Sunday, July 12, 2009

The Business of Writing

Hi all,


I just added this article to my articles at eHow but also thought it would be a good one for my blog. Many of us are striving to be writers but we forget that the business of writing is also important. I hope this article inspires you to get out those spreadsheets and keep track of everything!


Also, I have just added two more articles to Suite101 if you are interested in stopping by there. One is Helping Children Adjust to a New School and the other is Vacation at Home like a Tourist. Stop on over there is you get a chance.


Happy writing,

Deanna


How to Organize the Business of Writing

Writers love to write. They love placing one word in front of another, creating sentences and building articles or stories. And if writers can earn money doing this, that’s even better. As the money begins coming in though, it is time for the writer to turn into a bookkeeper. Whether you like it or not, organizing the business end of writing is as important as the writing is. So it is time to get out your spreadsheets, receipts and folders and get organized.

Know Tax Rates - Whether you write part-time, full-time or as a hobby, writing income is taxable. If you earn more then $400 a year, you are liable for self-employment (SE) taxes, which includes social security tax and Medicare, as well as state and federal taxes. For writers earning a small, part-time income, taxes can generally be paid when you file your income taxes at the end of the year. However, if you are a full-time writer or one who is earning a great deal of money on a regular basis and you think your taxes will add up to more than $1,000 during the year, you will have to pay your income taxes quarterly. For 2009, the SE tax rate is 15.3%. This does not include state and federal taxes which you will need to figure separately. Check at IRS.gov or with an accountant for more tax information.

Do You Need to Pay Taxes? - If you are trying to become, or are a full-time writer, not only is it the law for you to pay taxes on your income but it will also benefit you. Paying SE taxes on your writing income will ensure that you will receive social security and Medicare benefits when you are old enough to retire. If you didn’t pay these taxes, and did not have another source of income that paid these taxes, then you could not collect from these programs. Another reason is that businesses that pay for your writing are more than likely sending you a 1090 form for the income you are receiving. If you were to get audited for this money that you never claimed, you would owe much more in back taxes than if you had just paid the taxes to begin with.

Keep Good Records of Income – If you are like most freelance writers, you earn your income from several different sources. The best way to track your income from all of these sources is to set up a computer spreadsheet (or a handwritten one will do) that tracks the customers/websites you write for, income from each of these sources and other details such as date submitted, date paid and who sends out a 1090 form. Track this by month and by year so you have an idea where you are earning your best income from. This is also a good spreadsheet to automatically tally your SE and federal and state taxes due on each amount earned so you can put that amount aside and have it when tax time comes.

Keep Good Records of Expenses - Because you are earning an income, it is important to keep track of your writing expenses. Keep receipts for everything you buy to use for your writing and place these receipts in a separate folder from your household expense receipts. It would also be good to make up a computer spreadsheet for income and expenses. You can list each month’s income on top and the expenses below for the month by category. There are many expenses you can deduct for items you use for writing such as pens, paper, printer ink, envelopes and postage. If you use Internet for your writing, even if it is the household Internet, you should be able to deduct a portion of that cost. There is also the depreciation of your computer, printer, and computer programs. If you have set up a room in the house specifically for writing, you may be able to deduct or depreciate that, along with office furniture. Keep track of all expense that you incur throughout the year so you can use these deductions at tax time.

Keeping good records of your writing income and expenses is a good thing to do whether you are a hobby writer or professional writer. Not only will it allow you to keep track of how well you are doing as a writer, it is also a good way to track where you make the most money so you can spend more time in those areas. If you are serious about being a writer, then you should be serious with the business of writing also.

1 comment:

  1. Contacting our tax accountant was one of my first stops after realizing I could actually make money at this. It is important to understand there are implications once money becomes involved. Great article.

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