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Friday, March 15, 2013

So You Got Books To Sell

Congratulations on becoming a published somebody. More importantly though, congrats on scoring your first book signing gig. And because you're all pumped up to (hopefully) sell some books to the reading public, you're probably not giving any though to the myriad of issues that come with personally selling your book.

So yours truly is stepping in to impart a half dozen or so genuine pearls of wisdom that I've acquired in the past four years. These delightful pearls of wisdom will not only help you take advantage of what you do to the fullest, but will allow you to keep Uncle Sam and Auntie 'Bama out of your pockets.

1} Get a Federal ID #: This is a necessary item to have if you want to file Schedule C (business loss/profit) with your personal taxes. Easy to acquire as it takes about 15 minutes talking to the IRS, and you can set yourself up as a sole proprietorship. More importantly, you need this because you also need to get....

2} A Sales Tax permit: In most states, if you sell something (like a book or crafts), you must collect the sales tax. No sales tax permit equal major headaches in the short and long term with your local Department of Revenue (click here for the sordid story). My state requires that you file quarterly reports, regardless whether or not you sold something.

3} File a Schedule C: having the first item on this list will allow you to file a Schedule C, thus helping with your personal taxes. Contrary to popular opinion, the form is pretty straightforward and it's the easiest way that I know of to learn basic business skills.

4} Use your deductions wisely: With a Schedule C, you can deduct various things that are related to your writing, but just like everything else connected with the IRS, use judiciously.

For example, this past year, even though I spent about $600+ for my writing, I wound up deducting the following items on my Schedule C: rental of box, postage, and service fees. This directly due to the fact that I didn't sell a lot of books the previous year. Therefore, if I tried to claim everything related to my writing, it would surely raise a large red flag with the IRS.

5} Track, track, track: Because I created a little business for myself (Books By George), I have to track what I sell and what I buy. I have to track what I sell quarterly for taxes and yearly for the IRS. So among other things, I have a little cheat sheet that has the beginning inventory for all of my books, which I have to make sure is accurate right down to the last book. Pain in the butt...

6} Separate bank account:  The main reason why I can deduct service fees is that I have to keep the money I earn from writing (sales and royalties) completely separate from my 9-5 earnings. This is basically a catch 22, in that the bank whacks me with a service charge because I don't have a minimum balance (and I can't tie this account into my others) and I can't simply put more money in to get to the minimum balance because that would invite questions from the IRS.

7} Post Office box: Having a P.O. box will allow you to keep your writing endeavors separate from your personal affairs, because if you're like me, you really don't want your readers knowing EVERYTHING about you. A P.O. box is the best way to have a privately public persona.

I'm sure there a lot of other useful tips out there that you can do as a writer, but these seven are what I deem to be essential if you're doing the self-employed thing with your writing.

If you have any other suggestions, by all means let me know about it in the comments section.

12 comments:

  1. Eek, I better get on some of these things.

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  2. Charles: If you recall, I learned about this the hard way back in January 2009, when my local DRS threw a conniption fit because I didn't have a sales tax permit and decided to fine me $50 for filing a quarterly return late.

    I had to write a one page letter of appeal in order to get the fine dismissed, but I now I filing my quarterly within days of the new quarter starting. Plus, I pay extra just to be on the same side.

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  3. Great info, George. We went to New York this summer to go to the Javitz Center and the book extravaganza. I wanted to write off the entire trip and my husband said, "NO WAY". You tips were great and I should probably get my ass in gear and do some of them. I a may be famous one day!

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  4. Penny: You're more than welcome.

    Like I stated, I had roughly $650+ in writing related expenses that I could've wrttten off, which included:

    Book trailer; two sets of business cards; bookmarks; service fees; box rental; postage

    But, being that I'm genuinely afraid of the IRS, I limited myself to just what I'd mentioned in the post.

    For next year, I'm looking at the very least, breaking even.

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  5. I hope I will need this information someday:)

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  6. G, it's a definite case of one thing leads to about 2,083 others! :)

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  7. Talon: And then some. :D

    The most pain in the butt thin about this is filing quarterly sales tax returns when you haven't sold anything for the quarter.

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  8. I'm exhausted reading about it. :)

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  9. Lynn: Welcome to my world. It usually takes me an extra hour or so to get all my writing related expenses gathered, sorted and decided upon at tax time.

    This is the main reason why I don't have anyone do my taxes for me. Too many issues and too much aggravation.

    ReplyDelete

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G. B. Miller

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