Questions About Keeping the Books

Recently a reader in Tennessee asked:

If I am doing a booksigning at a retail place (bookstore or other shop) what percentage of my profit must I share?

Do I have to charge sales tax? Do I have to keep track of the taxes?

First, let me clarify that my advice should never  replace that of a CPA. Consult a professional in your area with your individual concerns. Most Accountants will offer a free consultation. Please know that all income received from book sales are subject to Federal Income Tax, and probably (depending on where you reside) State Income Tax as well.

You didn’t think about that part of being an author?  Oopsie, best call the CPA immediately, if not sooner.

Authors are business professionals. They are operating a business and providing a service. Seek the advice of someone who can explain when you should form an LLC or an INC. In the beginning you can report your earnings without much difficulty when filing annual income taxes. However, if you wish to accept credit cards using those fancy cell-phone scanning devices, you will need a business account in which to deposit the funds. The bank will require an FEIN number. You will also need a business account for PayPal transactions.

As an aside, I do not accept credit card payments, the fees eat into a thin profit margin.

In order to open a business account you will need to visit the local Secretary of State website and open an account. Expect to invest approximately $200.00 for proper documentation, even if you do the paperwork yourself. If you live in the city, you may also need a business license; say goodbye to another $100.00. Each require an annual filing fee which is smaller than the initial investment. A CPA can do this for you, but it will cost you approximately a thousand dollars total. Before you make that investment please send me a personal message through my website for a response based on your individual need.

Question One:What percentage of profit must I share?

If you are traditionally published, your publisher takes care of this by entering into an agreement with book distributors such as Baker & Taylor or Ingram’s. I strongly discourage authors from entering into consignment agreements with business owners because in these economic times a business can be here today and gone tomorrow. If you insist upon placing books in someone else’s store, do so only after both have a signed a written consignment contract. Most stores expect to receive 30 to 50% of the retail price of your book.

I will pause while veteran authors laugh. Go ahead, we’ll wait.

Veteran authors are painfully aware that no one  receives 30-50% of the retail price. As the author you should kindly explain this to those kind enough to shelve your book. The printer gets paid first, then the distributor takes a cut; the publisher takes a cut; the book must be shipped (and possibly returned); and that leaves very little (12-15% if you are lucky) for the author, AND the bookseller.

Sales Tax: When money changes hands a “legal sale”  transpires. You, the author, are responsible for collecting and then reporting this sale (rate and reporting deadline vary depending per state) to the Department of Revenue. Failure to report sales will result in hefty, compounded-daily fees. Educate yourself on this process. Authors require a sales-tax id number and a calendar reminder to report sales each month. Sales must be reported, even if they are zero, every month. In Georgia, failure to report a “zero sale” month results in a $ 50.00 fine.

When a bookstore makes a sale they collect, and report, that sale to the Department of Revenue. No action is required from you regarding sales tax.

When an online distributor sells your book, either hardcopy or electronic copy, they collect sales tax. No action is required from you regarding sales tax.

Federal Tax: Royalty checks both from your publisher or any other seller, do not include a deduction for Federal Income Tax.  If book sales exceed the IRS limit, your publisher, who is acting as your employer, will send a 1099. If not, you will report this income as “miscellaneous.”  If income from book sales is a large amount, it might be wise to report income quarterly and pay Income tax quarterly versus writing a hefty check in April.

Record keeping:Emerging Authors will realize that having an account of every sale and expense is imperative. Most word processing programs include a spreadsheet such as Excel. Here you will log every expense from paper to postage stamps; number of books ordered to packaging supplies. You will also log sales, returns and hopefully royalties.

Thank you for the question. I hope my response helps.

Renea Winchester is an award-winning author. She leads marketing workshops for emerging authors and is available to speak to groups as well as personalized individual consultations. Visit her at


Fresh from the Literary Festival

by Renea Winchester 

I have just returned from one of my favorite literary festivals held in Canton, Georgia. If you are working on a manuscript, attending festivals and workshops is the best way to meet authors and gather information about how they have successfully marketed their book. Here is what I learned.

While sitting on a panel with Stephanie McAfee, I, and many others in attendance, marveled when she told us that she sold 145,000 copies of her (then self-published) e-book. Not only that, but Stephanie sold those copies during a time when the sale of traditional books fall flat. Her sales came in January and February.

