Sunday, February 25, 2018

The Tax Man Cometh

As most of you know, I began my business this past year so I could officially start publishing as an indie writer.  The freedom that has come with it has been great.  However, today I finished the one thing every business owner dreads - taxes.

Taxes are a part of life in America.  I'd be paying them regardless of whether I published through indie or traditional.  The only real difference is in how I report them - as income(through royalty payments by a traditional publisher), or through a Schedule C(filed as the head of a business).  As a business owner, I can do things I can't do when filing as regular income, like deduct the cost of inventory and business expenses.  These deductions mean that I have more income that's not taxable.

Make no mistake - I lost money this year.  I expected that.  This was my first year, and I know I still likely have a few more years of slogging through, plus the need of a break, to start showing a profit.  My losses weren't staggering, but they were real.  Lucky for me, I had a few thousand bucks set aside specifically for my business.

The nerve racking thing, however, is the labyrinth of IRS rules, as well as the risk of an audit.  I was very careful in annotating expenses.  There were probably even a few I could've taken but didn't since I was unsure of some.  I played as strictly by the book as I possibly could, mostly because the IRS scares the shit out of me(as it does most people).  That doesn't mean that my caution and double-checking of everything has totally alleviated my anxiety.  The IRS audits about three times as many returns of folks who have Schedule Cs than they do regular folks, so even with my meager amount, I'm at greater risk of an audit.  I don't know about you, but I went into writing to tell stories, not to get lambasted by a government agency.

This is part of life as an indie author.  That doesn't make it any more pleasant.  I advise caution and complete honesty as a business owner, as well as plenty of time to make sure you get things right.  With all of that, even I might not have gotten everything right(I hope I did, but I'm as human as the next person).  This is why it's crucial to know how to run a business and not just muddle through.  I'm sure you'd rather not have your next novel be a first hand account of losing everything in taxes.

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