If you are an author who is serious about selling your books you are a small business owner. I’ve noticed this concept makes many authors extremely uncomfortable. Creative people are often not good with numbers, and becoming a business owner means that you have to keep track of a lot of numbers.
Let me first write one of those infamous disclaimers: I’m not an accountant. I don’t want to be an accountant, and everything I suggest here should be discussed with your accountant. Notice I said, “your accountant.” That’s my first piece of advice. Don’t try to do your taxes yourself. You are now a small business owner and your taxes have just become more complicated. Don’t try to do them yourself. Get professional help – it’s deductible.
That’s the point, of course, as a small business owner you have more deductions. Your computer, postage, cost of marketing materials, cost of editing, proofreading, cover design, website design all may be able to be deducted from your taxes. Keep good records of all of your expenses and discuss them with your account when you prepare your 2012 taxes.
While you are keeping track of your expenses, you must also keep track of profits, too. Record your book sales and make sure that you are paying sales tax when appropriate. For books sold through a third party, such as a book store, the store will take care of the sales tax. For books you sell yourself you should be collecting, and reporting, sales tax. If you sell your book through your website, keep an eye on tax laws. They vary from state to state and are changing rapidly.
As the year comes to a close, take some time to get your paperwork in order because your book is your business.