7 Things to Know When Setting Up Your Writing Business
- Is this a business or a hobby? If you are a business, you will not only focus on creating fantastic books, but making money, too. A business makes money. A hobby may or may not make money—the focus of a hobby is the joy of the experience. It is imperative that an author know into which category he/she falls.
- Have a separate bank account for your writing business. Trust me, it will save you countless headaches at tax time! All business expenditures will be written of this account and all business income will be deposited in this account. This is account is a picture, at any given time, of how well or badly your writing business is doing.
- Create a business plan. Not one of those long, drawn out 50 page documents (unless you just love doing that kind of plan), but something simple that reflects what you want from your writing career and how you plan to get it.
- A budget is crucial. Know what expenditures must be supported by your writing business. If you know where your money is going, you’ll be able to plan ahead, realistically for your expenses. Remember, you won’t show a profit, let alone break even, until you’ve earned back all the money you’ve spent in pursuing your writing career. Sobering thought, isn’t it?
- Filing systems can save your life! The system doesn’t have to be elaborate, it just needs to be a system you understand AND use. As the old saying goes: if you can’t retrieve the information you need within two minutes, that information is useless to you. An organized file system in an invaluable asset to any writer.
- Taxes. Need I say more? But I will. Keep meticulous tax records. Have EIN number. Know that you’ll have to pay in taxes because none are being withheld from your royalties. A schedule C is imperative if you’re a sole proprietorship. Should you incorporate? If so, what kind of corporation—S Corp, LLC? Don’t know what I’m talking about? Then get with a CPA or a serious tax book and learn. Many a writer has had their hard earn cash appropriated by the IRS because of not knowing how to handle their taxes for their writing business.
- A Contact Management system is a must for writers. Whether your list is small or large, having a system by which you contact your loyal fans can be the difference between a bad launch and a fantastic launch. Just FYI: your list is the golden key to your book’s success. Don’t treat it lightly!