For many years I sold books and collectible on eBay and Amazon. I was diligent about collecting and/or printing receipts for items and services I purchased for my business and I was stickler about tracking both expenses and income using a spreadsheet I designed and perfected over the years. I’d used Quickbooks when I owned or operated more complicated businesses but all of the trappings of that software simply weren’t necessary for a one woman, part time retail operation. The spreadsheet system worked just fine and it made tax time a breeze. I do use tax software so I was able to quickly fill in amounts by category as needed with just a glance at my spreadsheet.
I got completely out of the eBay business in early 2014. Life changed and there just wasn’t time to devote to it to keep it profitable as a viable extra income. At the same time though, I did start writing, something I’d always wanted to do and could do in 15 minute snippets here and there as I found a little time. I didn’t publish my first book until November of 2014 and, since I self published and did almost everything myself, I had very few expenses.
My first book, Relic, didn’t make me much in late 2014. Oh, it sold but I didn’t make close to enough to claim the income. Still, I combined my meager earnings as an author and the few expenses I incurred with my early year eBay earnings and expenses, declared the whole shooting match and called it done.
At the beginning of 2015 I was working on the sequel to Relic, ‘Busy Bees‘. I started a file folder for 2015 taxes and I dropped a receipt in it here and there. I didn’t bother to print everything or to start a spreadsheet because, I thought, how much could there possibly be?
Ha! Silly, silly me! I released six books in 2015. Along the way, I incurred lots of expenses including website fees, advertising costs, office supplies, art (covers, logos, banners, etc.) and much, much more. I also sold books. Not thousands of books but hundreds, certainly. And, all my books were in the Kindle select program so I also gained income from borrows and page reads. I didn’t make a lot in 2015 but I certainly made enough income and incurred enough expenses in the process that I should have been keeping track all along. Sadly, I wasn’t.
My wife and I started a commercial haunted house in 2015. Because we got a very late start – late, late August – due to factors far beyond our control, we had to work fast and furious for an October 2nd open. We threw receipt after receipt into a file folder and we tracked ticket sales. I promised to spreadsheet everything out over my holiday break so we’d be ready for tax season. It’s been a ‘nightmare’ reconciling everything, to say the least.
Being a published author is being a business person. We all need to act like business professionals when it comes to our finances and our tax liability. Please, by all means, take a few lessons from my mistakes:
- Keep all of your receipts: Keep store receipts and, if they don’t itemize what you bought, make notes on the back or attach a note. Print receipts for internet purchases.
- Track everything you buy on a simple spreadsheet: Record date, purchase price, a general idea of what you bought and who the vendor was.
- Download all of your earnings reports from each service where you sell your books: Record the amounts and dates paid on your simple spreadsheet.
- Retain emails from vendors that simply forward payments: Are you an Amazon affiliate? How about a Google Adsense affiliate? When they pay you, you get an email. You can usually download a report from them but their emails give you all of the payment information you need. Simply check with your bank for the actual payment date and record the vital information in your spreadsheet.
- Categorize your expenses: If you intend to do your taxes yourself, your tax software will want you to break out things like inventory costs (like books you pre-purchase to take to conferences and book fairs), expenses for supplies (like office supplies) and various other costs. As you spreadsheet out your expenses throughout the year, try to categorize them as your tax software will using a coded column you can sort by later.
I’m an author, not an accountant or a tax attorney. You certainly can’t go wrong tracking everything but, for specific tax questions, you should consult with a certified tax professional.