Accounting for Writers and Artists
Orycon 34
Edward Muller, John R. Gray III, John Hedtke, Richard A.
Lovett
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How does accounting impact your business?
o
JG: I hire an accountant once a year. He gives
me a layout of what’s new and what I need to keep track.
§
I keep every possible receipt. I write on the
back what they are for. I fill out every form with what fits into the
categories, and the accountant figures out what can be used.
o
JH: Was a sole proprietor for years, doing it
all myself. I tried a CPA a few times, but found I was still doing most of the
work myself. It was going through all the spreadsheets and receipts. I have a
big box, and I stick everything into that box. Periodically I sort it into
folders.
o
RL: Does it himself. My system is receipts. I keep
them, I stick down at my kitchen table. I have an old fashioned ledger paper. I
do not put money into the bank or receipts into an envelope until I’ve put them
into the ledger. I take the ledger sheet, and using a calculator, put it into
schedule C. The one that causes me the greatest grief is mileage. I have a
mileage counter in my car to keep track, the trick is to remember to do it.
o
EM: I write short science fiction, and sold it.
I have a day job. My wife is a doctor. We use a CPA. Thermal print will fade,
so write it down on paper. I claim mine
as hobby income. Then you have hobby expenses. A whole slew of rules on that.
o
JG: I don’t claim a whole office, because the
rules are too strict. It’s too much of a nightmare.
o
RL: I claimed a home office, but it was somewhat
easier to claim, because it was my sole source of income and sole place I
worked.
o
JH: For a number of years I took a deduction for
home office. I took a deduction for 25% of my home. A lot of money. But you
don’t want to claim
·
For online expenses?
o
Put the email receipts into a folder.
o
Print the receipts.
·
Save all bank statements for at least three
years in case you are audited.
·
If you have a business, you can take losses and
apply it against other income.
o
You can do it 3 out of 5 years.
·
Travel for novelists for research…
o
Is the primary purpose business?
§
You can deduct as long as side trips are less
than one third.
§
It’s got to be plausible.
o
It’s different for foreign travel.
o
Must document the travel purpose, the research
you are going to do. More documentation is better.
·
Never volunteer anything in an audit. Find out
why they are audited.
·
How do you know when you should start paying
quarterly taxes?
o
They’ll tell you.
o
You are required to make estimated tax payments
when you expect to pay more than $1,000.
o
If you do have to pay, then if you pay a quarter
of previous year’s taxes each quarter, you are safe even if your income goes
up.
·
Royalties are schedule C income, subject to
social security taxes. But the IRS might try to tax you twice on this.
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