Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts

Sunday, January 15, 2023

In The Thick

There is a big difference between being "in the thick of it" and "in the weeds"....unless one is doing ones American taxes, and that's what I am talking about.

Late last year, I wrote about a professional author's responsibility to send out 1099-NEC forms to non-employees, and to send a cover form, the 1096, with the red copy to the IRS. Before 2021, the forms were 1099-MISCs. Now, the 1099-MISC is to declare any sum at all paid to a lawyer (for help with ones business).

Forms 1096 with forms 1099-NEC have to be filed by January 31st. It looks like the 1099-MISCs might have an extra month, but why procrastinate and add to ones mailing expenses? I assume that one is not e-filing.

I checked the Author's Guild site, and there is a video advising authors when to create an LLC (limited liability company) or S Corp.

https://authorsguild.org/resource/forming-an-entity-when-should-authors-create-an-llc-or-s-corp/

Assuming that those reading the alien romances blog are either writing-business owners who sell their works wherever they can, including on social media or e-commerce sites, or are avid readers who may sell on physical copies of their book collections (in hard copy form, of course per the first sale doctrine) I should like to point to Ryan Stegenga, legal blogger for the Gordon Law Group who published a crash course this last week for anyone selling "stuff" on Facebook, Etsy, or Ebay.

He also presents a helpful (and ad-free) video on YouTube
 
For those who prefer text, the advice is here: 

As a copyright enthusiast, I should like to point out that the first sale doctrine does not apply to e-books. E-books may not be copied and copies sold on, since copyright does not permit anyone other than the author and his/her/their publishers or licensees to create a copy of works.

EBay has a long history of allowing private pirates to sell in-copyright novels as ebooks, repeatedly selling the same e-book over and over again, but that is a topic for another day.

Back to the taxes. It appears that Facebook and EBay will send you 1099-MISCs or 1099-Ks for you to report on your own tax return (the latter only if you sell quite a massive amount.) They will report this activity with the 1096 to the IRS, so if your tax return does not match what is sent in by the platform about you, you might face questions.

If you ever wondered about the recent uproar about every transaction over $600 suddenly being reportable, (it has been postponed), online commerce on Facebook, Etsy, and EBay was part of the discussion.

Happy filing!

All the best,


Rowena Cherry 
SPACE SNARK™ 
EPIC Award winner, Friend of ePublishing for Crazy Tuesday 

Sunday, October 17, 2021

Thinking Taxes

Not all writers are Planners and Plotters. Some are Pantzers and some are Puzzlers. However, as some of us prepare for NaNoWriMo (National Novel Writing Month), early October is also a good time to prepare for taxes.

Why is that?

If you have an account with a stockbroker such as Charles Schwab or Fidelity (to name two at random), they will have to send you a 1099 Composite. The later in the year you sell stocks, the later in the following year you will have to wait for them to finish their corrections.  Take gains and losses in October if you want to file early in the new year.

Also, if the current Administration gets everything they want, Capital Gains taxes could be assessed at whatever the new rate is retroactively on every trade since September 12th.

If you have any worthless stock that is really unlikely to rise from the ashes, and that you cannot sell any more, you can call your broker and have it taken out of your account. The removal of the stock will not be documented by your broker on your 1099 Composite, so you will have to document its disappearing act (with a before and after set of statements) on your own tax return.  Since you need the "after" month, you don't want to do it in December.

If you are a successful writer on Medicare, or likely to be eligible for Medicare in the next couple of years, know that your total earnings (including capital gains on stocks) could affect how much Medicare claws back from you to pay for your Part B two years after your successful year.  So, you make a lot in 2021, and you pay for it in 2023.

Think about that, because writing is a volatile business.

Don't forget to pay your self-employment taxes.  If that is news to you, an old article by Writers Weekly has a good guide geared to writers.


Bear in mind, although a writer can deduct a business meal at a convention or book signing, one must be careful not to claim that a delightful celebratory night on the town at a restaurant with writer friends may not qualify as a business dinner.

