Tax Day and What It Means for the Writer

April 15, 2015

Happy Tax Day!

I thought this would be a good place to talk about taxes and the writer.

I want to talk about 3 things in particular:

  • LLC vs. Self
  • 1099s or winging it
  • QuickBooks

Note: I am writing from my experience as a U.S citizen responsible for U.S. federal taxes.

LLC vs. Self

Someday Lady Publishing Author Marketing ServicesOne of the first questions you’ll need to ask yourself is should you form an LLC or risk it as a person.  As a self published (or traditionally published) writer, you will be responsible for taxes on the sales of your products, your products being your books. You can choose to pay for these taxes against your own social security number or you can form an LLC that is responsible for all business activities regarding your writing.

I chose to form an LLC to separate the liability of my writing business from my personal assets. I wanted to make sure that anything I did as Jessie Clever did not impact my life as Jess Somethingelse. As such, all taxes are paid by my business, Someday Lady Publishing, LLC. This is as simple as filing a Schedule C with my taxes and as complicated as needing to hire an accountant. I keep my own books and thus do my own taxes (which involve handing my P & L to my husband at the end of the year). You may choose to hire someone to handle your books as it can get complicated, which leads me to…

1099s or Winging It

As a self published writer, I receive 1099s from some of the vendors through which I publish. I say “some” because this is where it gets complicated. Not every vendor sends out a 1099. This means you will be responsible for tracking all of your sales, subtracting the ones covered by 1099s, and paying quarterly tax payments according to what you’ve tracked.

Like I said, it can get complicated. So I suggest…

QuickBooks

I use QuickBooks Online. My business checking account is attached to my online QuickBooks account and when I open QuickBooks, my transactions automatically load from my checking account to QuickBooks. From there, you can sort your expenses (with categorization options) from your sales. Additionally, QuickBooks allows you to generate the reports that will make completing the Schedule C much easier.

The Bottom Line

Taxes are tricky. Keep track of everything and keep all receipts. Hire an accountant if you decide it’s more valuable to spend time on the writing rather than on keeping your own books. And most importantly, decide rather your writing is a hobby or a business.

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