Sharon Yntema, bookkeeper and author, shared her good experience with a small publisher in a recent blog and here she shares her story and good advice for the business of being an author. In 1981, I received my first author royalty check. Up until that point, my tax returns had been totally straightforward: one W2 was all I had to deal with, and so I did my taxes myself. I decided “how hard could it be to deal with just one 1099-MISC as well?” and so did my 1981 taxes myself, without filing a Schedule C. I included my writing expenses as itemized deductions. About 6 months later, I received a notice that I was being audited by the IRS. This was pretty terrifying, mostly because although I’d kept a written log of my expenses, I didn’t have receipts for many of the items. As a result, I worried that most of the deductions would be disallowed and I would owe back taxes, plus a penalty, none of which I had savings to cover. The appointment was at 7:30 a.m., an additional problem since it was hard to find ad hoc childcare for that time of the day. I gathered together all the documentation I could find and brought it to the appointment. It turned out I also hadn’t paid Self-Employment tax, since I didn’t even know there was such a tax to be paid. The IRS agent and I went through every detail of what should have been done, and…

January begins a new fiscal year. It’s also the best time to organize your tax information for last year. Whether your book has been out for more than a year, or you’re more than a year out before you finish writing your book, this is the best time of year to gather the information together for tax purposes. On the income side, identify the sources from which you have received payment. If you received royalties or an advance on royalties, you will need to file this as income because taxes have not been paid on this amount. You pay income tax on the full amount of the check or checks received during the fiscal year from royalties or an advance on royalties. Your agent or publisher will send you a 1099-MISC which you should receive in early February. If you worked as an independent contractor and someone paid you more than $600 in the past year for your work as a professional writer, than you should expect to receive a 1099-MISC early in February. If you worked as an independent contractor but were paid less than $600 in the last year, you still need to declare this as income, but don’t expect to receive a 1099-MISC form. If you worked as an employee (writer, editor, teacher, workshop leader) then social security and income tax has already been taken out of your payments. Expect to receive a W-4 which declares your income and taxes paid to the IRS. On the expense…