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Michelle @ ProWritingAid: Welcome everyone. Welcome to premium, Dave. Writers week as you're filtering in. If you can see and hear me, please drop your location in the chat, so we can see where in the world you are joining us from, and I have lots of special links to drop for you. I will put these in the chat throughout the session today. We have a lot of great resources here for you

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Michelle @ ProWritingAid: from our speakers.

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Michelle @ ProWritingAid: Oh, everybody's coming in quickly. I see

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Michelle @ ProWritingAid: Kentucky, St. Louis, Indianapolis.

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Michelle @ ProWritingAid: British Columbia.

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Michelle @ ProWritingAid: England, Maryland. Hello, everyone.

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Michelle @ ProWritingAid: and thank you. To those of you who are joining bright and early, Barbara. I know you said, 7 Am. For you. We we appreciate your dedication and still joining us despite the early hour.

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Michelle @ ProWritingAid: So thank you, everyone.

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Michelle @ ProWritingAid: I'm going to drop links again for you here.

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Michelle @ ProWritingAid: and we are going to get started with our 2 speakers in just a moment. But first, st I just have a couple of housekeeping items for you as usual.

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Michelle @ ProWritingAid: So your replays for Monday through Thursday's events are still on the regular crime writers. Week Hub Page. But today's replays are going to be added to our premium hub which you should have access to from your email instructions. And if not, I did put the link in the chat for you as well. So that's where all of your session resources and replays will be for premium day.

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Michelle @ ProWritingAid: So you can check them out there, and the replays will also be moving to the community page next week. The resources will not, though, so you'll still want to go to the premium hub. If you need any links, slides audio transcript files. Anything like that, just the recordings will move to the community page next week.

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Michelle @ ProWritingAid: If you would like to keep talking crime writing, and you haven't joined our community yet. We'd love to have you there. It's our private online community. The link is here, and it's also on the hub and the premium hub. You just log in with your pro writing 8 account you get in for free, and you can see all of the recordings from our past writers, week events, and you can go to the live event. Chat you can go to. There's a few different spaces. You can introduce yourself and say, Hello!

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Michelle @ ProWritingAid: Below. You can do feature requests. There's a few different things that you can do there. We'd love to have you come? Check it out, so please join us over there, and also we would love it if you could take a minute to fill out our survey on this week. We'd love to get your thoughts and feedback on what you thought worked well, what you think we could improve for future events. It really helps us to plan workshops and to keep these events just

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Michelle @ ProWritingAid: going in general. So if you could fill out our type form, we'd greatly appreciate it. The link is in the chat for you. It's also on the premium hub, and the link is here

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Michelle @ ProWritingAid: reminders for our session today. If you have any questions. Please make sure you put them in the Q. And a box, so we don't miss them. Use the chat to chat with each other as much as you'd like, but we don't want to lose any questions. Also, while you're chatting, make sure that next to 2 in that little menu there you select everyone instead of the default, which is host and panelists that way everybody will be able to see your messages.

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Michelle @ ProWritingAid: So thank you so much for joining us for our 1st premium session. Today I'm so excited to introduce. We have 2 speakers. Our 1st is Ashley Guian. She is a seasoned, certified public accountant with a Master's degree in accounting with extensive experience in public accounting. She specializes, in supporting small business owners in the Us. With tax preparation, planning, and expert bookkeeping assistance.

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Michelle @ ProWritingAid: including quickbooks, online setup, prioritizing family time. Ashley transitioned from public accounting to be with her 2 young boys while pursuing an unexpected passion for writing, recognizing a lack of accounting resources for authors, Ashley decided to utilize her expertise to support fellow writers. Now, between diaper changes and bedtime stories, Ashley's committed to making financial literacy a breeze for authors.

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Michelle @ ProWritingAid: And I'm also we're also joined today by Jasmine Wallace. Jasmine is a fantasy romance author writing about besotted men and powerful women growing up in Australia. She now lives in Wales with her husband and daughter, with their wolfish lurcher. When she's not writing. She works as a solicitor, advising private clients on tax matters and estate, planning. Welcome, Ashley and Jasmine, we're so happy to have you.

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Jasmine Wallace: Good to be here.

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Ashley Guion - Novel Numbers: Accounting for Authors: Thanks for having me.

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Michelle @ ProWritingAid: All right. I'm gonna hand things over to you, Jasmine. I think you're kicking us off so you can go ahead and screen share, and I will be here in the background.

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Jasmine Wallace: So just as an introduction. My name is Jasmine. I'm here to discuss the various tax reliefs that may be available to you as an author in the UK, and also to highlight. When income tax needs to be paid on any royalties. You may earn

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Jasmine Wallace: also to highlight any potential deductions or reliefs you may be able to claim.

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Jasmine Wallace: So what we going through a little bit today is, firstly, an introduction bit of a disclaimer and disclosure. We'll talk briefly about the overall

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Jasmine Wallace: setup of income tax within the UK. Setting up as a sole trader or a limited company depending on how you want to go about publishing your books and the deductions and reliefs that would be available to minimize the amount of income tax that you would pay on your royalties earned. We'll also talk about vat on services. So, going further, if you're

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Jasmine Wallace: if you provide other services, such as editing or sending out signed copies of your books, they are services provided outside of the normal course of authorship. So there may be vat applicable on those

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Jasmine Wallace: possible those services

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Jasmine Wallace: also look a little bit at making yourself assessments, which is your tax returns payable at the end of each tax year. Sorry, submittable.

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Jasmine Wallace: So self assessments.

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Jasmine Wallace: they can be

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Jasmine Wallace: submitted either online or through paper format. And we'll look at kind of the 2 of those

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Jasmine Wallace: a little bit further down the line, and also then just highlighting some bookkeeping services that are available within the UK that have integration potential to help you file online. If that's something you want to go

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Jasmine Wallace: to look at

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Jasmine Wallace: so a little bit about myself. So for the beginning of my career, I focused primarily on inheritance tax matters, administering estates and providing wealth, planning services for high net worth clients. I've since moved on to providing more bespoke services of catering, to providing advice on a range of tax matters

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Jasmine Wallace: from income tax declarations, capital gains, tax calculations and submissions and more complex inheritance tax matters, including agricultural and business property relief claims.

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Jasmine Wallace: Since starting my author journey I have noted how difficult it is to find helpful resources when it comes to tax specific to the accrual of royalties, and if you can find it, how difficult it is to understand it.

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Jasmine Wallace: Navigating the editing and publishing process is hard enough. You shouldn't have to get a degree just to understand how you will be taxed as well.

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Jasmine Wallace: I've been through it all, including sustaining my family life, my personal life, coping through raising a child in the pandemic. Life's hard, so if I can make it easier. I will gladly volunteer.

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Jasmine Wallace: So, as up on the slide, I do work within the legal industry by date, and I also am an author by night.

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Jasmine Wallace: I did qualify as a solicitor in 2021, and my specialization is tax

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Jasmine Wallace: little bit of a disclosure. It may seem silly, but if I don't say it. I'm not good at a job.

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Jasmine Wallace: I am a qualified solicitor, but I am not your solicitor. The advice I am providing today is very generalized overview of

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Jasmine Wallace: tax within the Uk. And should not be relied upon for any specific

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Jasmine Wallace: specific queries that you may have.

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Jasmine Wallace: If you do have specific queries, or you have a specific problem that you need. Further clarification on. My advice is to go and speak with someone in your locality to discuss your personal situation with you and provide more, bespoke advice.

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Jasmine Wallace: Anything to date should not be relied upon

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Jasmine Wallace: except for providing a general guidance as to where you need to go to figure out

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Jasmine Wallace: your tax matters and how they apply to you.

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Jasmine Wallace: Also keep in mind tax laws, change

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Jasmine Wallace: a lot.

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Jasmine Wallace: I attend courses very frequently to keep my knowledge on tax matters within the Uk. Up to date.

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Jasmine Wallace: and we do have an upcoming election which may see changes in tax law over the next few months. So please bear that in mind.

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Jasmine Wallace: If

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Jasmine Wallace: you have a particular situation at the moment, it may be resolved in the future, or it may get worse in the future, depending on how those laws change.

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Jasmine Wallace: so keep an eye on them.

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Jasmine Wallace: Bear in mind that this information may not be accurate. In a few months, or it may still be

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Jasmine Wallace: we don't know what's going to happen in the future.

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Jasmine Wallace: So income tax in the UK.

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Jasmine Wallace: It varies greatly on everyone's personal circumstances.

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Jasmine Wallace: current rates and allowances.

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Jasmine Wallace: Every individual within the UK.

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Jasmine Wallace: That has a personal allowance of

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Jasmine Wallace: 12,570 pounds before there is any income tax to pay on the income you earn.

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Jasmine Wallace: This is not relating to. If you are on benefits, they are a separate matter. This is, if you are

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Jasmine Wallace: earning a steady income, either through contractual employment or self-employment.

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Jasmine Wallace: Your personal allowance is anything earned within that you don't pay tax on, you start to pay

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Jasmine Wallace: tax on anything earned above that allowance. So at the moment, we have basic higher and additional rates of tax

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Jasmine Wallace: for any income under 50,270 pounds. But more than the personal allowance, there is a 20% tax rate.

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Jasmine Wallace: That is a flat tax rate. It doesn't change

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Jasmine Wallace: similar with the higher rate. Anything under 125,140 pounds per annum.

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Jasmine Wallace: But above the 50,000 is taxed at 40, and then anything over that 125 0 0 0, that is taxed at 45. Once you reach the additional rate, your personal allowance is reduced.

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Jasmine Wallace: So that's also a consideration. If anyone is within that tax bracket, although I don't know many people that are.

