s Guide workbook.
2. You can find invoice templates online by doing a search for “invoice templates.”
3. There is software specifically designed for invoicing. For example, I use MacFreelance.
4. Use Paypal’s invoice tool.
5. Create your own invoice template in Microsoft Word. (Tip: save as .dot file.)

Prepare and send your invoices soon after your project is complete, or before the project is done if you require advance payment. Make sure your clients get their invoices and make sure you keep a copy for your records. I keep both electronic and hard copies for added security. (You never know when your computer might crash or your house burns down and hopefully they don’t both happen at the same time).

Follow up on unpaid invoices. Get a file folder and label it “2009 Invoices.” (You need a new folder every year.) As you receive payments from clients, mark your invoices as “Paid” and file them away. Periodically review your invoices and follow up on those that remain unpaid.

Track your expenses. When you shop for your business items, like office supplies, shop only for business. Save your personal shopping for another trip and expense tracking will be much easier. Keep receipts for all your purchases, even if you have to print them from online.

I put all my receipts in an envelope until the end of the month when I total them up. After that, I file them away based on their tax categories, e.g. Advertising, Travel, Food, etc. (See About.com Tax Planning for a list of tax-deductible business expenses.)

Add up your net income each month. Earlier, I talked about all those useless spreadsheets you might have learned about in your college Accounting class. I still use a spreadsheet, it’s just far more simple than anything I’ve ever learned about in school. My spreadsheet has 4 rows, 13 columns, and looks similar to this:

It’s such a simple chart, you could just draw it out on a piece of Notebook paper. (But then, you wouldn’t be able to put in a formula to calculate your Net Income.)

At the end of each month, I add up all my paid invoices and all the expenses I’ve paid. Then, I subtract expenses from income to get my net income – that’s how much money I made that month. I try to generate income two months in advance of spending it. For example, what I make in October is what I pay myself in December. It gives me peace of mind knowing the bills are covered for the current and next month.

Writer You Are, Accountant You May Not Be

Of course, DIY accounting is not for everyone. Some of us need accountants and there’s nothing wrong with that. Make sure you get someone who has experience working with self-employed individuals and that it’s someone you can afford. Ask for referrals from friends and family members. When you find someone you like, get a few references to see how satisfied their other clients are.

Making the System Work for You

Doing your own accounting and bookkeeping can be time consuming, especially in the beginning as you’re working out a system. Once you pass that hump, you should be able to cut down your accounting time to 4-8 hours a month. Filing things away during the month makes the process a lot easier than having to spend an entire day looking for receipts and invoices only to spend another day sorting and adding them.

As your business grows, continually evaluate whether it makes sense to continue doing your own accounting or if it’s time to get some outside help.

Are you your own accountant? What are your accounting and bookkeeping practices like?

While this story may not be relevant to writers already on the higher end of the spectrum, today I’d like to share a story from one freelance writer who went from accepting gigs at as low as half a cent per word to now having advertised rates as high as $.15 per word. I hope those struggling at rock-bottom rates can find a bit of inspiration here to make changes in their writing careers.

Here’s my interview with Writer’s Brew blogger and business and finance writer, LaToya Irby:

When did you begin freelance writing, and what type of writing do you take on?

When I first started freelance writing in early 2006, I took on a lot of keyword-spamming type of articles. You know, the writing equivalent of an offshore shoe manufacturer. It wasn’t what I was ultimately looking for, but those jobs were easy to find and paid quickly. At that point, I was just happy that I was getting paid to write.

What did your typical rate structure look like when you started? Why did you choose to start at those rates?

I was making anywhere between $.005 and $.02 per word. That’s what the jobs paid, so that’s what I took. It didn’t occur to me to ask for anything higher.

In hindsight, if you could go back and change anything about the way you started your freelance writing career, what would you do differently?

I would have spent more time learning the freelance writing business, making contact with other writers, and coming up with a clear plan about launching a freelance writing career. I would have chosen a niche and a target market and focused on building a reputation there.

