Today I'm interviewing Brigitte A. Thompson, author of eight financial books including the just released Bookkeeping Basics for Freelance Writers
published by Crystal Press.Why do writers need your book?
Writers have many questions about income and expenses, but no single source for answers. I created this book, Bookkeeping Basics for Freelance Writers, to be that source. It is an easy-to-understand guide to organizing a writer’s financial life.
This book addresses issues writers face daily such as how to deduct travel expenses, determine taxable writing income, and claim home office deductions. Navigating through the recordkeeping required for a small business owner can be difficult. This book is written exclusively for those of us who earn money by writing.
Readers will also find that each part of this book works together to assist in forming an overall business plan. The chapters take the writer through a comprehensive process that works as a building block towards a successful writing business.
Do freelance writers need a different set of bookkeeping rules?
Many bookkeeping rules are universal such as the requirement to record income, but there are some areas of the tax law that are of more interest to freelance writers. This includes dealing with royalty payments, bartering, personal property and agent fees. My book addresses the universal tax rules as well as the infrequently discussed rules that apply specifically to freelance writers. Learning how to document expenses and how to track income will give writers the best chance at overall business success.
Taxes are one of the areas writers have the most questions about. Are there tax deductions that freelance writers should know but might not be aware of?
There are many tax deductions available to writers. Some expenses are common, such as the cost of purchasing a case of paper or paying for a computer software upgrade. Other costs incurred in the operation of your writing business may not jump out at you as expenses. For example, consider the following examples:
Mileage: Trips made in your vehicle to pick up office supplies or to the library can be counted as a business deduction if you record the proper information to support it.
Meals: Treating your agent to a restaurant meal with the discussion focusing on your next book can also generate a tax deduction when properly documented.
Shipping: UPS charges or postage used to mail a query or review copy of your book can be a small expense, but it should still be tracked. Those small deductions add up and every penny spent as a qualified business expense will reduce the amount of income tax you owe.
Bookkeeping Basics for Freelance Writers devotes an entire chapter to expenses including a comprehensive listing of expenses and detailed information regarding what documentation is required to support each one.
I know I'm interested in things that save me time and money. What are some financial mistakes writers make that cost them time and money and how can we avoid them?
The most common misstep I’ve seen with writers is not taking themselves seriously as business owners. This can lead to financial pitfalls. Many writers have been honing their craft for years so it’s hard to identify an official starting date for their self-employment. Without this point to mark the beginning, it is easy to put off tracking income and expenses. This can be an unfortunate mistake.
The IRS will consider you to be in business when you are actively pursuing projects intended to generate income and expenses. This means they will expect you to file a tax return to report those transactions. Keeping track of your income and expenses from day one will enable you to pay the least amount of income taxes on the money you earn.
Many people (especially some writers) find numbers, particularly when related to bookkeeping and taxes, intimidating. Does your book make these things easier to understand?
Yes, my book breaks down complicated number crunching into easy to follow steps. By reading the book, readers will understand why it's important to keep certain receipts (and how to organize them) and how those pieces of paper factor into the overall success of their writing business. Sometimes knowing the reasoning behind a task makes it easier to complete.
Writers can take advantage of some wonderful tax deductions, but only when they are aware of the possibilities and know how to accurately document the expenses. My book explains it all in a reader friendly format.
Why is it important for writers to understand bookkeeping?
Writers are earning money and this money needs to be reported as income on their income tax return. If writers do not have any expenses to claim, their taxable income will be higher and they will owe more income tax. Understanding what can be claimed as business expenses when you are a writer and how to properly document these expenses will help ensure the success of your business.
The most important thing you can do as a writer is to become organized. There are many books available on how to organize your writing, but this is the best book available about how to organize the financial side of your writing business.