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Jasmine Wallace: if you are employed contractually or self-employed, you will have a tax code.

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Jasmine Wallace: Your tax code determines the personal allowance available for your your income earned in your employment.

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Jasmine Wallace: Currently, the standard tax code is 1, 2, 5, 7 l. Or may start with a C. If you live within Wales, Wales does have a slightly different tax

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Jasmine Wallace: set up.

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Jasmine Wallace: but it doesn't change that much between England and Wales.

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Jasmine Wallace: The L.

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Jasmine Wallace: Means that you are entitled to the standard tax-free allowance. You may see other letters at the end of your tax code, such as M, which means that you are entitled to an additional marriage allowance on top of your personal allowance.

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Jasmine Wallace: That letter at the end determines the allowance available to you, so

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Jasmine Wallace: you will be able to find your tax code on any pay slip that you receive through contractual employment employment, or you can request it from Hmrc.

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Jasmine Wallace: And that way you can check what personal allowances you have for any income that you earn.

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Jasmine Wallace: Multiple apologies. Multiple employments do affect your allowance, and you may have a lower allowance than the national average. If you have more than one

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Jasmine Wallace: source of income.

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Jasmine Wallace: there are additional tax free allowances for savings and

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Jasmine Wallace: savings, interest and dividend income. And they don't factor savings interest and dividend income doesn't factor into your earned income for income tax

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Jasmine Wallace: the most common way that authors within the UK. Set up for

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Jasmine Wallace: Publishing their works and

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Jasmine Wallace: working out their income tax is as a sole trader, so a sole trader is essentially self-employed.

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Jasmine Wallace: You can both. You can be both employed and self-employed at the same time.

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Jasmine Wallace: For example, if you work for an employer during the day under a contractual employment, and you run your own business in the evenings, such as author or editing, or providing another service.

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Jasmine Wallace: You're probably self-employed. If you run your business yourself, take responsibility for its success or failure.

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Jasmine Wallace: Have several customers at the same time can decide how, when, and where you work.

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Jasmine Wallace: can hire people at your own expense to help you to do the work, for you.

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Jasmine Wallace: provide the main items of equipment to do your work responsible for finishing any unsatisfied work on your own time.

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Jasmine Wallace: charged an agreed fixed price for your work, sell goods or services to make a profit.

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Jasmine Wallace: So author is a self

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Jasmine Wallace: employed

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Jasmine Wallace: profession.

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Jasmine Wallace: so you would work as a sole trader unless you are contracted through a traditional publisher. But still, in those instances you generally are responsible for paying any income tax accrued on the royalties you earn

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Jasmine Wallace: something to watch out for as a sole trader, though, is that it does also include income that you earn through creating online content. So, for example, social media, if you're on Tiktok and you receive gifts on a live, and you withdraw that as income for you to spend rather than

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Jasmine Wallace: converting it to

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Jasmine Wallace: more coins, that is, income

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Jasmine Wallace: as a sole trader that you need to take into account, and potentially need to declare to Hmrc. If you're not sure, if you need to declare it, there is a Hmrc. Helpline that you can speak with to determine whether or not you need to declare the income earned.

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Jasmine Wallace: There is a trading allowance for sole traders. So if you are a new author or an author that is not currently earning a lot in royalties.

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Jasmine Wallace: If you're gross

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Jasmine Wallace: royalty earnings. So that is everything before deductions of expenses or income tax, or anything like that.

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Jasmine Wallace: If your royalties earned in the tax year less than a thousand pounds.

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Jasmine Wallace: it is completely tax free.

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Jasmine Wallace: and you do not need to declare it.

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Jasmine Wallace: So

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Jasmine Wallace: you don't need to include it on a self assessment that a thousand pounds you can

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Jasmine Wallace: keep

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Jasmine Wallace: to yourself

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Jasmine Wallace: that will come up again later, as we discuss potential deductions.

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Jasmine Wallace: apologies.

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Jasmine Wallace: all right.

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Jasmine Wallace: As a sole trader, you are still liable for national insurance contributions. So it's not just income tax that you have to take into account

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Jasmine Wallace: national insurance contributions in the UK is how

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Jasmine Wallace: you set up for your State pension in the future.

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Jasmine Wallace: Sole traders are potentially liable for class 2 and class 4. National insurance contributions depending on profits earned in a single year.

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Jasmine Wallace: So class 2. National insurance contributions are treated as having been paid to protect your national insurance record, and they are, if your profits are over 6,725 pounds in a year.

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Jasmine Wallace: That's where you pay your class 2 contributions.

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Jasmine Wallace: If your profits are more than 12,517 a year, you must pay class 4 contributions in addition to class 2 contributions.

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Jasmine Wallace: However, if your profits are less than 6,725 a year, you don't have to pay anything.

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Jasmine Wallace: But class 4 contributions are voluntary

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Jasmine Wallace: contribution.

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Jasmine Wallace: to avoid gaps in your national insurance record.

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Jasmine Wallace: So

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Jasmine Wallace: although if you earn less than that, 6,725. You're not obligated to pay national insurance contributions

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Jasmine Wallace: to avoid the gaps in your national insurance. Most people will pay the voluntary contributions, so that when it comes time for them retiring, they're still entitled to their State pension.

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Jasmine Wallace: Limited companies are another way that authors can look at.

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Jasmine Wallace: Setting up to

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Jasmine Wallace: work as sort of a publishing company to publish their books. It's not common within the UK. For authors to set up a limited company.

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Jasmine Wallace: A benefit of it might be if you

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Jasmine Wallace: privately purchase your own I-s-b-n's rather than relying on. For example, the Kdp.

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Jasmine Wallace: Free I-s-b-n's the imprint that you have to register your i-s-b-n's under. You may want to register under a limited company

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Jasmine Wallace: such as

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Jasmine Wallace: a publishing company that you set up for your books.

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Jasmine Wallace: if you're self-published.

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Jasmine Wallace: but it's not necessary to do that. You don't have to set up a limited company to manage your I-s-b-n's. You can still do that as a sole trader by registering your I-s-b-n's under your author pen, name.

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Jasmine Wallace: So it's not common in the UK. But it is possible. If you form a limited company, its finances are separate from your personal finances, but there are more reporting and management responsibilities associated with that.

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Jasmine Wallace: It also does make it slightly harder for you to access your royalties.

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Jasmine Wallace: limited companies, the finances are not your personal finances. You can't just take the funds out of the Limited company in order to pay

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Jasmine Wallace: for your personal needs.

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Jasmine Wallace: You can pay yourself a salary from the limited company, or dividends from the Limited Company.

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Jasmine Wallace: to then use as your personal finances.

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Jasmine Wallace: to withdraw funds outside of a salary or a dividend payment. There is additional tax implications at that point.

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Jasmine Wallace: generally through a capital loss or a capital gain tax implication

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Jasmine Wallace: through salary. You're still paying your income tax. But the company pays the income tax

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Jasmine Wallace: and for dividends you're then liable for your dividend

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Jasmine Wallace: facts.

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Jasmine Wallace: which is 8.5% currently for dividends earned.

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Jasmine Wallace: You can get a professional such as an accountant to set up the company for you for you, but you can set up a company for yourself.

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Jasmine Wallace: If you do form a limited company, there are 2 ways. Limited companies are set up, one is either limited by shares.

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Jasmine Wallace: and usually that is a business that's intending to make a profit.

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Jasmine Wallace: The company is legally separate from the people who run it has separate finances from your personal ones has shares and shareholders, and can keep any profits it makes after paying tax.

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Jasmine Wallace: The other

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Jasmine Wallace: kind of limited company is limited by guarantee, and that is usually a non-for-profit company.

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Jasmine Wallace: Again, it's still legally separate from the people who run. It has separate finances, but has guarantors and a guaranteed amount of value.

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Jasmine Wallace: Oh.

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Jasmine Wallace: it's alright!

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Jasmine Wallace: It invests its profits.

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Jasmine Wallace: it invests the profits, profits it makes

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Jasmine Wallace: back into the company.

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Jasmine Wallace: Limited companies.

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Jasmine Wallace: If you do set one up and you set it up in a way that you pay yourself a salary from the royalties you earn.

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Jasmine Wallace: You pay the well. The company pays your income tax on the salary, but likewise the company also pays company tax on the profits earned.

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Jasmine Wallace: So.

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Jasmine Wallace: depending on how you want to set it up, or what your intention for the company is how you want it to act in relation to you as an author. It may not be the best tax viable option for you

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Jasmine Wallace: as such. Generally authors are sole traders.

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Jasmine Wallace: but it is up

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Jasmine Wallace: to you, and what your circumstances are.

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Jasmine Wallace: deductions and reliefs.

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Jasmine Wallace: Any business, sole trader or limited company that has expenses and various running costs can claim deductions.

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Jasmine Wallace: Deductions are some of the costs that you pay

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Jasmine Wallace: to keep your business running. They're allowable expenses that do not include money taken from your business

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Jasmine Wallace: to pay for private or personal purchases, so they must be purchases specifically for the running of your business

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Jasmine Wallace: or

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Jasmine Wallace: the purchase of items for the business.

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Jasmine Wallace: so that can include office costs such as stationary or phone bills. Travel costs. If you're attending a

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Jasmine Wallace: a book signing, and you are traveling to get there that can be included.

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Jasmine Wallace: things you buy to sell on. So if you buy artwork for your books, bookmarks, and you sell those.

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Jasmine Wallace: You get them printed by a 3rd party, and then sell them on. The cost of the printing can be deducted from your royalties.

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Jasmine Wallace: advertising or marketing.

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Jasmine Wallace: and

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Jasmine Wallace: anything.