What are your rates like now? How long did it take for you to make the transition from your previous rate structure to your current rates?

My rates are [at least] 4-5 times higher than what they were in the beginning. Of course, I don’t know if the increase [is] that dramatic considering I moved from $.02 per word to $.08 per word over three years. That’s about a 2 cent increase every year. I charge $35/hour for other types of business writing like copywriting, business letters and business proposals. I didn’t offer those services in the beginning.

Was it “easy” to raise rates? Did it pose any difficulties? What was the hardest part about it?

Sure, deciding to increase my rates was the easy part. The hard part was letting go of clients that didn’t want to pay the higher rate and putting in the work to find clients that would pay them. At the time, it was difficult moving out of my comfort zone, but all I really had to do was start looking for clients in other places. That work was vital to my freelance writing success.

What made you decide to increase your rates in the first place? Was it out of necessity (needed to earn more to get by), pride in your work (you knew your time was worth more than what you were charging), or something else?

It was a little of both. When I started freelance writing, I had a corporate job making close to $60,000 a year. There was no way I could match that salary at the writing rates I was accepting. I would have had to write thousands of articles per year. I realized I could write for more during an episode of Sex and the City. Carrie, the main character who writes a column for the New York Post, mentioned getting paid something like $1.25 a word to freelance for Vogue. I thought “She’s making more per a word than I make per article!” That’s a slight exaggeration, but you get it.

How did your then-clients take the news? Did you ease them into it? Did most stay with you? Did you end up targeting a completely different client base?

I let my clients know I would be increasing my rates and gave them a two-month grace period at the current rate. None of them stayed with me. I understood that their business models wouldn’t allow them to make a decent profit and pay me higher rates. So ultimately, I had to target a different type of client.

Many writers express a certain level of fear when it comes to raising rates–did you experience that kind of emotion? What was the scariest part of the process, and how did that fear either motivate you or hold you back in some way?

I was definitely shy about raising my rates. I was new to freelance writing, I didn’t have any writing credits, and I have a Business degree rather than an English or Journalism degree. I thought those things made me look less attractive to “real” clients. It kept me from hiking my rates up to where I really wanted and needed them to be. I thought it would be better to ease my rates up over time, so I started out with a low increase, like how McDonald’s does with their cheeseburger prices. Only, I’m not McDonald’s and I don’t sell cheeseburgers, so it might not have been the wisest plan. I could have set entirely new rates and reestablished myself in a different market. Which is what ultimately happened, it just took longer.

Has raising your rates made you look at the freelancing life any differently? Is it easier to view it as a career path rather than a way to make extra money for example? Or do you find yourself feeling differently about the actual projects you take on now versus those you started with?

Definitely. Last September, I left my corporate job and started freelancing full time. There was absolutely no way that would have happened if I hadn’t raise my rates. It would have happened sooner if I’d been more aggressive at rate increases. Now that I do this full time, I am a lot more selective about the jobs I take on. I have to be. I love writing and I don’t want to start resenting it, so I only take on projects that I like. I have no problem saying no to a job that pays well, but would make me hate myself in the morning.

If you could say one thing to freelance writers who feel they have to offer very low rates to compete and survive, what would you say to them?

You can’t compete and you won’t survive on low rates. There will always be someone out there who will charge less than you. And that market of clients is always trying to figure out how to pay lower rates for writing. So, figure out why you’re afraid to charge what you’re worth and work on solving that problem. If you feel that you need bylined clips, get some. A lot of writers will tell you not to write for free, but if you have to give away one bylined clip to a credible website or publication to increase your rates, I say it’s a worthwhile investment. That was more than one thing, wasn’t it?

I’d like to thank LaToya for taking the time to share her personal experiences with the very low Web content writing rates we often see advertised, and what she did to start breaking away from that market.

If anyone has anything they’d like to add from their own experiences–tips to help newer or underpaid writers take a step in the right direction–I hope you’ll share with us here in the comments.