by Sylvia Inks, author of Small Business Finance for the Busy Entrepreneur
Preparing for April 15 Tax Day is not always easy or fun, but what happens if you just launched a book and have book sales? The biggest mistakes that most authors make are not asking their CPA the right questions ahead of time and not organizing their information. While I did meet with my CPA before and after my book launch, I learned eight valuable lessons that I want to share with all authors to help make your Tax Day less stressful.
8 Tips to Make Tax Day Less Stressful:
- Apply for a sales and use tax number before you start selling books.
If you are selling any of your books on your own, then you need to be collecting sales tax (unless exempt by your state). Check with your CPA to confirm the requirements for your state and business.
Example: How to obtain a sales and use tax number in NC: Click HERE
- Mark your calendar for sales and use tax due dates.
Determine your filing frequency (monthly vs. quarterly) and due dates based on tax liability. Create a recurring appointment in your calendar to block off time to calculate taxes owed in advance of the due date. If you’re not filing and paying taxes online, be sure to pay for certified mail and have it postmarked on or before the due date.
Example: In North Carolina, if you qualify for quarterly filing, then the payment for sales and use tax is on or before the last day of January, April, July, and October for the preceding three-month period.
|Tax Collection Period||Due Date|
|October, November, December||Last day in January|
|January, February, March||Last day in April|
|April, May, June||Last day in July|
|July, August, September||Last day in October|
*For More information in NC: Click HERE
- Before you travel out-of-state and sell books, contact the state to understand your filing requirements.
Make sure you understand the state and county tax rates based on where you will be selling your books, and adjust your invoicing and payment system accordingly. Then when you are back from your trip, be sure to calculate and pay the state for all sales tax collected.
Example: I traveled to Nashville for one weekend and sold several books. Since I only traveled here for a one-time conference, I was told by a TN agent that I didn’t need to apply for a TN sales and use tax number. After the business trip, I downloaded and printed a sales and use tax form and mailed a check for taxes collected and owed to Tennessee.
- Use one invoicing and payment system to track sales.
Pick an invoicing system that allows you to easily accept credit cards, set-up a specific dollar or percentage discount, and allows you to mark payment via cash or check. When you are selling your book in-person at a special event and have a line of people waiting to buy, you want a system that allows you to quickly take payments without having to create and email an invoice for each sale.
By having all your book sales in one system, you can easily pull up reports to find out total gross sales and taxes collected, making your job easier when providing tax information to your CPA. Evaluate your options and select the best accounting software that will work for you and your business.
Example: I use Square for all my book sales, and one customer asked if he could use PayPal to pay for a book. While I do have a PayPal business account, I replied that I only use Square for book sales to keep all the transactions in one system. He completely understood, admitting that he does the same, and gave me a credit card to complete the sale.
- Track your book inventory and sales.
Keep a good log with key data including the total number of books ordered (inventory), number of books sold versus given as gifts, gross sales, sales tax collected, and sales tax paid.
The sales tax on books can vary for books, especially if books are:
- Given as gifts and raffle prizes (you will owe a use tax on the books)
- Sold at retail price
- Discounted for special event
- Set aside money collected for taxes.
Open a tax savings account separate from the business checking account for operating expenses. When sales are made, set up periodic intervals where you transfer money from business checking account to the tax savings account to ensure there is enough money when taxes are due. Otherwise, you may find yourself accidentally spending the tax money on business expenses if it’s all sitting in one account.
- Keep track of all contractors and independent consultants who were paid over $600.
Did you hire anyone to help you complete and market the book like a graphics designer, website designer, virtual assistant, marketing consultant, or photographer? If so, did you collect a completed W-9 form before you finalized the agreement and made payments? If not, go back and ask for a W-9 form to be completed. If you paid anyone by cash or check for a total of $600 or more in a calendar year, you will need to submit a 1099-Misc form by January 31st of the following year. Create a tax folder to organize and track these completed tax forms.
- Track your mileage for business.
Make sure you have a detailed record of total miles driven on your vehicle and the total business miles driven. Include where you went and the number of miles driven on your mileage log. According to a few of my CPA colleagues, this is going to be the next big area of IRS audits over the next few years.
When tracking mileage driven to support your book, be sure to include events, appointments, and errands such as:
- Book signings
- Interviews to help create and promote the book
- Post office to mail books to colleagues and endorsers
- CPA’s office for tax meetings
- Supply store to buy book stands and business card holder
- Local printing company to pick up bookmarks, business cards, and flyers
- Grocery store to buy food/drinks for book events
Knowing the right steps and how to get organized can greatly alleviate the stress that comes with Tax Day. Once you understand what you should be doing and tracking, then you can be prepared ahead of time instead of trying to fix what you did incorrectly or having to re-create information that you didn’t collect. Focus on what you’re great at—writing and promoting your book—and work with your CPA to complete your taxes.
Did any of these tips surprise you? If so, which one(s) and what will you do differently? Do you have any tips that you want to share with other authors as they prepare for tax season? Leave a comment and share your story!
About Sylvia Inks
Sylvia Inks is financial coach, author, and speaker, specializing in helping small business owners save time, money, and reduce stress in running their businesses. Sylvia Inks’ book, Small Business Finance for the Busy Entrepreneur, is a practical, step-by-step guide that shares the key components that have the biggest impact on creating and maintaining a solid, profitable business.
Sylvia speaks at seminars and holds workshops to help the busy entrepreneur learn how to become and remain profitable. Upcoming events can be found at: http://smifinancialcoaching.com/events/
Contact and Follow Sylvia:
Company website: SMIFinancialCoaching.com
Book website: SmallBusinessFinanceBook.com
Photo Credits: Collazo Photography, Catherine Davis Photography, StockUnlimited
Disclaimer: This article is meant to give general insight into tax information that may apply to authors, and to give readers a starting point to do further research. While every effort was made to ensure the information in this article was accurate at the time of writing, the publisher assumes no responsibility for errors, omissions, or contrary interpretation of the subject matter herein. All readers are advised to seek services of competent professionals in legal, business, accounting, and tax fields.