Being Business-Like as a Writer

Taxation Departments regard writers and illustrators as 'Small Business'. Even if you are a new writer and don't earn enough money to pay tax, it's a smart idea to work in a business-like way. Then, when the time comes, the transition is easy.

This advice was given in a session called 'Taxation for Writers' at an Australian Society of Authors (ASA) seminar that I attended in the early eighties before I was earning enough to pay tax. A tax consultant advised on procedures that would simplify the drudgery of 'getting the figures together' at the end of the financial quarter or year. Here is my procedure, based initially on his advice and changed from time to time to suit different circumstances.

I write short stories, verse, scripts and articles for magazines (for adults and children), as well as junior novels, non-fiction books and picture-stories. I keep track of them by means of Card files and a Day Book. (If yours are major works, such as writing one novel or illustrating one picture-story a year, then you will always know where your work is placed.) Available now is software which does this job, but I like the portability of cards and a Day Book.

A. CARD FILES (Note that this can be computerised)
1. Each item of work has its own card, filed in its category: short stories, picture stories, articles, verse, scripts, novels, collections - in sections for adults and children. A quick glance tells the history of the work.
When I send a piece of work out, I write the date and the market; later, the date of acceptance followed by the payment, written in green felt pen, or the date of rejection followed by the next market.
Some items have a long history. If an item is out longer than four or five months, I send a reminder. If payment is slow, I send an account. If the item is returned, I send it out again, and make a notation, 'revised', if I re-write. I offer second rights and send items overseas.
I have retained copyright to most of my work and have been able to offer some for inclusion in story and poetry anthologies. I offer non-exclusive rights so that I am free to market my work again.
On the back of the cards, I note expenses, such as: postages, short story entry fees, photocopying costs...
2. Each market has a card: newspapers and magazines (adults and children), trade publishers, education publishers, radio programs. Five columns show date sent, title, category (short story, verse...), date of acceptance, date of return.
B. DAY BOOK (Note this can be spread-sheet on your computer)
I use a spiral notebook, page-numbered and divided into sections. Categories are listed on a Contents page under Expenses and Income. Three columns show date, details and fees. Whenever I pay by cheque, I include its number.

1. EXPENSES
Postages: Daily, as I post items, I enter them. My Post Office Box fee is also included once a year.
Telephone: Local and interstate charges are entered on separate pages. Half telephone rental is included.
Fares and Travel: This includes local travel by public transport and travel by car for speaking engagements. (Charges are based on kilometres and the cc capacity of the car.) Fares and travel costs paid by hosts for interstate travel for talks, research, appointments... are recorded.
Printing and Stationery: The usual office items, plus computer software and photocopying - coin-in-the-slot and copy card costs.
Subscriptions and Memberships: Add the cost of daily newspapers, for these are essential research tools for all kinds of writing.
Books: A collection of books may be depreciated annually, or new books related to the earning of income may be listed.
Workshops, conferences and seminars: Registration payments.
Fees: Include fees paid to enter competitions. If you are a compiler, fees paid to authors for permission to include items in an anthology. Fees paid for professional computer maintenance and advice.
Accountancy: Eventually you may decide to engage a tax consultant. This was my decision in 1986 when I had bought a computer, software and printer, and wasn't sure which of three ways was best when claiming depreciation.
Publicity and Advertising: Fliers, bookmarks, photographs and the purchase of your own books to give away.
Home Office: see Special Notes
Donations: List gifts to charitable organisations.
Hardware: Record details of the purchase of computer hardware, office desk, chair and filing cabinet. (Note that computer hardware can be depreciated and software cannot.)
Depreciation: see Special Notes.
Input Tax Credit: see Income: Copyright Agency Limited

2. INCOME
I list under the following headings:
Features and articles
Short Stories
Scripts
Verse
Royalties
Lectures, Workshops, School Visits
Public Lending Rights and Educational Lending Rights
Copyright Agency Limited - payments made when individuals or organisations photocopy works or segments of works. There is a commission involved in this, which is an Input Tax Credit. Multiply the amount by 11 and list it as a tax deduction.
Sale of books - if you buy new or remainders for re-sale, record purchase price and sales

3. SPECIAL NOTES
* File all royalty statements, receipts, etc, in two large envelopes - income and earnings.
* Originally, I had to discover how to depreciate office items, such as typewriter, tape-recorder, computer and printer. Now I leave it to my taxation consultant.
* Claim Home Office or Home Studio expenses on a room used exclusively for this purpose. The area of my study is about one-seventh of the total house area, so I list expenses (lighting, heating, water rates, council rates, insurance, body corporate fee) and divide by seven.
* Other items that may be tax-deductible: depreciation on office furnishings and fittings, repairs to office equipment, furniture and fittings, office cleaning, proportion of home loan interest, proportion of rent for a flat or a house, wages paid to assistants, legal fees in respect to contracts, proportion of overseas travel expenses...

When I engaged a taxation consultant, I explained my organisation and asked whether she had any suggestions. 'That's fine,' she said. 'All I need is your Day Book and totals of extra income from investments and bank interest.'

The system works for me. I hope it works for you!

© Edel Wignell
Edel Wignell is a freelance writer, compiler and journalist. Her latest titles are Tying the Knot: Folk Tales of Love and Marriage from around the World and Tying the Knot: Teacher Resource Book for Years 6-9 (Phoenix Education).
This article was first published in Writers' Forum (USA).