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Jasmine Wallace: It so stall higher.

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Jasmine Wallace: If you pay to get a shelf within a bookshop

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Jasmine Wallace: anything that is specific to

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Jasmine Wallace: your books, or your editing services, or whatever it is you provide. Those are allowable deductions.

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Jasmine Wallace: However, if you're claiming allowable deductions.

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Jasmine Wallace: you cannot use a trading allowance.

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Jasmine Wallace: so if your royalties earned are less than a thousand, use your trading allowance.

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Jasmine Wallace: If you're going over the 1,000 trading allowance start claiming your deductions, you can't use both

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Jasmine Wallace: in terms of reliefs. They're not a deduction, but they're rather a return on tax paid on something you've bought for the business, so that could be your editing services. If you are an author, and you hire an editor

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Jasmine Wallace: for your books, and the editor provides you with a VAT.

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Jasmine Wallace: Receipt, or invoice. You can claim the tax back on that service.

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Jasmine Wallace: You can't claim the

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Jasmine Wallace: base fee of the service. So say, for example, the editing is 500 plus vat so 600 pound total, you can't claim the 500, but you'd get the 100 pound

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Jasmine Wallace: back as a relief.

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Jasmine Wallace: There are additional reliefs that in the UK. You can claim if you work from home.

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Jasmine Wallace: So if you are predominantly from home, you can claim an automatic flat rate allowance to reduce the amount of income tax you pay. That's an easy submission through the Hmrc website.

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Jasmine Wallace: Of course, you can also go through and work out exactly what it is that you want to

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Jasmine Wallace: claim as a relief such as electricity phone bills like your home phone using a portion of

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Jasmine Wallace: your home phone for business calls

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Jasmine Wallace: things like that you would be able to claim as reliefs on the income tax paid, but you would have to work out how much of, say, for example, your phone bill is a fixed 50 pound a month. You would have to work out how much of that in that month was dedicated to business calls.

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Jasmine Wallace: and then deduct that value. You can't deduct the whole 50 pound

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Jasmine Wallace: vat on services.

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Jasmine Wallace: This is not necessarily for authors, but for editors or people that provide other kinds of services. If you provide a goods or service.

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Jasmine Wallace: You may be subject to VAT.

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Jasmine Wallace: Some sole traders mistakenly believe that only limited businesses or large companies must be vat registered, but ultimately is that both limited businesses

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Jasmine Wallace: and sole traders alike are just as liable for vat registration, because it's based on your 12 month turnover, not business structure.

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Jasmine Wallace: If your business has a total VAT tax will turnover across any 12 month period, not just

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Jasmine Wallace: within a year, or a tax year, a 12 month period that exceeds the vat threshold, which is currently set at 90,000.

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Jasmine Wallace: Then it must be registered for vat, and apply the appropriate rate of vat to goods and services that you sell.

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Jasmine Wallace: To make this clear, you should register for vat if your 12 month running sales total puts you above the vat threshold, and you must register for vat as soon as possible.

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Jasmine Wallace: Another instance when you should register is, if you believe you'll be eligible for vat in the near future, based on sales forecasts.

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Jasmine Wallace: Remembering that any vat is considered across a 12 month consecutive period

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Jasmine Wallace: you can also voluntarily register, if you're below the threshold which enables you to claim vat if you pay more vat than you charge.

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Jasmine Wallace: so if you are

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Jasmine Wallace: providing services, and you charge vat on your services.

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Jasmine Wallace: Any

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Jasmine Wallace: output tax that you pay

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Jasmine Wallace: sorry input tax that you pay. So when you purchase the services yourself, you can potentially reclaim the vat

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Jasmine Wallace: on that

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Jasmine Wallace: back from

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Jasmine Wallace: the tax that you have charged on so

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Jasmine Wallace: purposes that you sell

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Jasmine Wallace: standard rates of tax is VAT is 20%,

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Jasmine Wallace: and there is a reduced 5%, and there is also a 0 rate. The sale must still be recorded on your vat return.

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Jasmine Wallace: It depends on the good and service as to which rate of vat gets applied to that service. More often than not. It is the standard 20 charge.

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Jasmine Wallace: It's very rare that you come across the reduced 5% rate. But if you're unsure as to whether or not the service you provide should be the 20 or the 5%

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Jasmine Wallace: you can contact the VAT

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Jasmine Wallace: section of Hmrc, and they can discuss that with you

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Jasmine Wallace: your self-assessments.

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Jasmine Wallace: So self-assessments are your tax returns. You can do this either by paper or via online filing, online filing can be simpler. And there are accounting and bookkeeping programs that can help you complete this. You can also hire an accountant to file for you.

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Jasmine Wallace: There are 2 distinct deadlines for filing self assessments depending on. If you submit by paper or online

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Jasmine Wallace: paper, is the 31st of October within the tax year

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Jasmine Wallace: or within the tax year after

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Jasmine Wallace: the tax period. So if you are submitting for the tax year of 23 to 24, then you must submit by the 31st of October 24.th

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Jasmine Wallace: And then the online is for the 31st of January. So for the tax year 23 to 24, you must submit your online submission by the 31st of January 2025,

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Jasmine Wallace: or 3 months after the date, on the notice that you may have received to complete a tax return. If that date is later.

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Jasmine Wallace: national insurance contributions must be paid by the 31st of January, and there is a penalty of 100 pounds for late filing.

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Jasmine Wallace: This is the just, the very basic

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Jasmine Wallace: starting page of an Sa. 100, which is your self-assessment.

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Jasmine Wallace: there is a if I have my

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Jasmine Wallace: mouse over here. This is the section that you would need to take. Yes, on. If you are acting as a Sole Trader.

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Jasmine Wallace: 2.

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Jasmine Wallace: Declare your self employed Income, so the royalties that you earn within the year.

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Jasmine Wallace: the additional

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Jasmine Wallace: forms for the self-employment account is a form SA. 1 0, 3 f.

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Jasmine Wallace: In order to get these forms. If you are going to apply by paper, you do need to contact Hmrc and ask them to send the forms to you. You cannot download them

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Jasmine Wallace: online.

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Jasmine Wallace: This is the self, the sort of starting pages of the self-employment, self-assessment. So it does just ask you for some generic

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Jasmine Wallace: details at the beginning. If you are unaware of what your unique taxpayer reference number is, you can find that out on any paperwork that you have received from Hmrc. In relation to income tax. So if you've received a refund, you'd be able to find your Utr on there.

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Jasmine Wallace: The second page then comes up with the business expenses. So this is why I was talking about with regard to allowable deductions. There is a different box for each kind of deduction that is potentially allowable.

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Jasmine Wallace: and you just have to go through and fill in the correct amounts. You don't have to necessarily provide any evidence for these figures, but you do have to be aware that Hmrc may potentially ask you to provide evidence later down the line. If they query any of the figures that you do submit.

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Jasmine Wallace: and then, finally.

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Jasmine Wallace: these are a few of the programs within the United Kingdom. So quickbooks, Sage 0, and free agent are my general recommendations. They have integrations that allow you to make

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Jasmine Wallace: online submissions through their software so they can keep track of your incoming royalties, expenditures for your services

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Jasmine Wallace: and any allowable deductions, and they will import that into an online submission.

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Jasmine Wallace: You can hire a bookkeeper or accountant to help you with managing income and expenditure as well.

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Jasmine Wallace: But online resources

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Jasmine Wallace: are generally being more popular at the moment.

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Jasmine Wallace: And that is it for me. Thank you very much.

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Ashley Guion - Novel Numbers: Accounting for Authors: Alright, so I guess I'll screen. Share my portion for the Us. Piece.

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Ashley Guion - Novel Numbers: Accounting for Authors: Let's see if I can figure out how to.

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Jasmine Wallace: Me, stop sharing.

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Ashley Guion - Novel Numbers: Accounting for Authors: Oh, perfect. Okay.

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Ashley Guion - Novel Numbers: Accounting for Authors: share screen.

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Ashley Guion - Novel Numbers: Accounting for Authors: We'll do that and share

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Ashley Guion - Novel Numbers: Accounting for Authors: hoping. You guys can all see

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Ashley Guion - Novel Numbers: Accounting for Authors: my presentation here. Looks like you can. Okay. So now we're gonna talk about the the Us. Piece of everything. Actually, she already gave me an intro earlier. But I'm a Cpa turned author. We had a real life. Ivf mix up at a hospital. I wanted to write about it because

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Ashley Guion - Novel Numbers: Accounting for Authors: it was traumatic, and I wrote about it, and I loved writing, and it was great, and my husband said, you got to keep writing. So I now moonlight also as a romance author. But I do try to add a little bit of suspense and crying stuff into it. So I

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Ashley Guion - Novel Numbers: Accounting for Authors: have been to this in the past. As an intent and an attendee, so I'm on the other side now. So

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Ashley Guion - Novel Numbers: Accounting for Authors: like, Jasmine said, this is not tax advice. Don't come after me. Orange is not my color. I have 2 young toddlers that were downstairs earlier that were causing a scene. Take care! Fell through also. Am struggling, as Jasmine said, to the parenting to toddlers during a pandemic but this is not tax advice will all be us based on my side of things. I'm not getting into States, because, as you know, we have, you know.

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Ashley Guion - Novel Numbers: Accounting for Authors: the Us. And then we have every single State, and sometimes counties and towns within the State that want to make their own rules.

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Ashley Guion - Novel Numbers: Accounting for Authors: So we're gonna talk in generalities. And we're gonna try to help you make better business decisions. So if I were to pull all 60 something of you right now and say, How do you keep track of your records?

