Blogger: Rachel Zurakowski
Location: Writing for the Soul Conference; Denver, Colo.
Tools and tips for handling the financial aspects of writing:
1) Understand taxes: When you receive your first advance, it’s so exciting that you’re tempted to spend the entire thing. Don’t do that! Be sure to talk with an accountant about how much you need to set aside for your taxes first. Publishers don’t withhold any taxes from your advance; so it’s your responsibility to pay Uncle Sam yourself at tax time. Avoid unaffordable surprises!
2) Find out what you can write off: If you know what you can write off of your taxes and you save receipts, you can save yourself thousands of dollars. Writers Conferences and research travel can be written off in some cases. The catch is you need to make money from your writing within a couple of years. If you don’t think you’re going to have a book published right away, but you still want to attend conferences and to write off the expense, it’s a good idea to submit articles to magazines. Getting paid for an article counts as making money from writing. Be sure to talk to a tax accountant about the specifics for you.
3) Keep all check stubs and payment receipts: It’s important to have these documents when tax time comes. You want to have a record of all income made from writing.
4) Look into pros and cons of becoming incorporated: Looking into this is something you should do when your income reaches a certain level. Incorporation isn’t for everyone, but it could benefit you.
What other money tips you have learned?
Such a timely post, Rachel. I’ve learned a lot about taxes in the last year or so! Great advice here – thanks so much!
To keep receipts from a certain project together, I tape or staple them to a sheet of typing paper. That way I can title the page and write notes explaining the expense. I can even make copies, but the actual receipt is undamaged.
It’s low tech, and it may not be news to anyone but me, but it has made record keeping easier.
There’s an iPhone app called “Receipts Lite.” You can photograph the receipt, enter the business reasons for the expense, and pitch the paper. It syncs w/your computer and you have a permanent record of the receipt and its details.
I love it.
I keep a small calendar (book) and keep track of any mileage related to research and book related errands. If I make a purchase I keep the receipt in the book until I’ve logged it and then I file it in a current year’s folder. I keep a spreadsheet with all of my submissions and their results on the computer, so if the IRS ever doubts my yearly losses (so far), I’ll be able to show them my efforts. 🙂
I’ve really benefited from all your Tools for the Writer’s Life blogs. Every time I read one that I was doing, I gave a little sigh of relief! You’ve given me lots to think about.
Thanks for sharing your knowledge and experience!