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I've been writing like mad lately and the day I finally start to send out some short stories or self publish an anthology is fast approaching. After reading in the recent edition of Writing Magazine (Apr 2014) the article on tax and and accounts, I'm wonder when I should take the plunge and set up as self employed.
I'm already paying out for things like magazine subscriptions, reference books, web hosting that all relate to my writing, but I've been doing it from my own pocket rather than through a self employed business. Having to move all that across and record it all as expenses feels like a large task and very daunting. At the moment, I have a week off work, and although I was planning on raising the daily word count, I have to admit that it would be the perfect time to deal with boring paperwork and essential future preparation.
The thing is, I'm not sure if it would be too soon.
I've not finished editing, formatting or even getting an eBook cover done for anything I intend to sell, and I have no target date set for trying to sell the first story. However, I'm aware that any artwork I pay for the cover and any marketing I do should go through the business to offset future profit.
Feeling a little lost, buried under information that all feels relevant and more than a little scared at the prospect of things marked 'business' and 'tax'.
Any advice for someone just starting out in this scary world?
Comments
2. Maintain your obvious boundless enthusiasm
3. Send out your short stories etc. to potential publishers
4. Keep the day job until you at least have a good indication that your writing will support you.
Unless I've misinterpreted what I've read (highly likely), if I write a story and sell it, I have to declare that I've done so as I've created something with the sole purpose of generating income from it. Therefore, I have to put it through a company with all the relevant accounting paperwork.
It's trying to run the self employed at the same time as the day job that's the scary part.
For reference:
I was intending on sending short stories to magazines, selling collections on Amazon KDP and similar services. The intention was to get some feedback, a few readers and generate interest in larger projects as I work on them. I have outlines and a start on two novels, but I wanted to work on getting my name out there, however small, before setting them free.
It's not all that easy to place short stories, a great many publications don't actually pay for submissions, especially on-line mags and even those that pay are pretty miserly with their rewards.
I'm sure that other people on this forum will share their experiences with you.
Keep writing, start subbing, stop worrying and good luck.
I've never thought of writing in terms of a business. It's more a hobby that brings in small amounts on a very infrequent basis. I think that to produce a business plan would only occur to me if I suddenly became a household name, earning vast amounts of money! What you're suggesting, Laevus, seems a lot of trouble to go to for little gain, but then I'm not a business person; I'm a fuzzy Creative Head.
I've had a couple of short story collections on kindle for a while. I earn 35p a copy. As an unknown writer you'd have to price a collection low. Have you seen how many self-published books are out there?
Magazines often use the same batch of writers for their stories. It could be a while before you 'get in'. First of all it may be an idea to get some credibility behind you by getting placed in competitions.
I subscribe to WM and occasionally buy Writers' Forum. I pay out the odd £5 to enter writing competitions. Occasionally I win something; my biggest win was £200, probably less than I've paid out overall.
It would be lovely to think of this as a way of earning a regular income, but I doubt that there's anyone here on TB who can make that claim.
For now, my advice would be to carry on writing, not worry about forms and test the waters by sending out your work. Look on the Internet for writing opportunities.
You can carry losses forward for a certain amount of time if you set it up as a business, but I'm not sure how you do that and whether the paperwork etc would be worth it.
So basically, what the others said. Don't waste your writing time worrying about it yet.
It's strange, in my head the self employed route makes perfect sense, but as soon as I look at the info on declaring extra income and tax returns, my brain turns to mush.
From the sound of it, it's not worth worrying about until I start making sales rather than needing to set it up in advance. Also nice to know there's another way of keeping it above board without having to go down the route of self employed just yet, thanks for that Heather.
Thanks for the comments.
If only... ~:>
If you register before earning anything they won't let you claim against your day job tax for expenses, apparently it's considered a hobby until you make anything so setting it up in advance won't gain you anything.
The tax forms aren't really that complicated. As long as you keep proper records and read each question carefully yout tax return shouldn't take more than an hour.
I enter my expenditure as it happens and file the invoice. Same with income. I'd say that it takes me longer to faff around with my password to access the HMRC pages than to do the return. All the figures are on that spreadsheet, I just have to enter them.
It's as hard as you want to make it. Simon Whaley is running a series of articles on this topic in WM - it's very basic, but that's all it needs to be.
Unlike Laevus, who at the moment isn't making anything, though that will hopefully change in the future...
You don't need an accountant to do it for you - but it does depend how complicated one's finances are. Mine are straightforward, so I do my own bits and bobs.
http://www.hmrc.gov.uk/startingup/bus_sup.htm
http://www.hmrc.gov.uk/startingup/help-support.htm
I don't think I'd have any trouble dealing with my own accounts when I get started, it was more the order that I needed to set things up in. First order will be getting things finished and then getting it out the door.
By all means keep a spreadsheet account of all your expenditure, just don't become dejected upon realising how much money 'disappears' in telephone, postage, travel and material sourcing.
First stage of independence could be declaring your 'hobby' as a self-employed occupation in your own name. That enables all receipts, even milk and coffee, to be set against payments received for articles etc., for which you have been fortunate to gain payment.
However, formalising an actual self-employed status will also incur necessary contributions toward National Health Insurance and other annual outgoings to justify claim of your writing career being a legitimate business.
You may imagine how such expense will only burden your outgoing payments before sufficient remuneration is generated to balance that spreadsheet record.
At the moment, it seems best to concentrate on juggling your words into readable compilations. Enjoy your creations' and good luck in finding others wishing to pay money for the pleasure of sharing your imagination.
Keep your faith and savour the journey,
all the best with every enterprise that attracts your attention,
Jan.
I've been self-employed for the day job for five years, and I quickly added my writing income (mainly competition wins at the time) as another income stream. It is easy to keep track of your expenses once you get into the habit. As others have said a simple spreadsheet should be enough. I find it useful to look at the categories used by HMRC and allocate the expenses accordingly as they come in, rather than trying to do it all at the end when you're filing the tax return.
You definitely don't need to set up a limited company at this early stage!
Just be aware of the difference between avoidance and evasion, under tax laws.
There's a lot to wade through on the HMRC website, but the rules are (mostly) clearly explained. If you don't understand something, the helpline is usually pretty good. In my experience you'll probably be waiting to speak to somebody for about half an hour but they can generally sort out your query there and then.
As accountants tend to charge according to your earnings, in my experience they tend not to be too interested until your writing brings in an income. However, doing simple book-keeping isn't usually as difficult as it looks. I'd make sure you set aside a set time each month to keep everything up-to-date otherwise it can become another excuse not to get on with actually writing.
1. You are on the verge of being a higher rate taxpayer (HRT) from your day job if so you need to be careful you don't stray into this by your writing earnings but again not a huge issue unless u start earning big bucks from writing.
2. Again if ur close to earning £50k from yr day job any writing earnings could be added to your overall income and reduce yr entitlement to family allowance thankfully not many of us need to worry about that!!