As someone who enjoys writing short stories and selling them to magazines and various websites, you might not consider yourself to be a small business owner. However, any money made from your writing is generally considered self-employment; when you make more than $400 in a year from selling your stories, you are likely to need to pay self-employment taxes. That's why you should keep the following accounting tips in mind so that you can make things easier for yourself when it's time to file your taxes for the year.
Open Your Own Business Account
One of the most important things you can do to make your life easier at tax time is to open an account that is only for your blossoming writing business. Use that account to deposit money you've earned for your stories and withdraw from it when you have writing expenses that need to be taken care of. You might also want to have a debit card that is tied to that account only.
By keeping your writing income and expenses separate from your personal accounts, you can more easily ensure that you can find the information you need to accurately file your taxes.
Keep Receipts
Have you bought ink for your printer lately? Did you just buy a computer that you plan to only use for writing and storing your stories? Did you drive for an hour to interview a source? All of these things may be tax deductions for you, so it is vital that you track and keep receipts for your writing-related expenses. Keep them in a specific folder so that when it's time for taxes, you don't have to go searching for them or try to remember what you spent money on.
You can also scan your receipts so that you don't have a lot of paper sitting around your home. However, if you do end up scanning the receipts, you may want to print them periodically so that if something happens with your computer, you haven't lost the receipts forever. You can also store scanned receipts on a small flash drive, if you choose.
These suggestions can help you to remain organized throughout the calendar year. It is also a good idea to recruit a small business accountant like those found at Don Lamb CPA Inc P.S. who can help you get through tax time without too much stress. They can help you find deductions and ensure that you are doing everything necessary to stay in good standing with the IRS.
Share20 May 2016
Accounting is the absolute most important element of running a business. If you mess up the bookkeeping even the slightest bit, the entire business could be in trouble. I know how costly a small bookkeeping error can be. About three years ago, I made a seemingly small mistake in the financial records for my business and the next year when I filed my taxes, things were very bad for me. What would have required a small tax payment had suddenly turned into a big tax bill and quite a headache. Since then, I have worked with an accountant and things have been better.