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Ashley Guion - Novel Numbers: Accounting for Authors: Some of you would laugh and say what records, and it would make me cry, and it would kill my soul on the inside, and I could wax poetic about it in my next romance novel anyways. I want you to if nothing else. Today. This is not country specific, if nothing else. Today I want you to separate your finance streams. I I don't really care what country you're in, unless you have a specific accountant that has told you not to do that. For whatever reason, wherever you are on planet Earth.

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Ashley Guion - Novel Numbers: Accounting for Authors: please separate your finance streams, Jasmine, please chime in if you think that that is an incorrect assessment to make but I think if you keep your bank accounts separate for your writing business. If you keep your paypal, your square, your venmo, all of that, it lends legitimacy in the eyes of whatever taxing agency that you are subject to, that. You are trying to make this a business, because if nothing else in the Us. If you say that you're a hobby if you tell people at night. Oh, yeah, I I write as a side hobby.

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Ashley Guion - Novel Numbers: Accounting for Authors: Careful.

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Ashley Guion - Novel Numbers: Accounting for Authors: That's a very dangerous slippery slope to fall down, because if you are writing as a hobby a true Irs described hobby, you don't get to take any deductions. The current tax law right now means that you cannot take deductions

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Ashley Guion - Novel Numbers: Accounting for Authors: or a hobby business. You have to report the income until the cows come home. But you can't take deductions. So is this your hobby, or is this your business? If this is your business, separate your finance dreams, no matter where you are in the world.

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Ashley Guion - Novel Numbers: Accounting for Authors: So that means the things that I mentioned earlier your bank account, your paypal, your square, your venmo. You can get no fee checking accounts. Try to do that

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Ashley Guion - Novel Numbers: Accounting for Authors: in terms of setting up your books, and why it's important

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Ashley Guion - Novel Numbers: Accounting for Authors: you don't wanna miss out on important tax savings. You don't wanna have to go through and find out that you paid a thousand dollars more in taxes just because you didn't keep good books, and if you have enough money that that's not a big deal for you, then go for it. But if you want to make also better business decisions, you wanna figure out whether a pen name is profitable. If you wanna find out whether a series is profitable. You wanna see, if you've made back your costs of your editing, you had a developmental editor. You had a

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Ashley Guion - Novel Numbers: Accounting for Authors: you paid for alpha and beta readers. You paid for line editing, copy editing, proofreading all of that stuff. You paid a arc service to get your book out there. All of those expenses. Make sure that you're keeping track of those, and then, if you want to, you can allocate them across your series, and then you can see which one is.

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Ashley Guion - Novel Numbers: Accounting for Authors: Which one are you kicking the dead horse, and which one is actually your your cash cow, which one's your racehorse that's bring home all the bacon for your family. That's a lot of animal metaphors there, but I hope it. I hope it translates in the Us. If you're not sole proprietor, you actually have to have separate bank accounts. So I mean, if you're ever trying to position yourself to be any type of other type of entity. If you ever want to be a C. Corp, for whatever reason, you actually do need to have a separate bank account. So just

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Ashley Guion - Novel Numbers: Accounting for Authors: put it in place now. This is also much easier in terms of tax prep time. When you're looking at preparing your tax return. You're not going back through all of your old Amazon statements and saying.

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Ashley Guion - Novel Numbers: Accounting for Authors: Oh, man, that Amazon charge for 2799 on March 3.rd Was that for something for my writing? Or was that because Johnny needed new sneakers? Or was that something for this or that

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Ashley Guion - Novel Numbers: Accounting for Authors: just separate it? And then you know that anything that comes through is a business expense, because otherwise it wouldn't be on your business credit card. It wouldn't be in your business bank account. I'm hoping that I'm stressing this enough that you're seeing where I'm going and how important this is. And at the end of the day time is money. You can pay to have a bookkeeper do all this stuff? Sure.

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Ashley Guion - Novel Numbers: Accounting for Authors: the messier it is, the longer it's gonna take the bookkeeper to do it, and if you don't wanna do it yourself. I've had clients over the years, hand me literal shoe boxes full of receipts, and said, Here, add them up.

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Ashley Guion - Novel Numbers: Accounting for Authors: I don't practice voodoo.

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Ashley Guion - Novel Numbers: Accounting for Authors: but if I did, those people would be getting PIN cushioned. Oh, my God! So just! Don't make your accountant in the heat of tax season.

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Ashley Guion - Novel Numbers: Accounting for Authors: Add up your receipts and then choose to put which bucket they go in. That's a good way to get on a

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Ashley Guion - Novel Numbers: Accounting for Authors: chopping block, more or less, that if your client needed to get rid of someone because they were overbooked. That's a good way to get yourself added to that list

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Ashley Guion - Novel Numbers: Accounting for Authors: proceeds for them. Sure you're paying them to do it. But there is a shortage of Cpas and an abundance of people who need them. Don't be the reason that they end up calling you, and it's like, like, I tell my five-year-old it's much less stressful to clean your room periodically throughout the week rather than try to do it

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Ashley Guion - Novel Numbers: Accounting for Authors: once at the end of the

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Ashley Guion - Novel Numbers: Accounting for Authors: week every 2 weeks. Same thing for your bookkeeping. Try to do it throughout the year, maybe, or once a month. Even. You don't even have to do it a lot. I mean, we as authors, we get deposits on from Kdp pretty much within the same 2 day period every month. Just make that your bookkeeping hour.

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Ashley Guion - Novel Numbers: Accounting for Authors: that's really all it's gonna take, you have your Amazon or Facebook receipts for ads. You have different kind of posting boosts and orders and things like that. It's not gonna take you hours. Generally famous last words. If you're here doing pro writing aid premium day, I'm assuming that you have time to do that. But anyways, don't worry. I got solutions and things like that at the end things to help you, and I'm sure Jasmine could point you a bunch of places, too. But you have options like you have like these, like.

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Ashley Guion - Novel Numbers: Accounting for Authors: similar to what Jasmine mentioned. But you have paper trackers like, I know that we have, like

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Ashley Guion - Novel Numbers: Accounting for Authors: you, just have a book.

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Ashley Guion - Novel Numbers: Accounting for Authors: Just write down what the expenses are easy, super easy. Excel Google spreadsheets and then quickbooks online is what I use because

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Ashley Guion - Novel Numbers: Accounting for Authors: my job. But I love quickbooks online, and I will talk about it all day long if you let me. But we're not going to do that because we're on a time crunch. So of the different types of entities that you could be in the United States is, you could be a sole proprietor, a single member. Llc. Those are the exact same in the eyes of the Irs.

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Ashley Guion - Novel Numbers: Accounting for Authors: Single member Llc. Is only a state differentiation, and that just provides you a little bit more protections and things like that, and additional fees. But anyways, in the eyes of the I-r's a sole proprietor and a single member Llc. Are the same exact thing likewise with a partnership or a multi-member Llc. Reported on the same exact tax return as each other.

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Ashley Guion - Novel Numbers: Accounting for Authors: S. Corp is its own entity. C corporation is its own entity.

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Ashley Guion - Novel Numbers: Accounting for Authors: Out of all of these, the ones that are in that blue box on the screen. If you're blue colorblind, you might not see the box. It was the first.st The C Corp is the only one that's not included in the box. I don't know if blue color blind is a thing. But anyways, all of those top ones are entities where you're paying the income taxes on your own personal income tax return. So all of those might have their own tax return that you have to file on. But

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Ashley Guion - Novel Numbers: Accounting for Authors: the income actually ends up getting reported on your own income tax return, and those tax returns themselves. At least the Federal tax returns don't have their own

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Ashley Guion - Novel Numbers: Accounting for Authors: tax rates more or less. You can see how the multi-member Llc. The partnership and the S. Corp. Are all due on March 15th

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Ashley Guion - Novel Numbers: Accounting for Authors: of the following year. Everything else is due on April 15th of the following year, plus or minus a few days for holidays and weekends. That's because those returns are considered flow through entities. You don't necessarily need to understand that here, but just know that. Those returns need to be filed before you file your personal income tax return. So if you're trying to set up with your best friend, set up a author business and you wanna set up a publishing company. And you're like, Hey, let's be a multi member Llc. Or a partnership or something.

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Ashley Guion - Novel Numbers: Accounting for Authors: that's all well and good. But just know that you guys now have a joint tax return that you need to file together. That is absolutely separate from your personal income tax return. But that tax return needs to be done because a form gets produced from that tax return, and that has to be used to populate your personal income tax return. So you're now having 2 filing requirements. If you want to be in a arrangement.

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Ashley Guion - Novel Numbers: Accounting for Authors: I see balloons all over my screen. I'm not sure what happened there. I don't know if you guys see that either. So anyways, let's go on. There are B corps. But we're not gonna talk about that here because I don't wanna make any of you cry so sole proprietor, a single member. Llc. That is what most authors are here in the Us. It's the easiest one to set up sole proprietor you are by doing that, that is it. There's really not really much registration required for that of a single member. Llc. You do have to register with your State.

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Ashley Guion - Novel Numbers: Accounting for Authors: and you have to tell them what you are usually have to give an address which can be public record. So make sure that you're being very aware of that. So if you're going to be the next Stephen King, make sure you're not necessarily putting out your home address out there forever, because it will be posted on the Secretary of State website. Just something to consider.

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Ashley Guion - Novel Numbers: Accounting for Authors: You're filing just an additional schedule on your personal Federal income tax return. It's called the schedule. C. It's just an additional form that attaches on the net income at the bottom of the form. Is.