Those who have read my book Stress-free Marketing: Practical Advice for the Newly Published Author know that I am firmly against releasing a printed book during January and February. Why? Most people are on a budget and, during the months of January and February, have limited funds by which to purchase books.

The exception… those who receive a new Kindle and gift cards.

Kindle fledglings scour Amazon searching for cheap (or free) books. Stephanie’s plan was simple. Write a book. Release it in January during a time when people were uploading  99 cent ebooks. Then wait. Hope. Pray.

Caveat: what worked for her then may not work for you today. She released her e-book on the cusp of the Kindle explosion. Today, there are literally tens of thousands of 99 cent ebooks.

Stephanie also shared that once the book started selling well, (well above average) she became embarrassed at the number of typographical errors it contained.

“I didn’t have an editor,” she explained to those in attendance at the conference. “So when I started selling a lot of copies I was embarrassed at how many mistakes the book contained. If you are considering publishing, please invest in an editor.”

Today, Stephanie is living every author’s dream. She has a three-book contract from a New York Times publisher. She also has a tremendous amount of work ahead. With three books to write in addition to marketing those books, she spends a lot of time locked inside her home office.

“I asked for my agent for an extension,” she announced at the conference. “I thought the publisher would give me 90 days…they gave me thirty. These are the things new authors learn fast.”

Certainly, Stephanie’s e-books will never again be priced at the bargain price of 99 cents, but for her, the low-price strategy worked.

Thank you for reading and remember, keep writing.

Renea Winchester is currently working on her third book titled: In the Kitchen with Billy. She was recently named the Atlanta Pen Woman Author of the year. Visit her at

To learn more about Stephanie visit her at

Standing Out Among Other Titles

Trivia time.  Without looking, guess how many titles are on Amazon?

Insert Jeopardy music.

Can readers find you?

According to Amazon, there are 8 million titles available either in print or electronic format. Instantly, the question becomes how can anyone find my book in the midst of so many titles?

Not to repeat myself, but you cannot create a nationally recognized name for yourself , which translates into sales outside of your home state and wider recognition, if you do not first invest the time to create a local name. Take heed, emerging authors, I speak directly to you. Authors who successfully sell eBooks incorporate many tactics. A few examples are: creating a web following, establishing a powerful social media presence and generating word-of-mouth advertising. All are done before publication.

All over night success stories takes years to create.

Why in the world would you invest years of your life, to pursue publication, only to expend energy doing the wrong things. It did take you years…right? Please tell me that you aren’t self-pubbing an unedited rendition of your NaNoWriMo assignment; or worse, submitting a smoking-hot manuscript to a power agent. Pretty please, tell me that you have paid an editor, had complete strangers read your work, let the manuscript cool, re-read, prayed, meditated, corrected and re-read (out loud) the entire manuscript before sending it to an agent, publisher, or printer.

Please, tell me you understand the difference between a printer and a publisher, and that you are not going to put your name on something that isn’t ready. Books take years (plural) to ripen. You do not want to know how many emerging authors email me in a panic. Whether they have found me after attending one of my workshops, or by referral from another author, the stories are always the same. They paid $ 5,000 for 50 copies; $20,000 for a thousand copies; they have books to sell (now); they are in crisis mode. As my mother says they have, “got the cart before the horse.” They have self-published, loaded their trunk with a shiny baby and now suffer new parent angst.

Dear author, I am not equipped to solve this type of unsolvable, yet simplistically preventable catastrophe. Unfortunately, no one can. The best I can offer is that you consider my words now, before making an irreparable mistake.

I see you.

I want your work to stand out, in a good way. Because if you don’t do the research before publishing, odds are high your work will not get the recognition you think it deserves.

 Further, if you have caught a second wind after completing NaNoWriMo, join a critique group. Join a local authors guild. Find a reading group. Take the necessary steps to polish your work first. The world should first meet you as a confident author, not a desperate one.

 You can stand out in a crowd, either in a good way, or a not-so-good way. The choice is yours.

Renea Winchester is the author of Stress-free Marketing: Practical Advice for the Newly Published Author. Her first book titled: In the Garden with Billy: Lessons About Life, Love & Tomatoes, earned a SIBA nomination and a Georgia Author of the Year nomination. She is an award-winning author who believes in the value of community and relationships. Her work has appeared in various magazines, anthologies, and literary journals. Visit her at