Book Beat Babes

Book Beat Babes

Friday, October 18, 2013

Reality Check to Royalty Check

Welcome to Fridays at Book Beat Babes.  I’m Terri Morris and I will be blogging about the business side of writing to include taxes, technology, social media, records management, research, publicity, promotions and more.  Whether you are a seasoned writer (pass the salt) or a newbie to the wonderful world of writing and publishing, there is something here for you.  I look forward to spending Fridays with you and I hope that can I help you navigate the often murky waters and constantly changing currents of the business side of writing.

When most of us start out as writers we focus more on the craft of writing and, in too many cases, the fantasy that we’re going to make millions and millions of dollars with what we produce.  While it is true that the news has highlighted stories of writers who have done just that – made millions from their books – the majority of writers earn very little, or nothing at all, especially in the early years.  In fact, most writers give up after a few years because, guess what?  Writing is very hard work and for most writers it does not pay well.  In fact, writing often costs more than it earns, especially fiction writing.
                So why do it?
                For some of us, especially those who do become successful (and there are many ways to measure success), it is because writing is a passion and we just can’t walk away from it.  Then there are the writers who have truly figured out how to earn money and have a writing career, something you often see in non-fiction, web content writing and even with the so called ghost writers.  BUT, most people who flock to writing and writers conferences want to write fiction.  Some years back a survey was conducted that revealed that more people wanted to write a book than read one.  Think about that for awhile.
                Barbara Cartland, actually Dame Mary Barbara Hamilton Cartland and now deceased, was a romance writer in the 20th century who published more than 700 books.  She was an amazing woman and I met her at a romance readers’ conference in 1983 and she was indeed impressive, as is her biography.  An article about her appeared before I met her and she was reclining on a sofa as she dictated her books to her assistant who then typed them up.  Yes, this was before the personal computer and the electric typewriter was just becoming the latest technology.  She made it look easy and she sold millions of books.  I remember thinking, how difficult could it be?  I had read many of her books and especially towards the end of her writing career they began to sound more and more alike.  So how was she still selling so many books and why did it seem so easy for her.  Well, she had fame and connections long before she started writing romances.
                Remember that I said writing is hard work?  Even if you are famous and have well-oiled connections, writing is still hard work for somebody, even if that somebody is a ghost writer, or the assistant taking notes and then typing them up.  Most people don’t understand this when they first put pen to paper.  After all, many of us have read poorly written fiction and think to ourselves, “I can do better than that!”  We start to write, and in the beginning just like any endeavor or relationship, there is a honeymoon phase.  Its fun, it’s exciting, you get all tingling when you think about doing it and then you hit a wall.  So, you join a support group – no not AA, but close.  You’re determined to see this writing gig through but you need encouragement to keep going.  You meet people who have actually made it – and made money doing it – and you get excited all over again.  Months, even years pass and you still haven’t received your big break, or maybe you have self-published your written treasure to dismal results.  You might feel betrayed at this point and want to walk away from it all.  You might even feel a little (or a lot) misled.
                For those who don’t give up keep in mind that just because you don’t become an overnight sensation and even if you don’t make any money right away you still need to at least consider and review the potential tax consequences of your writing, especially if money does change hands.  The first question to ask and have answered is whether or not you are a business or a hobby and the answer to this question is fundamentally based on your intent to make a profit.  We will explore in future blogs the concept of what intent to make a profit means in terms of the US Federal Tax Code and why it is so important.    
                Writing, especially fiction writing, tends to be a solitary endeavor and it’s easy to hide away from the world when you’re actually writing.  However, once you start earning income from your writing there are intrusions into that world such as paying income taxes on those earnings, not to mention that you typically have to promote the book whether you follow a traditional publishing path or not.  All of these variables and more are important in determining your tax status as a business or a hobby.  Why is it so important?  Well, the tax consequences and benefits are significantly different based on your status in one of these two categories.
                So turning your reality check into a royalty check is within reach.  You just have to know the rules of the road and which roads to take.
                Next week we will start to explore the criteria used by the Internal Revenue Service (IRS) to determine if your writing efforts classify you as a business or a hobby for federal income tax purposes.

You can also follow me on my blog, Dear Writer – How’s Business? 

4 comments:

  1. Terri, That was a great post. Lots to consider there. I'm looking forward to more from you about the business side of writing!

    Morgan Mandel
    http://www.morganmandel.com

    ReplyDelete
  2. Wow! You have such great knowledge to share with us. I'm looking forward to more.
    DL Larson

    ReplyDelete
  3. looking foward to more from your well of experience.

    ReplyDelete

PLEASE COMMENT HERE.