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Ashley Guion - Novel Numbers: Accounting for Authors: it flows through onto your regular tax return like you would if you had a W. 2 from someplace. And it flows through you getting taxes

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Ashley Guion - Novel Numbers: Accounting for Authors: factored in on that income. But you also pay social security and Medicare taxes that's called the self-employment taxes also on that income. So just to stress. So you were hearing me

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Ashley Guion - Novel Numbers: Accounting for Authors: when you have income from your business. Say that you made $50,000 in your writing business last year you were paying your ordinary income tax rate on that income.

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Ashley Guion - Novel Numbers: Accounting for Authors: and you are paying

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Ashley Guion - Novel Numbers: Accounting for Authors: self-employment taxes on the income

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Ashley Guion - Novel Numbers: Accounting for Authors: both, you're paying both. The self employment taxes is 15.3. So that's the 7.6 5 plus the

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Ashley Guion - Novel Numbers: Accounting for Authors: A.

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Ashley Guion - Novel Numbers: Accounting for Authors: 12.4 for social security, and then 2.9 for Medicare. But if you were an employer you'd be paying half of it, and your employee would be paying half of this

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Ashley Guion - Novel Numbers: Accounting for Authors: payroll taxes. When you're self-employed. You're paying both half

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Ashley Guion - Novel Numbers: Accounting for Authors: both halves, and that's what the self employment piece is.

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Ashley Guion - Novel Numbers: Accounting for Authors: you're not taking a paycheck from your business. You might call it pay all you all day long. You're not getting a W. 2 at the end of the year your bankers going to ask you for a W. 2 if you ever need a loan but you're not getting one, because you can't take a paycheck from your own sole proprietorship, or from your own single member. Llc. So that's a draw. It's not a deduction for your business whether or not, you took out a penny from your business, or whether you took out every cent of product.

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Ashley Guion - Novel Numbers: Accounting for Authors: it does not matter. The Irs is going to tax you on what the net income was, regardless of how much you've left in the company.

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Ashley Guion - Novel Numbers: Accounting for Authors: This is what the schedule see? Looks like it. Just it has your information up at the top. It has your revenues, I believe Jasmine called it something else in her slides for the European people. But for us in here in the States for calling it our revenues. Below your expenses you have a deduction line at the bottom for the box, where you can take home Office expenses, and then at the very, very bottom, you get your net income

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Ashley Guion - Novel Numbers: Accounting for Authors: it. The form looks pretty simple. I did work with an author who she thought she had to put every single bucket that rolls into each of these items on her tax return. So she's been doing her tax return as an author for 20 something years under advertising. On her tax return she would make sure that she created footnotes, and she said, This is what I spend in Facebook ads. This is what I spend in

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Ashley Guion - Novel Numbers: Accounting for Authors: Tiktok ads. Instagram ads boostings. This is what I spend in everything. She broke it all out and gave that to the I-r's, and was like. And all of this is just what equals that one bucket number line number 8. You don't need to do that. You just need to give them the total number, the subtotal. You don't need to give them all the little things that make it up. Will they audit you at some point, possibly, and they ask you to break those out totally possible if you got audited.

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Ashley Guion - Novel Numbers: Accounting for Authors: Are you going to get audited, I have no idea. But have you been audited yet? I don't know. You don't need to give them all of that information right out the bat if they want more information they'll ask you. They will not call you by the way, they will not call you, and they don't send emails. So if you get a letter from the I-r's, there's much more

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Ashley Guion - Novel Numbers: Accounting for Authors: legitimacy to that. But they're not going to email you a hundred percent. They're not going to email you. And are they going to call you? Probably not as well. So just look out for scams on that side the top red box before I move on. I just want you to be aware of it. Says, did you make any payments in the year that would require you to file forms 1099.

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Ashley Guion - Novel Numbers: Accounting for Authors: I will talk about that later. But that is a very, very important box if you answer yes. The next question is, if yes, did you and you check. No, I just want you to know that the penalties per 1099 not filed by you is hundreds of dollars

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Ashley Guion - Novel Numbers: Accounting for Authors: hundreds. So we'll talk about that real quickly later. But you just need to know that that is a responsibility that you have now as a business owner.

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Ashley Guion - Novel Numbers: Accounting for Authors: This is the second page of that where you can add in additional other expenses. So for me, I have a book production line that I add in here, and that's where I put in my Isb ends, my copyrights, my editing fees, things like that. Vendor fares. I put those all in this other expense bucket, and I I do list them out here. But I don't list them out here because I feel like those expenses don't fit in any of those buckets appropriately.

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Ashley Guion - Novel Numbers: Accounting for Authors: So where do you go? Where do you put things? A lot of people get hung up on this, and they get really stressed about it. And they really shouldn't, because it's not that big of a deal. You're putting all of your royalties up into the revenue bucket. You don't need to split out Amazon royalties, Ingram spark royalties, drafted digital any kind of publisher royalties. You can just put the total number. You don't need to split it out if they need you to split it out.

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Ashley Guion - Novel Numbers: Accounting for Authors: They'll ask you, but you can put one giant number for your royalty income under advertising. You have any cost for promoting your business websites, ads, promos, book launches, art copies, newsletters. This is where you'd put something like book sirens or book funnel story origin. Things like that. Pro-writing. No, not pro-writing aid. That would be a bad one. That would be office expense. But you want to make sure that you have anything that's using to spread your name for your business up into advertising. If you're paying for your website, and you think I have a wordpress website.

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Ashley Guion - Novel Numbers: Accounting for Authors: I don't wanna put it on advertising. I wanna put an office expense totally fine, totally fine. Do not get stressed about where things go. If you can make a justified reason in your head why it should be going one place than the other. It doesn't really matter as long as it's on there. As long as you're getting that deduction somehow. And you're not paying more in taxes than what you need to tax. Evasion is not okay. Tax avoidance is okay. At least that's what they told us in

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Ashley Guion - Novel Numbers: Accounting for Authors: the master's program. You're taking advantage of the things that are allocated to you and offered to you whether or not it's in the advertising bucket or the office office expense bucket doesn't really matter. So don't get stressed out about any of this. I'm trying to emphasize that because that's like a huge thing that I hear from people

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Ashley Guion - Novel Numbers: Accounting for Authors: current truck expenses that will be if you had any vehicle related expenses for any of your trap

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Ashley Guion - Novel Numbers: Accounting for Authors: business use. So that was your actual auto expenses versus. If you had mileage, if you took mileage to travel to and from different signings, commissions, and fees. We don't really see that all that much for authors. But you might have contract labor, which is anything you've paid to contractors or freelancers. You have PA's. You have editors, you have designers and formaters. You can put all of that.

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Ashley Guion - Novel Numbers: Accounting for Authors: Did I say translators? You can put all of that under contract labor if you want. Could you have contract labor and still answer no to the contract labor question the 1099 question. Yes, absolutely. If you paid a corporation any of those contract labor fees. They don't need 1099. Any anyone that was taxed S. Corp. Or a C. Corp. Doesn't need to receive a 1099, and it gets finicky for foreign people that you're paying. So if you're paying someone, and

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Ashley Guion - Novel Numbers: Accounting for Authors: Indonesia or Australia, there's a whole bunch of different rules for that. But anyways, your your contract labor can go into that line, your depreciation. That's if you buy any piece of equipment that's more than

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Ashley Guion - Novel Numbers: Accounting for Authors: 2,500 bucks is the Irs de minimis rule. If you buy a walking desk, that's $2,200, put it in office expense. If you buy a macbook pro something, something, something something something that is $6,000.

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Ashley Guion - Novel Numbers: Accounting for Authors: Yeah, you gotta capitalize that. And then you gotta depreciate it over the course of the business. So that's what goes into that line. Employee benefits programs. If you have employees and you're paying for their health insurance that goes there insurance here. This is not your health insurance. This is, if you have business liability insurance. It's not auto insurance. It's

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Ashley Guion - Novel Numbers: Accounting for Authors: insurance related to your business. It's not even related to your home. Your home office insert insurance goes somewhere else, completely. Interest expense. That's interest on any business loans or business credit cards, legal professional services. That's if you're paying for an accountant, a bookkeeper, if you have payroll fees, retirement, planner fees.

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Ashley Guion - Novel Numbers: Accounting for Authors: legal those types of things.

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Ashley Guion - Novel Numbers: Accounting for Authors: Oop.

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Ashley Guion - Novel Numbers: Accounting for Authors: Okay, office expense. That is my all time favorite bucket. I throw everything in there. I have reference materials, shipping supplies, office cleaning supplies, organization things, paper pencils. We all love notebooks. We love notebooks. We love paper even to sometimes we don't even use it. I have so many empty notebooks because I'm a computer person, but they're still pretty ink for your printer, even a printer itself, a computer itself. All of those different things

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Ashley Guion - Novel Numbers: Accounting for Authors: can go into office expense as well as any subscriptions that you have. So if you have pro writing 8 that can absolutely go in there, if you have word, anvil or plotter or novel crafter, Marlow. Pseudo. Right? Chat. Gpt, any software canva. If you have any software that you're using for your business, it can go into office expense. It's it's all part of it. You don't have to create a new bucket called Subscriptions, or Do's, or Software, or anything

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Ashley Guion - Novel Numbers: Accounting for Authors: just in the office. Again, the Irs needs further clarification. They'll ask you, but they don't want

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Ashley Guion - Novel Numbers: Accounting for Authors: too much broken out.

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Ashley Guion - Novel Numbers: Accounting for Authors: If you have pension or profit sharing plan or retirement plan for your business. That's the line that is for your portion that you have given for your employees, not your own rent or lease again, not for your home. It's for if you rent an office space for your business repairs and maintenance. If you had to fix your ipad or your computer printer supplies I generally don't use. I leave that usually blank taxes and licenses. If you have any business income taxes, if you have any state or State.

