Great, You’re an Author! Are You a Business Too?

Hi, author friends!  I haven’t blogged in awhile so I figured it was time to pass along some more knowledge that I’ve accumulated over the years.  Like you, after I completed my rough manuscript, I needed to start getting my work publish-ready.  That meant hiring a professional editor (a must) and finding the right artist to create a killer cover design (a bigger must) as well as beginning my thought process for the big marketing campaign.  What else did I do?  OK, here it goes!

I needed a website, a newsletter to send to my loyal fans, set up my social networking accounts, yada, yada, yada.  Though some of these things you can do for free, you still need Internet access, which last I looked cost some money per month.  Oh yeah, I needed a device(s) to access Al Gore’s creation, a printer, a smart phone with all those cool apps, and again much, much more.  Are you sensing that a particular word should be added right about here?  That word would be expenses!  And when you have expenses, you my friend, have a business.  With Tax Season nipping at our heels, wouldn’t it be nice to get back a little that you put into the system?

My local bank, and I’m sure many others, allows me to have a free online business account as long as I have a personal account with them.  I use my social security number as my personal identification number for the account and tax purposes.  I even use my business name, Overlord Enterprises, on my account meaning that I can have people sign checks to either that name or myself.

When it comes to Uncle Sam, I write off book purchases, editor and artist fees, mileage to book signings and workshops, devices, Internet access, etc.  I personally use Microsoft Excel but Quicken also has home and business software that is exceptional and easy to use (I use Quicken for my personal business and love it).  Be sure to collect taxes for book sales and pay them to your state.  On your federal return, you can fill in a Schedule C and deduct everything that you do.  And when doing your taxes, be honest.  Don’t overdo it and you will be fine.

I do want to add a disclaimer here.  I hold writer’s workshops, give presentations at libraries and schools, attend writer’s conferences, and travel to all my gigs, which makes what I do a nice side business.  All of these things generate revenue, along with book sales.  If you’re only selling books, and not many at that, you might not be able to really qualify as a business since your losses will be drastically more than your income.  This raises a red flag on your tax return and can increase your chance of being audited.   Furthermore, Uncle Sam may deem you as having a cool little hobby and not a bonafide business.  But if you’re active in your business all will be fine.

I hope this helps you guys out a bit.  Getting back some money at tax time from doing something that you love is always a good thing, right?  Absolutely!