Thinking About Taxes

Thinking about Taxes, by Renea Winchester

Accurate Reporting of Income and Expenses are Important

Most of us are familiar with the term, “music business.” The same applies for the “writing business.”

Those who have opted to self-publish because they want to control money generated from sales should understand that this control comes with tremendous responsibility.

 Taxes.

DISCLAIMER: This blog entry is NOT meant to replace professional tax advice. If you are accepting payments in any form from books sold at events, signings, speaking engagements you should seek the counsel of a tax professional.

Sales Tax: In most states, authors should collect sales tax on books sold at events. In many states, sales tax rates vary depending on the county in which you are doing business, meaning an author who works in one county may pay a different rate than her friend who lives (and works) two counties away. Visit the Department of Revenue in your home state for specific information. Please know that in Georgia you must submit a sales tax form even in months with zero sales. Failure to do so will result in hefty fines (and daily interest).

Money: How do you handle payments? Do you need a business account or FEIN #? Visit http://www.irs.gov for more information. If you created a LLC, or incorporated a business, the bank will require an FEIN number in order to process payments.

Expenses: The IRS allows the deduction of many expenses incurred during the course of operating your business. Maintaining a flawless record-keeping system is crucial. Save all receipts, document mileage (meaning the actual odometer readings and the physical address of the event). Be prepared to show these receipts and validate them with a personal calendar.

Time: Expect to spend several hours each quarter logging receipts into a spreadsheet. If the thought of this is overwhelming, schedule an appointment with a Certified Public Accountant. Many provide an initial consultation at no charge. One thing is certain, the responsibility of reporting income and documenting expenses falls on you.

Renea Winchester is an award-winning author of Stress-free Marketing: Practical Advice for the Newly Published Author. Visit her at http://www.reneawinchester.com