Also, claiming all the running expenses of a room in your home (home office) tends to arouse suspicion. One can only claim for a room used exclusively for the business purpose, and it is wise to document that. Keep a Writers Log (Captain Kirk-like), every day, marking start time, break time, finish time. It can be ledger form, or a word document.  You can also use your daily log to note when you called your editor or received a call from your editor, and what you promised.... and when you drove to the post office to mail your manuscript. and when you got back.  You can deduct travel time and postage. It would help to buy a splash of gas for further proof  (scan and keep the gas receipt).

Know that gifts to charities that sell fund-raising lottery tickets are not deductible as gifts to charities. You got something of value, namely the theoretical chance of winning a Corvette or whatever.  You thought the lottery ticket purchases were deductible. The charity blurb might have suggested that, but the IRS might not agree, and the IRS is likely to be really scraping the proverbial bottom of the barrel.

However, you can give at least $10,000 to charity and be able to deduct it, as long as you can produce receipts to prove that you gave what you say to a legitimate charity, and received no benefits in return. 

For anyone terribly disappointed that there is nothing about copyright today, Andrew H. Bart and colleagues at Jenner and Block LLP have a really great article about the scope of copyright in the USA

https://www.lexology.com/library/detail.aspx?g=8f4998c3-9a4c-4cb0-99dc-39f7831afd1e


All the best,
Rowena Cherry 

Tuesday, March 20, 2018

Business Model of Writers In A Changing World Part 3 - Choosing A Computer for Novel Writing

Business Model of Writers In A Changing World
Part 3
Choosing A Computer for Novel Writing
by
Jacqueline Lichtenberg 

Previous Parts to the Business Model of Writers series are:
http://aliendjinnromances.blogspot.com/2013/01/business-model-of-writers-in-changing.html

http://aliendjinnromances.blogspot.com/2013/03/business-model-of-writers-in-changing.html

Most computer salesmen will give bad advice about which computer, and which configuration you need for writing novels.

Most computer salesmen have never written a novel, and those who have did not sell their novel to a major publisher, have it go from hardcover to paperback, to re-issue to audiobook, to self-published version, and back to sales by a reputable publisher, and on to a videogame.

Most computer salesmen (and women, you know) have no clue at all what is involved in a career in "the arts." 

Most computer salespersons are convinced they work long hours for little reward.  Which is, in fact, true, but reveals a clueless state.

Even middle-good selling books do not make more than minimum wage for the writer.  In today's changing world where minimum wage is increasing, the purchasing power of the dollar (or whatever currency you get paid in) is decreasing faster than minimum wage is increasing, the writer's initial compensation (advance against royalties) is not increasing.

However, the demands in writer's working time and price of acceptable equipment to output text to a publisher, is increasing.

Although computers make rewriting take far less than a third of the time it took when you had to re-type every page over and over (often 5 drafts), it still takes time to create and polish the words that tell your story.

The price of paperback books has increased while the percent of cover price paid to the writer has stayed pretty much stationary.  So yes, writers get a little more per book sold.  And writers get a larger percent per e-book sold.  However, the number of titles published per year (in all forms) has increased.  Nobody reads everything in a given field anymore (least of all in Romance, or Science Fiction Romance).

Books compete with Netflix and other streaming sources for the entertainment-hour (and buck) -- there are more readers but they are more selective, and tend to prioritize FREE e-books (Kindle etc.) or the 99C deals offered by writers, direct.

So the number of readers per title decreases as the number of books sold per year increases.  That means writer's compensation decreases -- you have to work harder, be more productive, and market agressively just to stay even.

Yes, the price of computing power has decreased, but a computer that can handle a writer doing a Series still costs a lot more than a manual typewriter cost in the 1950's in hours-worked. 

Inflation changes the number of dollars involved, but not the number of beads of sweat.

So how does a writer choose a computer to do "only word processing" in order to write books?

Most clerks understand "word processing" does not require much computer capacity, heft or memory.  They will sell you a student's laptop.

Yes, you can survive that career stage where all you can afford is a student version laptop, maybe a "refurbished" one.  Most successful writers today started on the equivalent of that. 