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Ashley Guion - Novel Numbers: Accounting for Authors: sales, tax things like that can go under there. Your Llc. Registration. All of those different things taxes and licenses can all go together. Travel. This is, if you had airfare if you had an author. Cruise

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Ashley Guion - Novel Numbers: Accounting for Authors: is your author cruise 100 business. I want to ask you that I want to ask you that I'm not the Irs.

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Ashley Guion - Novel Numbers: Accounting for Authors: I can't answer that, but I can ask you

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Ashley Guion - Novel Numbers: Accounting for Authors: if your author cruise was a hundred percent business, would you be going down to a beautiful tropical island.

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Ashley Guion - Novel Numbers: Accounting for Authors: Because what does it matter if it's a beautiful tropical island, if it's a hundred percent business. So just

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Ashley Guion - Novel Numbers: Accounting for Authors: be aware of that opening that could get you. That also includes airfare taxis, a bus. Things like that meals typically limited to 50. So if you paid a thousand dollars in meals while you were out and about. You generally only get $500 as a deduction on your tax return utilities again. This is for your business itself.

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Ashley Guion - Novel Numbers: Accounting for Authors: not for Home Office utilities. This line, I don't really see, populated all that much for authors when I'm when I'm doing their taxes. Generally this would be like if you had

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Ashley Guion - Novel Numbers: Accounting for Authors: your own phone. That was specifically for author things and not just the while I use my phone, 90% of the time for my author business. It's like, no, you have your own line that people call you with on that that would be that utilities and wages again. This is not your wages because you don't receive wages. If you're a schedule, see? Reporter this would be just if you're paying someone else and then you have obviously the miscellaneous expense bucket that I showed you on that second page where you can put in

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Ashley Guion - Novel Numbers: Accounting for Authors: thing, and that's where you can put any of like your membership fees or dues. If you have book book, Fairs book signings.

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Ashley Guion - Novel Numbers: Accounting for Authors: going to getting witchy with it, or book bonanza, or things like that. Any book production costs, where you have an editor, a formatter, a cover designer, Isbn copyright. See? Those could also go under contract labor. I like to put them under other under that book production cost line, because I like to see what it cost

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Ashley Guion - Novel Numbers: Accounting for Authors: to make a book like the the people that I paid to make a book see? But that's me. You might want them under contract labor, and that is totally okay. And if you had any kind of like entry fees to a compet to a writing submission, or things like that that could also go under miscellaneous.

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Ashley Guion - Novel Numbers: Accounting for Authors: I hope that it's very hard to do these presentations and not see the look of fear in people's eyes. So I'm hoping that you guys are all sticking with me as I try to rush through it all. Charitable deductions generally you don't get a deduction for as a business as an author. Sometimes you can be argued that they are advertising expenses. If you're getting your name or your author name plastered up on a sign somewhere and saying that

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Ashley Guion - Novel Numbers: Accounting for Authors: Stephen King sponsored this race.

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Ashley Guion - Novel Numbers: Accounting for Authors: Part of that is probably advertising.

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Ashley Guion - Novel Numbers: Accounting for Authors: If you're not getting your name anywhere, it's probably just a charitable deduction, which means you probably don't get a you don't get a business deduction for it. We did talk about how, if you're getting a huge walking desk or a really expensive computer, that's more than $2,500. You have to capitalize it. So just make sure you kind of remember that word and that concept in the back of your mind. Because it's reported differently on your tax return.

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Ashley Guion - Novel Numbers: Accounting for Authors: And what if your designer person, whoever ghosted you? You paid someone $3,000 for an editing service, and then they just disappeared off the face of the earth. You're sending them email after email after email. You don't get

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Ashley Guion - Novel Numbers: Accounting for Authors: anything back from them. Can you still deduct that. Yes, you can, because generally in the Us. Authors are usually cash basis, which means you get the deduction when you've paid it.

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Ashley Guion - Novel Numbers: Accounting for Authors: Whether or not it was a bad day or not that money came out of your pocket more or less, and you get that deduction likewise, if you were paid money, and then you didn't actually have to do what the service was.

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Ashley Guion - Novel Numbers: Accounting for Authors: you still got the money. So you're paying taxes on when you've received that money.

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Ashley Guion - Novel Numbers: Accounting for Authors: Is a credit card charge, a an expense that you can take absolutely. So it's when you say cash basis. Credit cards are also considered cash

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Ashley Guion - Novel Numbers: Accounting for Authors: home office. There was a famous Tiktok that I saw at the end of last year, where a girl started her presentation like her, her Tiktok video. And she's like. I'm not an accountant, and I've never done any accounting classes. But this is what I know about Home Office. And then she gave a video about like Home Office tips. And then she said that if you had a cat that like to hang out on your windowsill that cat is now part of your business, and you can now deduct

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Ashley Guion - Novel Numbers: Accounting for Authors: the vet fees and the food and the collars, and the toys and things like that. And please, please, please, Jasmine, you can also chime in here. I don't know if it's different in Europe, but that does not make it a business asset. It does not make it a business expense. Please don't deduct your cat if it just hangs out with you while you write. Likewise for a dog there are certain aspects where you could have an animal in your business that you could get deductions for, especially like

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Ashley Guion - Novel Numbers: Accounting for Authors: if you wrote cozy mysteries. And the cat was like on your books, and it was part of your marketing. And like all of your Tiktoks, went Viral, because you've posted funny videos of your cat and like it's part of your business. It's part of your marketing and your brand. That's probably a different conversation. Your little companion back here, unless it's like an emotional support animal, and it has actual. You need to contact an actual like a

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Ashley Guion - Novel Numbers: Accounting for Authors: a person that you're paying to advise you on that. But I would say that no, no, you were not deducting your cat, and it's toys. So make sure that you're not getting your advice for this from someone that's saying that it needs to be an exclusive area of your space, of your home, and you need to be able to

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Ashley Guion - Novel Numbers: Accounting for Authors: quantify that you need to actually count the square footage of the space that is reserved for your business. You can't have a crib in the corner. Do you have a crib in the corner? Then it's not reserved and exclusive for your author career. It's your kids nursery. So

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Ashley Guion - Novel Numbers: Accounting for Authors: make sure that you're being aware of that when you do take home office, because that is an area of

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Ashley Guion - Novel Numbers: Accounting for Authors: risk of people that

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Ashley Guion - Novel Numbers: Accounting for Authors: abuse it. We're gonna kind of skip over that. And then 1099 s. Who receives them. This part.

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Ashley Guion - Novel Numbers: Accounting for Authors: whenever I give live presentations, and, like the people are, I can see them. This is the part that we get hung up on the most. It'll be like an hour and a half presentation and 30 min of it will be just on this. Because people will just have question after question as a business owner in the Us.

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Ashley Guion - Novel Numbers: Accounting for Authors: You have a responsibility to pay anyone that you've contracted and paid more than $600 to over the course of a year

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Ashley Guion - Novel Numbers: Accounting for Authors: you have to issue them a 1099.

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Ashley Guion - Novel Numbers: Accounting for Authors: Now there are lots of other rules that follow that. But if you pay an editor that lives in Tennessee, $700 to edit your book.

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Ashley Guion - Novel Numbers: Accounting for Authors: Now you have some responsibilities that you need to follow up on. You need to see. You need to send them A. W. W. 4 w. 9. 1 of them, I'm mind, break blanking right now

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Ashley Guion - Novel Numbers: Accounting for Authors: to make sure that they are not taxed as an S. Corp. Or C. Corp. If their tax is either those, then they don't need a 1099. If their tax is anything else they do unless

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Ashley Guion - Novel Numbers: Accounting for Authors: I will be saying a lot unless a lot during the slide, unless they are an attorney, and then they need to get a 1099 pretty much, no matter what. Now, if you've paid them through cash or check definitely 1,099, if you've paid them through Paypal square venmo or credit card.

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Ashley Guion - Novel Numbers: Accounting for Authors: They don't need 1099 s. They don't need 1099 s. At all.

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Ashley Guion - Novel Numbers: Accounting for Authors: even if they are not a corporation. If you paid them through one of those methods. But

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Ashley Guion - Novel Numbers: Accounting for Authors: again, unless you've paid them via one of those methods, and you've marked it as friends and family payment.

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Ashley Guion - Novel Numbers: Accounting for Authors: So this is where the Paypal fees kill you, and you really don't want to have to pay the paypal goods and services fee that they charge you because you're like, Oh, my God!

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Ashley Guion - Novel Numbers: Accounting for Authors: That eats up a huge chunk of the percentage.

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Ashley Guion - Novel Numbers: Accounting for Authors: But it also means that they take care of the 1099 s. For you.

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Ashley Guion - Novel Numbers: Accounting for Authors: So if you pay via credit card.

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Ashley Guion - Novel Numbers: Accounting for Authors: the credit Card Processing Company will take care of the payment for you if you pay via

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Ashley Guion - Novel Numbers: Accounting for Authors: paypal, and you clicked friends and family.

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Ashley Guion - Novel Numbers: Accounting for Authors: You know you're now on the hook for filing those 1099 s. If they need one. If you do paypal goods and services.

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Ashley Guion - Novel Numbers: Accounting for Authors: Paypal takes care of the 1099 s. For you likewise, if you do venmo, and then likewise and Square obviously will take care of it for you, Zelle. Zelle does not take care of it for you. If you've paid someone over $600 in Zelle, and they're not a c-corp or an S-corp, and obviously regardless of whether they're an attorney. You are still on the hook for making sure that you keep track of what you pay that person, and you send them a 1099 if you're required.

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Ashley Guion - Novel Numbers: Accounting for Authors: Now let's go further. There are 2 different types of 1099, so pay attention to that. Usually you're going to be filing the 1099 nec non employee contractor.

