This Business of Writing: Ordinary and Necessary Expenses

Today, Dear Reader, we continue the series on the business of writing and welcome back Brigitte A. Thompson as she shares her professional advice as an accountant and author.

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Bookkeeping is an essential part of the business of writing, especially identifying and tracking expenses. Business expenses are considered an operating cost.  The more legitimate business expenses that we can document, the lower our tax payments will be.

Ordinary and Necessary Business Expenses for Writers:

The Internal Revenue Service (IRS) requires that our writing expenses be ordinary and necessary in order for them to be acceptable. An ordinary expense is defined as common and accepted in our profession. A necessary expense means we need to spend this money in order to operate the business. The expenses must not be considered extravagant. They must be an essential part of doing business as a writer. It is important to differentiate between personal expenses and business expenses.  Continue reading “This Business of Writing: Ordinary and Necessary Expenses”

Tax Tips for Writers: Business Meals

We welcome back accounting professional and author, Brigitte A. Thompson as she continues her helpful advice to writers.

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Writers may choose to meet with their agents over lunch or they might arrange to meet a subject to interview at a local bagel shop. The cost of the meal can be a tax deduction with proper purpose and documentation.

1. The primary purpose of your business meal must be related to your writing business.

2. You must conduct business during the meeting such as discussing the storyline of a new book or determining which publications are interested in your current article.

3. Be sure to save the receipt. It should contain pertinent information such as the name of business, location, date of the meeting, time, who was present, total charge, and how it was paid for. You can use the back of this receipt to record a summary of what was discussed.

The amount you can deduct is limited to 50% of the actual unreimbursed costs. The IRS is considering an increase in this amount to allow 80% reimbursement. As of this writing, the deduction has not been raised. You can Visit the IRS Web site for updates.

accounting, bookkeeping, author© Brigitte A. Thompson, Datamaster Accounting Services, LLC
Author of Bookkeeping Basics for Freelance Writers available on Amazon:

The information provided is intended to be general and based on the Federal Tax laws of the United States. As such, it is subject to change. This information is not intended to be used as a substitute for financial or legal advice. Be sure to consult your tax advisor on all tax matters.

This Business of Writing: Accounting Methods

Today, Dear Reader, we continue the series on the business of writing and welcome back Brigitte A. Thompson as she shares her professional advice as an accountant and author.

business, bookkeeping, accounting, legal forms, writer, author
All rights reserved by iStockphoto

A business can be operated under one of three methods of accounting; cash, accrual, or hybrid. The IRS will be automatically informed of your choice when you file your first business tax return. If you decide you would like to change your accounting method, you will need to get approval from the IRS using Form 3115, Application for Change in Accounting Method which is available on their web site IRS.govContinue reading “This Business of Writing: Accounting Methods”

This Business of Writing: Legal Organization

Today, Dear Readers, we begin a series of posts by accounting professional and author Brigitte A. Thompson of Datamaster Accounting Service LLC.  Please make her welcome as she shares her expertise with us all.

business, bookkeeping, accounting, legal forms, writer, author
All rights reserved by iStockphoto

Writers work in all different genres and write for a variety of media outlets.  Some of us are business writers, others create romance novels and many write articles for magazines or copy for web sites.  Putting words into print is our profession, but dealing with the financial aspects of our writing business can be challenging. This series of blog posts can help!

Legal Organization for Writers

There are several forms of legal organization to choose from when establishing your business. The most common form for a writer is a sole proprietorship, but there are other options. You should understand the choices and speak to a lawyer, accountant, or tax preparer to find out which option is the best for you. Continue reading “This Business of Writing: Legal Organization”

Authors Learn to Embrace the “B” Word

budget, accounting, calculating, financeOne of the best business management tools you can learn to use is a budget. Oh, I know; “budget” ranks right up there with IRS, death benefit, hemorrhoids and goiter as words we want to avoid associating with.  But, this word does not have to be something vile and filthy.  You don’t need to wash your hands after writing it.  It can, in fact, be an excellent tool for helping you improve your peace of mind and your quality of life.

While it is an extremely valuable tool in getting your personal and family finances in order – thus getting the money problems monkey off your back, I’m not going to go into all of that.  This time we’ll look at it specifically as a means of helping you run your business more efficiently.  Continue reading “Authors Learn to Embrace the “B” Word”

Practical Pricing of eBooks

ebook pricing price Lately I’ve been reading quite a few articles offering advice on pricing an eBook.  They range from the adamant insistence that all eBooks should be 99 cents to the almost snobbish claims that artistic integrity demands that eBooks be priced the same as paper books – and hard bounds at that!  Most of the proponents of a particular view have a good point to make, but these points are all too often used to whitewash the entire spectrum of eBook genres and their authors with a one-size must fit all attitude.  I vigorously disagree with that, and I’d like to chime in on some of the other views I’ve heard discussed and add one or two of my own.   Continue reading “Practical Pricing of eBooks”

Taxing Times for Indie Authors

 Government, taxation, incomeI’ve been looking around for my next book and think I may have come up with an idea.  There are a lot of newbie authors coming onto the scene who are being confronted with the fact that if they enjoy any success at all as an author that fact places them into a new category of the populace by the US Government: Self-employed.

I’m thinking I’ll write a business start-up and a tax penalty avoidance guide aimed specifically at authors.  How would I be qualified to do this since I am not a tax accountant nor do I work for the Small Business Administration?  This is true, but I have been full-time self employed for about 12 years now, part-time self employed for almost 20 years prior to that and I have filed my own family taxes every year (no accountant) and at no time in those 30+ years have I been slapped around by the government for my efforts.  In addition I have written such a guide before.  That one was written for those aiming to become a professional woodworker, was bought by Wood News Magazine for a handsome price and was serialized over ten monthly issues of their magazine, (you may check out [Going Pro as a Woodworker] if you wish) and was quite well received by both the editors and their readers.   Continue reading “Taxing Times for Indie Authors”

Simply Swapping Favors and the Barter System

Photo by Michael Ging

There was a time when, especially in rural America, most “commerce” was done not by exchanging cash money for goods you wanted but by trading something you had and could spare for something you needed.  Many rural General Stores were simply barter centers where families who had chickens would bring eggs and trade them for butter and milk brought in by another family or for flour ground by the mill up the road.

These stores would have cloth, pots, pans and farming implements brought in from the more industrialized East, thereby being able to supply most of the needs the local families had.  Cash transactions were accepted of course, but a large part of their trade was done through barter.

Rural life is still a lot like that.  Swapping favors is one way we can help one another get things done without depleting our bank accounts.  This goes beyond rallying around a friend who has something heavy to move because we know when we need help he will return the favor.  For instance, I have the equipment and skills to do high end woodworking, Tim has a truck and trailer.  Tim has often delivered my furniture pieces going “out East” for me, and I have built him furniture.   Continue reading “Simply Swapping Favors and the Barter System”