Taxes for Authors - WRITE | PUBLISH | SELL

Feb 12, 2024 | Business Tools

Taxes for Authors

taxes for authors

Taxes for Authors

by | Feb 12, 2024 | Business Tools | 0 comments

Are you ready to file taxes?

Tax season is upon us – the Americans on the list at least! For everyone else, these tips may or may not apply – definitely do your research for the laws in your own country.

I don’t know about you, but this is my least favorite thing to do. I’ve learned a thing or two over the years. As my business grew, I hired a bookkeeper and CPA for filing my taxes, but the first few years, I did it all on my own.

Disclaimer: I am not a trained tax professional nor am I an accountant, so please make sure you are consulting with a professional. These tips are based on what I have learned. And below, I’ve got a recording from a few year’s ago for our annual conference, in which Melissa Whaley, a bookkeeper, shared her professional expertise. Laws change, but the basics stay the same.

First – how do you figure out your profit?

This part is the easiest.

Profit = Revenue (be it from royalties, consulting, sales of courses, book sales at events, etc.) – expenses.

You may be in the negative for the first few years. In fact, it’s quite likely that you’ve spent more your first couple of years than you’ve earned. You get three years to file “in the red” (ie, negative because expenses = more than revenue) before the IRS deems your business to be a hobby, not a business.

Even if you’re not making money yet, these expenses can help bring down your overall tax burden. But if you hit year 4 and you’re still expensing more than you’re earning, you might not want to claim everything.

What can I write off as an expense?

Did you know that almost ANYTHING related to your author business can be expensed?

Some examples:

  • Editing
  • Conferences (to include airfare, hotel) – to include virtual conferences like The Women in Publishing Summit 🙂
  • All marketing expenses
  • Book orders – either of your own or of other people’s to do genre research, etc
  • Coaching programs, training, etc
  • Office supplies
  • Office space
  • Internet and phone
  • Website fees, domain purchases
  • All tech tools you buy to support your business (think tools like ProWritingAid, PublisherRocket, Autocrit, PubSite, etc.)
  • Stickers, flyers, swag – anything related to marketing expenses
  • Marketing expenses – ads, companies, promo tours
  • ETC.

Watch this interview, and if you’re interested in learning from a tax professional and asking questions, join us at the upcoming virtual conference, The Women in Publishing Summit!

One final tip – in the beginning, you can use a tax software, like TurboTax to help you file your Schedule C. But it’s a lot easier if you’ve been keeping track of your expenses.

Next year – (or starting now!) – take a day at the end of the month to put everything in a spreadsheet and categorize the expense type, reconcile your accounts, and pay bills. It will save you so much time next year in tax prep! And make sure you’ve got a separate bank account and credit card for all of your business income and expenses, so you’re not wading through personal expenses intermingled with business expenses.

Hope this helps!

*This post contains affiliate links.

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