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Ashley Guion - Novel Numbers: Accounting for Authors: miscellaneous would be if you were doing a

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Ashley Guion - Novel Numbers: Accounting for Authors: other payments to someone like there's a whole different category. But you're not doing them, am I the miscellaneous one you're using the Nec. One? So if they're independent contractor that you've paid more than $600 to throughout the course of the year, and it wasn't through any kind of

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Ashley Guion - Novel Numbers: Accounting for Authors: service provider that is taking care of the 1099 s. For you, you need to issue the 1099 s. Usually by January of the following year.

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Ashley Guion - Novel Numbers: Accounting for Authors: So January 31st of the following year. If you have more than 1099, 1099 s. That you need to file.

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Ashley Guion - Novel Numbers: Accounting for Authors: you need to file them online. It's required. Now from the Irs. You also cannot print the 1099 forms from any kind of website, because you need to use their like straight up carbon copy whatever forms you can usually pick them up for free like a local Cpa firm, a local post office. Sometimes local staples. They usually have all of those in during that tax prep time. But yeah, you. They made this pretty much as difficult as possible for people. But

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Ashley Guion - Novel Numbers: Accounting for Authors: failure to do this for you as an author. Now. The people don't talk about this enough in the author space, and people usually shut down accounting questions as soon as they can. They just say you need to talk to a professional, and they get snotty about it. But this is me a professional telling you that if you're in the United States, you need to issue 1099 s. To other people in the United States. If you've met these criteria, and if you don't, you could be charged by the Irs or state

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Ashley Guion - Novel Numbers: Accounting for Authors: hundreds of dollars in penalties per 1099 not filed

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Ashley Guion - Novel Numbers: Accounting for Authors: hundreds of dollars per 1099, not filed.

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Ashley Guion - Novel Numbers: Accounting for Authors: That's a lot. That's a lot. So you can file for free on the 10 and on the Irs's website for up to, I think, 50 at a time.

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Ashley Guion - Novel Numbers: Accounting for Authors: Take advantage of that and look up the rules yourself. Go on the Irs's website and look it up. The penalties are for you, not for them. So you need to make sure that you're working with someone who's willing to give you A. W. 9 with their information on it. So you can fill out that 1099, if they refuse the Irs actually has steps that you can do to make it so. You're not the one on the chopping block. But this is a really big deal, and that's why I'm focusing on it, even though we're kind of going over. And I hope you guys are still with me. But that's

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Ashley Guion - Novel Numbers: Accounting for Authors: it's a big deal. It's a big mistake that people in the Us. Make, and they forget if the contractor is not a Us. Resident.

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Ashley Guion - Novel Numbers: Accounting for Authors: the different ball game, and there are different rules. But if it's within the Us. Boundaries, they they want it.

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Ashley Guion - Novel Numbers: Accounting for Authors: So if I have not caused you to have a panic attack yet, just know that. Get it down somewhere on whether paper, excel, or software that Jasmine and I talked about. Get it recorded somewhere. Put it in a bucket. It doesn't necessarily matter which bucket at this point. Just put it in a bucket. If you have a tax preparer, they'll fix it if it's in the wrong bucket if they catch it, and just

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Ashley Guion - Novel Numbers: Accounting for Authors: just know there are resources out there for you. And I think I mean, yeah. So I have like, I have a paper organizer for people that like that scratch of pen on paper where they like journaling. And they like

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Ashley Guion - Novel Numbers: Accounting for Authors: paper record keeping. I think it's beautiful. But I would never use it myself, because I am definitely a computer person. And I like at that information electronically. But you have excel which I love. I actually have an Excel bookkeeping spreadsheet that, like automatically prepares your tax return for you, which is like a masterpiece. I love it. But like you can use 0 like Jasmine was mentioning that one's an awesome one. Fresh books. There's Qbo. There's wave a lot of those I don't tend to like so much here in the Us.

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Ashley Guion - Novel Numbers: Accounting for Authors: Because of how our tax system works. I don't like the limits of some of those softwares. So that's why I default to Qbo quickbooks online. But it's really

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Ashley Guion - Novel Numbers: Accounting for Authors: something is better than nothing. So just try to go through and figure out what you can do to help you save money

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Ashley Guion - Novel Numbers: Accounting for Authors: either from a bookkeeping perspective and a a tax preparer perspective or your own sanity. Your time is valuable, too. We, as authors, tend to forget that. And your time is important. Your mental health is important, your stress level is important. Don't do something. What do you wanna do? Do you wanna spend your time storytelling? Or do you wanna spend your time bookkeeping? So figure out a way that makes it as painless as possible and makes it so you can save as much money as possible, because otherwise

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Ashley Guion - Novel Numbers: Accounting for Authors: you're just miserable doing this management side of your business, and no one wants that. So yeah, I have codes for a lot of the stuff. For Crime week, 2024. But I if you guys have any questions, I think you have a lot.

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Ashley Guion - Novel Numbers: Accounting for Authors: what do we? What do we wanna do for questions? I guess.

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Michelle @ ProWritingAid: Alright. We can just try and get through as many as we can in the next few minutes.

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Michelle @ ProWritingAid: And Ashley, if, as you're looking at the QA. If there's any that you particularly want to answer over, others, just say the word

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Michelle @ ProWritingAid: but we'll start with Mark, who says I'm in the process of creating my 1st novel, so I'm incurring a lot of expenses. But I have no revenue. When should I start reporting my business even at a loss with the Irs.

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Ashley Guion - Novel Numbers: Accounting for Authors: He's in the Us. I'm assuming. Oh, Irs, yeah, I would say. Report immediately.

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Michelle @ ProWritingAid: Okay, and Jasmine, same to you. If you see any questions, particularly from any Uk folks that you want to answer, just let me know.

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Michelle @ ProWritingAid: Okay, Maria asks, are there benefits to being a sole proprietor versus an Llc. I believe that'll go to Ashley.

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Ashley Guion - Novel Numbers: Accounting for Authors: Yeah, so that's very state specific. And don't let anyone ever pool you and tell you otherwise. Being an Llc. Here in New Hampshire is a hundred bucks, and I'm good. That's what I am. I was like, yeah, I'll pay the 100 bucks every year to be an Llc. That's because we have no State minimum tax to be an Llc. If you're in California and someone's being like oh, it's super easy to be an Llc. Don't worry about it. If you're an Llc. In California you have a minimum tax every year of $800, I think, as well as registrations with the state every

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Ashley Guion - Novel Numbers: Accounting for Authors: year. So you can see how that's a bit more of a commitment. So in terms of

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Ashley Guion - Novel Numbers: Accounting for Authors: a financial impact is definitely more expensive in some States to be an Llc. Versus being a sole proprietor. But there are increased benefits of being an Llc. In the author sphere. It's not quite as cut and dry because we could be sued for copyright infringement infringement. We could be sued for defamation, and things like that.

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Ashley Guion - Novel Numbers: Accounting for Authors: And an Llc. Wouldn't protect you in the States for those type of personal Torts, I believe. But I believe there is an additional protection involved with being an Llc. So if you're not worried about the money.

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Ashley Guion - Novel Numbers: Accounting for Authors: you gotta look at it. State specific, though.

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01:07:32.926 --> 01:07:46.100
Michelle @ ProWritingAid: Mj. Asks, can you speak a bit about a Us. Citizen living part time in the Uk. As a writer not allowed to work for hire. But Uk self employed writing and investment income and double taxation roles.

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Jasmine Wallace: So there are tax agreements with other countries. So Us. Citizens living within the Uk

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Jasmine Wallace: you have the option to declare your tax here or in the Us. And then there is a double taxation relief that depending

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Jasmine Wallace: on what you pay. If you pay your tax in the Uk. You can potentially claim what you paid in tax in the Uk as a deduction on your tax in the Us.

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Jasmine Wallace: But I can only say that as a potential, because I'm not exactly sure of the Us. System, but for if you pay your tax in the Us. You can claim that

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Jasmine Wallace: back on tax that you have paid already within the Uk. Under double taxation.

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Ashley Guion - Novel Numbers: Accounting for Authors: Similar for me. When you're doing your Us taxes, you can get the foreign exclusion, basically. And you exclude your foreign income from your Us. Income tax return, and you generally don't end up paying anything.

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Michelle @ ProWritingAid: Okay. Lucy asks, do you need to be a published author to use deductions.

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01:09:06.029 --> 01:09:07.149
Ashley Guion - Novel Numbers: Accounting for Authors: Not in the Us.

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01:09:10.149 --> 01:09:26.159
Michelle @ ProWritingAid: An anonymous attendee asked something similar. At what point can you start deducting from your taxes? Most writing seminars? Say, you're an author as soon as you start writing. Do you have to be published, author? And can you include things like pro writing aid, scrivener, etc, while you're in the drafting stage?

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Ashley Guion - Novel Numbers: Accounting for Authors: Yeah, in the Us. For cap basis, so we can deduct them as soon as we pay them. Whether or not we're published.

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Jasmine Wallace: Same in the Uk.

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Michelle @ ProWritingAid: We have a few questions here regarding payments through paypal stripe, venmo, etc. And I know, Ashley, you did mention that. But so basically, if someone is paying you through paypal or stripe.

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01:09:54.900 --> 01:09:59.579
Michelle @ ProWritingAid: does that affect your taxes? And does venmo send the 1099 s.