If you are forced to buy a minimal computer, you will have to pay extra for a cloud subscription such as Carbonite or Dropbox (I use both) or Apple's iCloud or Microsoft's.

We have learned not to trust the hardware on our desks as we trusted the stacks of paper boxes in our garages.  Yes, many writers have lost "everything" to a garage fire or flood. But it was rare.  If the books had been printed, there was a way to get fans to hunt for used copies, then copy-type the whole thing onto paper again (which has been done!).

Today, a paper copy is scanned and OCR'd, and you are good to go electronically, again.  All my older titles were made electronic that way -- by the unstinting efforts of a fan.

Those starting out today have to think long-term.  Don't think "write this novel" -- but "When the 14th Book in this series is published, how will I supply the previous ones to the new market which uses totally different software?" 

Paper was paper, and typewriter fonts were just typewriter fonts (Courier, that's it.)  But today writers work in a "changing world" as this series title suggests.

That is not a "changed world" but a "changing world." 

Plan on format inaccessibility, the need to spend time reformatting, finding software that can read the old stuff and create something the new stuff can read, then more time correcting typos and resisting the urge to rewrite.

In other words, a writer's career is punctuated with doing over again what has been completed and left behind forever.

There is no such thing as "finishing" a novel.

Once that idea has taken root in your vision of the future of your career, you are equiped to choose a computer to write your next novel with.

The choice has to arise from these considerations:

1) store clerks don't understand that novels must be rewritten and previous versions (5-10) kept, character and place notes kept, versions from various publishers reissuing kept, -- when you say "word processing" they think "term paper writing" at the most.  Nothing could be further from the truth!

2) you can't afford what you really need -- and very likely they don't make it yet.

3) In the commercial marketplace, there is a difference between equipment (from chainsaws and snowblowers to computers) made for "home use" and what is manufactured and sold to businesses.  Business machines cost a lot (more than a lot) more than stuff made for hobbyists, students, and grandma.  But they last longer -- long enough to make up for the price difference, and more.

4) there is no way to estimate what you will need during the useful life of a computer.  If your career takes off, you will wear your computer out long before its time, but be able to buy another.  That's fine if you've been paying for bakup in various "cloud" spaces.

5) if your career does not take off immediately, you must keep the ever-more-obsolete computer running because you can't invest more in equipment

6) the new tax law (for 2018) is supposed to let you deduct the cost of new equipment in the year you buy it -- problem is you can deduct it against what you earn that year, and publishers do not pay on time (they just don't - it is part of their business model.) 

7) the computer will die, just quit, eventually.  Home office equipment usually lasts 3-4 years (by design), and today the software field makes 4 year old programs too obsolete to use. 

So how do you make this decision of what to buy?

You want to avoid buying more than you need. 

You want to avoid buying less than you need (a career catastrophe caused by yourself). 

You can't afford what you need.

You have no clue what you need.

Nobody has a clue what you really need, least of all the experts in computers.

In other words, it's pretty much like buying a car or a house -- mission-critical but sans knowledge of what the mission is.

So what do you do? 

The truth is that you can't afford what you need because the profit margin your business model produces is not sufficient to cover the cost of producing the product.  This is true for all but the tiny percentage of writers who go to the top of the charts -- and even then, it usually doesn't last a lifetime.  Monetizing your hard work over decades takes preserving that hard work in a form that can be re-sold and re-issued.  This is not a problem specific to writing.  You find exactly the same business model problem in all "The Arts." 

I've been writing novels on computers since before there was such a thing as Microsoft Windows, or its predecessor "Presentation Manager."  And I've struggled (with massive help from fans) with re-issue issues on every title.

I learned my solution to this impenetrable conundrum of a problem from my first typewriter repairman.

I was just starting to try to sell short stories.  I went to a used typewriter store, asked for a machine to write books on, and bought a nice one.  I wore it out.  I went back and bought another, which I had to take back for repairs several times a year. Became buddies with the repairman in the back of the store.

