TAXES! Don't Go Into Your Shell!

TAXES! Don't Go Into Your Shell!

Sorry!  I said that I would talk about taxes yesterday and I was distracted.  Who would blame me?  Who really wants to talk about taxes?  When it comes to royalties and running a business, I have learned that the most important thing is keeping expenses separate from your personal account.  I have been doing this for two years and this year I am going to incorporate jeremycolebooks.  There are so many tax write offs for LLCs. 
Quick Tips for Authors and Illustrators:
1) Keep organized...Be sure to organize your expenses and receipts according to categories.  If you have a home office, this means utilities as well. (office supplies, art supplies, technology, phone, utilities, entertainment (meetings), etc...  Don't throw any receipts away.  You never know what you can write off and receipts are your proof.
2) Have a separate checking and savings account for your business.
3) Make sure that you have a great accountant.  I have been filing taxes with the same person for years.  He already has all of my information for my personal and business.  As long as he is affordable, it makes the process easier.
4) Show a profit in your 3rd year.  I have shown consecutive losses two years in a row because I have invested a lot of my personal income.  If your publishing isn't picking up a substantial profit by the third year, you may want to rethink your business model or consider something else.  You may have to change your approach with your business end.
5) Pay taxes on substantial gains on a quarterly basis.  You don't want to get hit with a big IOU to the IRS!