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Ashley Guion - Novel Numbers: Accounting for Authors: So you're never in trouble if no one has sent you a 1099 so like if if someone dropped the ball and they never sent you a 1099. You're fine. It's the other person that would be in trouble if they were ever caught. So if you're being paid via stripe, or the or venmo you're just reporting what you've earned, what you've been paid throughout the year. So whether or not you Cherry, pick that number off your end statement or

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01:10:26.480 --> 01:10:32.009
Ashley Guion - Novel Numbers: Accounting for Authors: it. It doesn't matter what venue they've paid you. You're just reporting everything that you've received.

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01:10:34.290 --> 01:10:40.849
Michelle @ ProWritingAid: And Paul asks, I have never requested a 1099, but I might have needed to. How do I fix that now?

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Ashley Guion - Novel Numbers: Accounting for Authors: So you send them the vendor themselves A. W. 9 and that will fill out. They'll just fill out their name, their address, their social security number, or ein there's a little checkbox row where they have to check what type of entity they are, and they send it back to you, that's it. And then, if they've checked the S. Corp. Or C court box, you're in the clear you're all set unless they're an attorney. And then, if they have checked box

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Ashley Guion - Novel Numbers: Accounting for Authors: of any of those other things, then you need to then think about going back figuring out what you've paid them during that year, and then sending them a 1099 for that amount.

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01:11:15.340 --> 01:11:20.789
Michelle @ ProWritingAid: We have an anonymous attendee who asks, What if you receive payments through something like Patreon?

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01:11:22.200 --> 01:11:30.049
Ashley Guion - Novel Numbers: Accounting for Authors: Yeah, you just you report it as your regular income, even under the revenue section, at least in the Us. Jasmine. Same for you guys, you report that the same.

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Jasmine Wallace: Yeah, it doesn't matter kind of where you earn the income from. If it's relating to your self employment as an author, or whatever else you are employing yourself under it all falls under the same income.

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Michelle @ ProWritingAid: Randy asks, What if your expenses exceed your income?

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01:11:52.241 --> 01:12:01.898
Ashley Guion - Novel Numbers: Accounting for Authors: In the Us. It's fine. Lots of businesses have losses that they operate on year after year. You have to be able to justify it if they ever ask you if it's a legitimate business loss.

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Ashley Guion - Novel Numbers: Accounting for Authors: A lot of people like to do the rumor like, if you've had a loss for more than 3 out of 5 years. You can no longer claim deductions, which is not true. The Irs looks at lots of things. There's a really great website that they have that says all the things that they look at. So you can keep deducting but they do want to make sure that if they ever challenged you, that you had a list of things that you've done to make your business a legitimate business? Did you change pen names if one was tanking, did you make sure that you looked at your?

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01:12:27.140 --> 01:12:54.040
Ashley Guion - Novel Numbers: Accounting for Authors: Did you make sure that you pivoted and you looked at your numbers and you made business decisions. They're not. You like horses, and you have a horse farm. And it's really just your pets. And you're not making any money year after year, and you're not, and making any efforts to make any money. And you don't have a business plan that shows that they're gonna say, dude, you have expensive lawn ornaments. You need to make this a business, or you. It was back taxes for fraud like you. You need to. Just. It's fine for you to have business losses. You just need to make sure that you have backup to say that you're

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Ashley Guion - Novel Numbers: Accounting for Authors: you are trying to make it profitable.

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01:12:58.760 --> 01:13:17.860
Michelle @ ProWritingAid: In a similar vein. Chelsea asks in the Us. I was told I didn't have to report income if I make less than $600 a year. Is this true? But I'm guessing. If I want to report expenses, then I might then I need to pair that by reporting income right now. My expenses far outweigh my income because I'm just starting. How will that affect all of this.

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01:13:20.135 --> 01:13:37.569
Ashley Guion - Novel Numbers: Accounting for Authors: So it's not if your income is less than 400. There is a very popular thing. That might be what you're thinking of. That if you've made less than $400 you don't have self employment taxes. Which is kind of unclear on their site. I've always

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Ashley Guion - Novel Numbers: Accounting for Authors: in the last decade. We've always done it. Where you're making income, you're reporting the income. Whether or not your expenses exceed your income, whether you have $10 of income. We're reporting it, and you're taking the expenses against it, even if it generates a loss, because that's the accurate picture.

463
01:13:56.650 --> 01:14:02.979
Michelle @ ProWritingAid: Anita asks, how many years can you use your writing business expenses on income tax before you actually earn income.

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01:14:02.980 --> 01:14:03.420
Ashley Guion - Novel Numbers: Accounting for Authors: From your.

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01:14:03.420 --> 01:14:04.260
Michelle @ ProWritingAid: Writing.

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01:14:06.840 --> 01:14:08.389
Ashley Guion - Novel Numbers: Accounting for Authors: Or us, or.

467
01:14:09.420 --> 01:14:11.180
Michelle @ ProWritingAid: She doesn't specify.

468
01:14:11.590 --> 01:14:13.715
Ashley Guion - Novel Numbers: Accounting for Authors: Okay, for us. I

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01:14:14.300 --> 01:14:21.480
Ashley Guion - Novel Numbers: Accounting for Authors: you gotta make sure you can justify it. I guess I don't have a I don't have a number. Jasmine, do you guys have a specific number.

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01:14:21.790 --> 01:14:24.600
Jasmine Wallace: I don't think there would be a specific number set out for this.

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01:14:24.860 --> 01:14:36.220
Jasmine Wallace: Am I muted? No, I don't think there would be a specific number set out for this particular situation. It would. You'd kind of have to take a view on of as to what seems reasonable.

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01:14:37.010 --> 01:14:49.439
Jasmine Wallace: And it may be the Hmc. Would want to query it if it's been going on for too long. But there's there wouldn't be a set practice for it.

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01:14:52.460 --> 01:14:57.190
Michelle @ ProWritingAid: She did specify. She's in the Us. But thank you both for answering that.

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01:14:57.730 --> 01:15:06.150
Michelle @ ProWritingAid: Pat asks. Please go over again about transferring personal money to business accounts to pay for expenses. I am not making a profit yet.

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Ashley Guion - Novel Numbers: Accounting for Authors: Us

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01:15:10.730 --> 01:15:11.770
Ashley Guion - Novel Numbers: Accounting for Authors: UK.

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01:15:12.220 --> 01:15:17.969
Michelle @ ProWritingAid: Pat, can you let us know if you are in the Us. Or Uk, please in the chat.

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Ashley Guion - Novel Numbers: Accounting for Authors: I'll answer it for us, and then if he says UK, we'll keep going so for us in like a schedule. C, you're just putting money in the bank account, or you're paying personally any of those expenses, and that just counts as an owner contribution. And then, likewise, if you're ever paying yourself back. There's no such thing as loans in between the owner and the business, but you're just taking a draw, and so there's nothing the I-r's doesn't even want to. They don't care. They don't even want to see what you've put in versus what you've taken out. It's not a taxable item for them.

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01:15:50.150 --> 01:15:52.620
Michelle @ ProWritingAid: Pat is in the Us. So thank you.

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01:15:53.128 --> 01:16:01.600
Michelle @ ProWritingAid: Let's see, do we have anything else? Randy asks, do you have to take a percentage of office supplies for business expenses.

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01:16:06.154 --> 01:16:08.519
Ashley Guion - Novel Numbers: Accounting for Authors: In the Us. So you're just

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Ashley Guion - Novel Numbers: Accounting for Authors: ear.

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01:16:10.350 --> 01:16:20.783
Ashley Guion - Novel Numbers: Accounting for Authors: I I guess it's like, depends on how much you're using it for personal versus business. It is. If there is a portion that is personal and you're buying huge stacks of

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01:16:21.110 --> 01:16:24.739
Ashley Guion - Novel Numbers: Accounting for Authors: colored paper and half of it's going to your kids to make shapes

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01:16:25.050 --> 01:16:31.670
Ashley Guion - Novel Numbers: Accounting for Authors: legitimate. It's a probably a limited business expense. But otherwise, if it's

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01:16:31.720 --> 01:16:33.640
Ashley Guion - Novel Numbers: Accounting for Authors: for your office, not usually.

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01:16:34.750 --> 01:16:36.189
Ashley Guion - Novel Numbers: Accounting for Authors: Jasmine, would you agree.

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01:16:36.570 --> 01:16:37.230
Jasmine Wallace: Yeah.

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Michelle @ ProWritingAid: Okay? There's 1 anonymous question left. It says, what if you sell books through an unusual platform like, say, ebooks, Pdfs via gum road or Etsy, or even directly, and have people pay you through Paypal. Does that affect anything?

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01:16:53.850 --> 01:16:54.660
Michelle @ ProWritingAid: Nope?

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01:16:55.230 --> 01:16:58.690
Jasmine Wallace: It's still income earned through your

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01:16:59.010 --> 01:17:00.660
Jasmine Wallace: trade as an author.

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01:17:00.810 --> 01:17:03.789
Jasmine Wallace: so you would just put into the lump sum.

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Michelle @ ProWritingAid: Alright. We got through all of the questions. Thank you all for hanging on with us. There was so much information to get through. So, thanks to everybody who was able to hang on and and thank you so much to Ashley and Jasmine for being here. I know that it's hard to fit all of this information into just an hour. Thank you for staying on for an extra few minutes. I will be posting the audio transcript

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Michelle @ ProWritingAid: on the premium hub for everybody to view this in the replay. The slides are already there, all of the links that were in the chat today. From Ashley and Jasmine are on the premium hub as well, so you can go ahead and take a look at that and thank you to everybody who came with all of your questions. And we have another presentation happening. In about 40 min. So we will see you. Then.

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Michelle @ ProWritingAid: N,

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Michelle @ ProWritingAid: bye, thank you, guys.

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Ashley Guion - Novel Numbers: Accounting for Authors: Bye.