This post is part of my Business of Writing series. As part of this series, I discuss law and taxes, so it's important for you to remember that I'm neither a lawyer nor a tax professional. This is not advice -- it's my understanding and, in many cases, what I do and why. You should take this as the base to develop your own knowledge and understanding, or consult the appropriate professionals. Also, I live in the US, so am really only speaking to US law and the US tax code.
This will be a short post, but an important one. Picking the right tax professional can save you or cost you — a lot of money.
First thing to remember is that “tax professional” does not, necessarily, mean Accountant or CPA. Not all accountants understand taxes or do them regularly. You’re looking for a tax preparer — someone who knows the tax code inside and out, at least the parts that apply to your author small business.
You may find, depending on the size of your author business, that you want or need an accountant for other business matters. Who you choose for that may or may not be the same as your tax preparer. Finding both in one, assuming you need an accountant, is good, obviously, but here we’re going to talk only about the tax aspects.
The second thing to remember is that your taxes are different now than an individual’s. You have a business. Finding a tax professional for your business does not mean dropping a paper bag of receipts in the lap of whatever dude happens to be behind the desk at Walmart this tax season.
This is not a one-off, prepare the return and done thing. As a business owner, you should be creating an ongoing, multiyear relationship with your tax professional. You want someone who will do your taxes every year and be able to make recommendations based on their knowledge of your business’ past as well as projections about its future. This is because some tax decisions, which might save you a significant amount of money, have to be made at the beginning of the tax year.
So, you are looking for:
- A tax professional. Someone who understands and works with the tax code as their primary job.
- Moreover, a small business tax professional, not someone who specializes in personal taxes — neither are you interested in a specialist in big corporations.
- Preferably, and hardest, someone who does taxes for other authors, so they know the writing business.
- Someone you can work with for years, and throughout the year — so you can make an appointment and talk to them in August if there’s some significant change in your business.
If you’re a part of a local writer’s group, ask around of the more successful writer’s. They may have someone who meets the criteria.