A couple years into this routine, the guy hands me back my machine and asks, "What in the world are you DOING to these typewriters?" 

Blink.  Blink,blink. "But I told you, writing books."

6-8 hours a day, typing 80-100 words per minute, when copying text. 

THAT is what secretaries in big offices do, not what salesmen envision writers do. 

So he says, "What you really need is an IBM." And he pointed me to a monsterous gray hulk he had refurbished.  I bought it.  Wore it out a few times, had it repaired, bought another.  Eventually, I was able to afford the new IBM and an on-site service contract, but I wore that out, too.

Many years later, I saw a fellow -- a big hearted guy -- who had a chain saw in his garage. Came a big storm that downed trees on his street, so he went to help the neighborhood guys and electric company linemen chop trees and clear the roads.  His chain saw broke.  It was almost new, but it wore out.  He asked the linemen.  They said it looked the same as theirs on the outside but was made chintzy inside. 

So this marketing ploy is still in play.

What they sell mass-market to homeowners and students LOOKS the same on the outside, but inside it is different from what they sell to professionals.  This holds in every type of product line where I've tested it, including now, computers.

In this new, still changing, world, though, box-makers of computers expect businesses to have cloud backup, etc etc, and consider desktop equipment a "consumer staple" not an investment in infrastructure. 

Computers, even desktops, are like phones now -- 3-years and it breaks.  The limit is designed in. 

This year, I had a Dell business grade desktop break down, and it didn't quite make 10 years as the previous Dell Desktop I had went.  In fact, I gave away the old Dell Desktop still in working order after 10 years.  This one, an even higher top-of-the-line went after 8 years, or so.

So I am not recommending Dell business computers anymore.

Each time you have to buy a computer, look around for the business that puts the most wear and tear on the hardware in the least amount of time, and uses the most capacity.

Store clerks hear "word processing" and sell you the LEAST rugged, lowest capacity hardware they have in stock. 

But the truth is, writing FOR A LIVING is not the same as writing letters to family and an occasional student paper.

The "change" in the world that has forced a change in the writer's business model is the shift from typewriter (a 20 year investment) to computer (a 3 year consumable tool). 

What you need to find each time you must shop for office equipment is the MOST rugged, highest capacity, fastest, smartest, top of the line business office tool you can possibly get.

Once you've found what the "real" high-productivity, mission-critical businesses use, then be sure to get the version that has the biggest harddrive, the most memory, and the fastest processors.  Even if you must start your career with "refurbished" computers, pick the ones used in high-volume offices (not your Doctor's front desk).

What you are doing, as a novel writer, is more demanding of your equipment than what the worker-bees in office cubicles do.  It more closely resembles what Gamers do, or perhaps what Videogame Producers and animators do.

Look at the equipment used by Hollywood post-production companies -- that is the equipment that can stand up under the pounding it takes to produce a novel.

But even so, you still need cloud subscription backup as well as your own external harddrive backup device.  Either of those could just POOF disappear with all your data without notice.  Lawsuits and apologies, even cash remuneration won't replace novel manuscripts. 

You can't afford what you really need, so create a "make-do" situation with a solid, well thought through, plan for the upgrade your first Advance Payment will finance.

For years to come, most of what you make will go to equipment upgrades, publicity trips, and many expenses that are not deductible. 

You need to order computers online, from the manufacturer, on the website page reserved for businesses not home-users.

Watch the world as it evolves for where the heaviest usage of computing power moves after it leaves Hollywood post-production studios.  That is where you will find the equipment it takes to create novels, and keep on creating without losing and doing over. 

Only a writer understands what novel writing entails relative to what is involved in, say, Term Papers. 

You can "get away with" using bottom-of-the-line equipment for years, but when you run the figures for your business, you will find the amount of time and energy you spend keeping your equipment functioning grows over time.  If you somehow swing top-of-the-line new equipment, you suddenly find the amount of time you can devote to word-creation triples or better.

This is your profit margin.  Calculate it.  Then decide if you want to "be a writer." 

Jacqueline Lichtenberg
http://jacquelinelichtenberg.com