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artemis31386
07-04-2010, 05:49 AM
I have a question for all the pub'd authors out there (it might only apply to the US authors, I don't know about the UK authors). Anyway the question is, how many of you have business licenses for yourself as an author? I was reading somewhere, that an increasing number of authors are choosing to obtain small business licensing. I have a friend that's a CPA that says this can provide some tax benefits.

So if anyone can help, since I am considering getting a license, I'd greatly appreciate it.

And of course, I will be talking to an account about any tax related questions, but I just wanted to know if this is common place now.

Medievalist
07-04-2010, 06:25 AM
I've done it because a lot of the writing I did was work for hire, and it did give me tax advantages. Plus, where I was living, I was required to by law because I worked a lot at home.

Kalyke
07-04-2010, 06:48 AM
I don't really want to mess with that because then you need to pay quarterly taxes and I loathe that. I had a business and it is forms, forms, forms. How on earth can you guesstimate how much money you will make over the year. Maybe if you are a regular free lancer you should do it.

There are many small business resources. Artists and writers have a few guidebooks out there about writing (or art) as a business that I would advise you to read.

Medievalist
07-04-2010, 06:55 AM
I don't really want to mess with that because then you need to pay quarterly taxes and I loathe that. I had a business and it is forms, forms, forms. How on earth can you guesstimate how much money you will make over the year. Maybe if you are a regular free lancer you should do it.

I had to; between advances and royalties, there was no other way.

I had to use an accountant; it was just too complicated.

Kalyke
07-04-2010, 07:09 AM
I had to; between advances and royalties, there was no other way.

I had to use an accountant; it was just too complicated.


Oh "After" you publish a book. I see. OOps, Sorry.

artemis31386
07-04-2010, 07:41 AM
So it is a good idea to consider it.

MaryMumsy
07-04-2010, 08:52 AM
It depends on what you mean by a business license. Here in AZ an author does not need any kind of license. The only exception is if you sell your books directly to readers, then you need a license for sales tax (also called transaction privilege tax). You also do not need any kind of license from the IRS, although you do need to report your income and deduct your legitimate expenses.

Two books I recommend are "New Tax Guide for Writers, Authors, Performers & Other Creative People" by Peter Jason Riley, CPA and "Tax Deductions A to Z, Writers" by Anne Skalka, CPA. Both are available from Amazon. I do not know these authors and get no kickbacks for recommending them. But I am a CPA who handles authors, artists, and film/theater people. I don't feel either book alone is adequate, but together they do a pretty good job.

All that being said, I highly suggest at least having a consultation with a CPA who knows the quirks in tax law which apply to authors. A CPA in your state who knows the rules applying to authors can prevent you from making expensive mistakes.

MM

Jamesaritchie
07-04-2010, 06:34 PM
I'd guess it depends on the state you live in. No two seem to have teh same rules, regulations, or cost.

I don't have a business license, and don't want one. Taxes on writers are actually a pretty good deal, anyway, but once you start making money, you have to pay quarterly taxes no matter how you go about it.

I simply find no additional savings with a business license, but there is added expense and regulations.

Medievalist
07-04-2010, 08:46 PM
So it is a good idea to consider it.

Yeah; and it's awfully dependent on local situations, too. In California, I had to have a business license because I worked out of my home, and was paid via 1099.

The city, understandably, was in part interested in things like clients visiting, and parking, and water use, but they had a sliding scale. When I indicated that there weren't any extra burdens on the city, the license cost was a token fee, until you made something like 150K/year.

I'm glad I did it, because it became very clear that the city interacted with the IRS.

Plus, it made my accountant happy.

c2ckim
07-04-2010, 09:24 PM
I know that if an author sells his or her own books, some states require him/her to pay sales tax on their books. Check that out as well! you might end up owing sales tax on your sales. I know in Wisconsin I have to pay slaes tax on the books I sell.

CheshireCat
07-05-2010, 01:00 AM
I have to admit, I'm completely baffled by the notion of a writer needing a business license. I've been writing and publishing more than twenty years, and no one has ever suggested I needed a license. I have a tax I.D. number, of course, and pay federal and state income taxes, but since I sell nothing from my office (which is, of course, my home) no sort of license has ever been required.

I dunno, maybe it's a city versus small-town thing as much as a state-by-state thing. Maybe in my area they're happy just to get property taxes from me. :Shrug:

I'd ask a good accountant about it.

ishtar'sgate
07-05-2010, 03:24 AM
In Canada you can register yourself as a sole proprietor to get some tax benefits and claim a variety of expenses so you don't have to pay tax on your entire income.