Many people put off tax preparation as long as possible. You give your bank account a quick glance at the end of the month when the statements come in, and if the balance is above zero, you turn your attention back to your latest novel or short story.
If you are a self-publisher, you also have marketing to do. Advertising to get out. Networking emails to answer.
Let’s face it; no one looks forward to working on taxes. Writers often fear it more than most small business people because we all fear failure. Dwindling funds in our checking account trigger that familiar panic and questions about our talent. “Am I really a good writer? Am I wasting my time? Am I fooling myself?”
The best way to survive tax season is to reduce the stress of the tax submission deadline. Here are five tax preparation tips for writers that will help you when you do your taxes this year:
1. Use one email address for all your email purchase confirmations.
Receiving your receipts in one email account reduces the chances of losing confirmation emails. Using one account also simplifies validating expenses during an audit.
2. File every online purchase receipt as soon as it arrives in email
This is not as hard as it sounds. Just create a folder on your hard drive and name it [Year] Purchase Receipts. For example, this year’s folder would read, “2018 Purchase Receipts.”
Every time you buy something online you receive an email confirmation. Using your browser’s File->Save As option, save these confirmations immediately to the folder you created. At the end of the year, all your receipts are stored in a single folder.
3. Charge all business expenses out of the same account or bank/credit card.
Having to go through multiple bank accounts looking for receipts is time-consuming. You can easily miss an expense.
Most banks provide a year-end summary of your expenses, often detailed by tax category. When you download one bank account transaction report as a spreadsheet, you can copy and paste the data into your tax information spreadsheet.
4. Use the document you created the previous year as a template
You have to gather and organize your expenses, revenues, and tax statements every year. Using the same template saves you time since you are familiar with where the information should go. If you have an accountant prepare your taxes, then you have to give them your tax information. Use a spreadsheet template and make the process more efficient.
5. Keep all your receipts in a manila envelope
My first bookkeeper taught me to put every paper receipt in a large manila envelope. Storing paper receipts in this manner prevents you from losing your proof of what you bought. Again, you will find this small bit of organization valuable if you are audited or if you need to return any items. This approach is easy and quick.
Hint: I use the envelopes I had left over from when I had to send my submissions to agents through the postal service.
Please share any tax preparation tips for writers you might have in the comments section below.
BONUS TAX PREPARATION TIP FOR WRITERS:
Order a new ink cartridge a month before you print out the information your accountant needs. Cartridges only run out of ink when you are preparing your taxes.
ADDITIONAL ARTICLES ON TAXES FOR WRITERS:
Tax Deduction Tips for Writers By
Disclaimer: The author is not a tax accountant. This blog post is not meant to be official tax advice. If you have tax questions, consult a tax accountant that is knowledgeable on with tax laws related to writers.