In 2014, I published my first book, and I chose to do so as an independent author. Little did I realize how daunting April 15th would become again (I didn’t receive my first royalty check until 2015). Last year, I tossed receipts here and there – sometimes in the garbage. I didn’t print the ones emailed to me. Nor did I save them all in one location. I did use one bank account solely for business expenses. However, sometimes purchases were made from my personal account since it took five days to transfer money to my business account as they were at different banks. Or worse, I purchased them on the same receipt. I think I may have underpaid my executive assistant all those years since she kept this straight for my expense reports.
I remembered when I graduated from high school, I wanted to be a journalist. When I found out how little the job paid, I decided I wanted to be an accountant because that seemed to pay well. After one year of accounting college classes, I decided I’d leave that field to those who prefer torture from the government.
To be prepared for the self-employment tax form and rules, I printed my bank statements for the year. On my personal account, I am ready to figure out if my purchase at Office Depot was personal or business, assuming I can find a receipt to match. I hired someone to print all receipts that could be found from my three, yes three, email accounts. I have boxes of printed receipts now that I have to sort into categories. Boy did I give away a lot of books. If you missed out, keep an eye out this year. I don’t plan to stop.
Looking at what I have in paperwork now, I know an accountant is the way to go, but as you may have figured out, authors are not wealthy. Think about it, we sell books sometimes for 99 cents, and we do not keep 100% of the royalties. But, it’s the life we choose. As this is the first year I was paid as an author, my hope is that once I sort through everything I can manage on my own. It’s not necessarily the right way to go, but if it becomes too difficult, off to the accountant I go, and much poorer I become. Don’t get me wrong, while accountants are costly, they earn every penny. Finding one who is comfortable working with writers shouldn’t be difficult in this literary town.
Where is all of this going? Be prepared. Don’t wait until later in the year to figure out how to keep track of income and expenses whether you file personally or as a business. Create a ‘receipt drop’ box in a convenient location. Print everything and reconcile at the end of each month. In other words, don’t be a Sheila when it comes to preparing for taxes.
I hope you survive tax season with a refund smile.