Getting Ready for Taxes

The best advice I received when asking about filing taxes was to treat being an author like a business. This way you can record it as a business (and not just hobby income) on your taxes.

If you keep track of these things starting right now, it will be much easier to do your taxes. You could create a Living Document that contains the following:

  • Dates and times spent writing, editing, formatting, and anything else that has to do with your book
  • Every single expense (paper, ink, web site, proof copies, reference books, electronics that are only used for the book, etc.) – keep receipts
  • Editor, Formatter, Cover Designer fees
  • Mileage (date & time) for speaking engagements, as a vendor, or author events
  • If you use one room in your house to work on your book (it can’t be used for anything else), then this room can be calculated into a deduction
  • Number of books you sell personally (I keep a box in my car)
  • Income of books sold personally
  • For books sold online – online retailers have number of books sold and royalty information

See this post about Filing Taxes for more information.

Living Documents

While you write it is a good idea to keep track of a few things. You can either create these as separate Google Documents or MS Word documents that get sync’d with your Dropbox. I call them “Living” because they will be constantly updated and changed.

It’s never too soon to create these documents:

Book Checklist. As you write, things will come to mind that you want to do – add these as bullet items to this document. These things will evolve as you get to different processes – editing, formatting, publishing, etc. As you complete an item, mark it as done, maybe include the date you did it, and put it at the bottom of the list. Here is one of the items that was on my list:     

Done – ordered business cards

Accounts. Trust me, after you get your book published on different sites, you will appreciate having a place where you list out these sites along with their links. Do NOT store the passwords in the document. I keep all of my passwords on my smartphone using the Keepass app (free and easy). When you make updates to your book, you’ll know exactly where to go to upload the new file.  For instance, for Amazon I have three links – one to my book sales page, one to CreateSpace, and another to Kindle Direct Publishing.

Style Sheet. As your book begins to take shape, you will realize that there are different ways to format certain things. A style sheet helps you to keep track decisions you’ve already made so that your books is consistent. I also used my style sheet to remind me of rules concerning block quotes, grammar, the use of BC & AD,  etc.  Here’s a personal preference item from my style sheet:   Use “1 Kings 7″ instead of “First Kings 7”

Book Seller Info. It’s never too soon to begin thinking about what genre your book belongs in, the key search words, description, biography, categories, etc. This is all information that is needed by Amazon, Barnes & Noble, iBooks, or where ever else you decide to sell you book.

Taxes. This document keeps records that you will need to file taxes. See my post titled Taxes – Read Now! for more information.

Software Programs

Google Docs – this is a great program to use if you have a gmail account (even if you don’t, it’s worth signing up for. It’s all free!) Documents that you create are automatically stored in Google Drive.

MS Word – I used this to write and format my book. It’s part of the Office 365 Suite.

Open Office Writer – a great free alternative to MS Word (part of the Open Office Suite).

Dropbox – This is a free cloud storage program. It will create a dropbox folder on your PC – keep your working documents there and they will be automatically saved to the Dropbox server as you work on them (you can see them online).

Adobe InDesign – If you pay someone to format your book, this is most likely what they will use.  Expensive and not easy to use.

Jutoh – Excellent little program that is inexpensive for formatting your eBooks. It’ll create any format you need (ePub for Apple, mobi for Kindle, etc).

macincloud – An online cloud service that will give you a mac computer through your browser. I used this to get my book into iTunes.

Audible – If you decide to create an audio book yourself, this is fantastic and free!

File Organization

There are a few paths you can take to keep your files backed up and organized.

Google all the way

If you setup a Google email account, then it’s easy to begin using Google Documents along with Google Drive. If you do not own a computer, this is the best option.

Once your Gmail (Google email) account is setup –  go to Google Drive, add a new document and begin writing. You can add as many documents as you need. They will always be in the Google cloud which means they are safe and you can access them from anywhere.

If you are unfamiliar with Google products, here is a training page that will help you get started.

Dropbox

If you have Microsoft Office or will be using a program on your own computer to write, then get a free Dropbox account. This will create a folder on your PC that will sync with Dropbox server constantly. No one will see this online except for you unless you give others permission. You will keep your working files in this directory so that they are immediately backed up as you work on them.

Once you get an account you will see a Dropbox folder on your computer. Create a folder in this folder titled “book.” In that folder you might create other folders as you need them (ie: photos, references, etc.).

Open a Word Document, save it to your Dropbox/book folder and start writing!

Money Matters

You may have begun to write… or not. But you know there’s a book in your future. These are just a few quick and dirty things to do. If you end up with a book in hand, you’ll be happy these things were done. If that book never materializes, there is no harm done.

Open a savings account that is only for your book. Doesn’t need to be a business account, just a plain savings account. Put any money that you get toward writing (donations, sales, etc.) into this account.

Keep track of all income and expenses. I use MS Money – it’s easy to use and it’s free to download.

Get a state tax ID number. If you decide to self publish, then use your publishing company name. If you don’t self publish then use your author name.  Do a search online for your state and “tax ID application” to find out how to do it online.