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taxNotes for IRS Recordkeeping 101

By Deborah K. Frontiera

How many cookies can you “snitch” from the cookie jar before somebody notices? It’s tricky knowing how much you can deduct for your writing business without sending “red flags” to the IRS. Deborah K. Frontiera’s daughter, a CPA and her “tax expert”, has taught her a lot over the years about what records to keep, what you can deduct and how much, when you need to fill out 1099s, etc. She’ll share these tips on how to keep all your ducks in a row with interested UPPAA members.

BIO: Deborah K. Frontiera has been a member of UPPAA for many years. While she does not live in the U.P. full time (she still lives in Houston, TX 9 months of the year) that’s where her heart is. Two of her books are entirely U.P. and her book of nature poems is “mostly” U.P. The rest all have at least a “hint” somewhere. She files sales tax in both Michigan and Texas. She’s been UPPAA’s newsletter editor for several years.

Business Name:

Simple partnership with DBA (Doing Business As) or LLC—your choice, but have One of them. Have a separate checking account with your business name on it.

Business Liability Insurance—if you can afford it, it is a good thing to have. The “bigger” you are, the more necessary.

Income Categories:

If you do a lot of little things, or you want to see where the most/least of your business income is coming from, then do this. At the end of the year, you can see what you want to work on. Categories can include:

  • Wholesale sales
  • Retail sales
  • Honorariums (from speaking engagements)
  • Payment for articles sold to publications
  • Royalties received
  • Services: if you do freelance editing, critiquing
  • “Work for Hire” type things—other than editing and critiquing
  • Tutoring
  • ???? depends on you

Inventory:

Have a column for each item/title you sell or distribute. Record the number of each at the beginning of the year.  Columns across the form can include:

  • Date
  • Sent to
  • Received from
  • Title/item
  • Title/item

Total at the end of the year and hopefully reconcile with what you had at the beginning. You’ll also need to figure the retail value of your inventory and the “cost” of what you have on hand.

Decuctions:

Columns may include:

  • Returns/allowances/discounts
  • Cost of sales/production
  • Advertising
  • Bank fees
  • Computer expenses and supplies
  • Contributions
  • Internet access
  • Interest expense
  • Meals
  • Membership dues and subscriptions
  • Mileage (at end of year)
  • Office supplies
  • Parking and tolls
  • Postage and p.o. box rent
  • Printing and reproduction
  • Supplies other
  • Taxes
  • Trade show
  • Travel (motel, air fare, bus tickets, etc.)
  • Telephone
  • Utilities
  • Insurance
  • Fees/permits
  • Legal fees
  • Royalties paid out

Damaged, lost, stolen books are reported under Returns/Discounts/Allowances at their full retail price! You were “deprived of any income” from that book. Books given to organizations for promotion/advertising/review are deducted under “advertising” or “contributions” also with full retail price. Pay Pal fees, credit card swipe fees, etc. are “bank fees”.

Home Office Expenses:

Mortgage payment, home insurance, utilities (water, electric, home security, heat), telephone, internet, property taxes

Figure the total square feet in your home. Figure the square footage of your office area—separate room or “separated space” in another room. Office Sq. Ft./divided by total = percent you use for all. Total of each expense for year X % = deduction for that part.

Milage:

A notebook for clip board IN YOUR CAR/TRUCK should include these columns:

  • Date
  • Destination
  • Odometer beginning
  • Odometer ending
  • Total miles for that trip

Total all the miles for a particular calendar year and multiply times the rate the IRS is allowing for that year. (2015 was around $ .58)

This is MUCH easier than keeping track of all the individual purchases of gas, oil changes, repairs, insurance, etc.

Retail:

I YOU  receive the money from the customer, it is a  retail sale and you MUST report/collect sales tax. GET appropriate forms from your state and KEEP IT WITH YOU whenever you do retail sales.

Keep it simple: have a little sign displayed that reads: Sales Tax Included in the Price. Round your book prices to the nearest dollar—keeps from having to give out pennies, nickels and dimes and quarters.

At the end of a sale, take total of money brought in. Total X .94 = Retail total. Difference between that and the total is the tax you collected. (MI is 6%, hence the .94 above, or whatever the rate for another state). Track and file monthly, quarterly, yearly according to the requirements of a particular state.

Discounts: If your retail price is $17.95, and you decide to sell books at a festival for $15, then 2.95 X number sold = total discounts and you put the amount in the appropriate column of your expenses.

Wholesale:

A book store, distributor, gift shop, etc. is the entity taking in the money, the amount you receive is a percentage of the price: this is a WHOLESLAE and you do NOT collect or report sales tax.

To 1099 or not to 1099:

If you pay over $600 to any one person or vendor for services, fill out a 1099 for those entities at the end of a calendar.

E.I. N. Vs. Social Security Number:

If you are still pretty small, you can continue to use just your social security number. If you begin to have substantial income from your small writing business, there are tax advantages in having an Employer Identification Number (EIN).

Cautions:

In all the years I’ve been selling at festivals, I’ve only been asked ONCE to show my Sales Tax form. But I met a vendor in Texas who said he didn’t have one, was asked to show it and was FINED $250.00 for not having one on site!

The odds of being audited are small—because we are all not small businesses but tiny ones, in IRS terms and not worth their time—but it is possible to be selected randomly. If you get audited: Make sure you have receipts for EVERYTHING you claimed as a deduction for that calendar year.

Big Red Flag:

LARGE losses several years in a row—out of proportion to your income.

 

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Judith Briles, The Book Shepherd

Judith Briles, The Book Shepherd

Upper Peninsula Publishers & Authors Association
For Immediate Release…
Contact: Tyler Tichelaar
(906) 226-1543
President@UPPAA.org
http://www.UPPAA.org

U.P. Publishers & Authors Association Holds 19th Annual Conference: Publishing & Book Marketing Industry to Be Explored

MARQUETTE, MI (May 15, 2016) – In its constant commitment to informing regional authors and publishers of the latest changes in the publishing world and offering effective marketing and writing strategies, the Upper Peninsula Publishers & Authors Association (UPPAA) will hold its 19th Annual Conference on Saturday, June 18th in Marquette at the Peter White Public Library from 10:00 a.m. to 5:00 p.m.

As always, this year’s conference will cover a variety of topics relevant to writing, publishing, and marketing, and it will be of interest to beginning writers as well as seasoned, published authors.

This year’s keynote speaker is Dr. Judith Briles. Known as “The Book Shepherd,” Briles is a publishing expert who guides others in turning their book concept into a successful reality. Judith is the past president of several publishing associates and has chaired many conferences, including the annual AuthorU Extravaganza. She is the author of eight books, including her latest The CrowdFunding Guide for Authors & Writers. In addition, she has won numerous awards, including the Indie Excellence Award, International Book Award, and Ippy Award.

Briles’ keynote speech will be titled “Creating Confidence as a Writer and Author.” In addition, she will be presenting two afternoon sessions: “Avoid the 7 Deadly Sins Authors Commit in Book Publishing Today” and “If Publishing Is in Your Midst…What Option Is for You and Your Book.”

Other sessions to be held are “Book Selling Across the UP,” which will feature a panel composed of Larry Buege of Harvey and author of the Chogan Native American series; Lloyd Wescoat of Copper Harbor, owner of Grandpa’s Barn, and co-owner of Mudminnow Press; and Minnesota writer Aimeé Bisonette, author of North Woods Girl. Bisonette, who is also a lawyer, will additionally present “Legal Rights and Responsibilities of Authors.” Helen Haskell Remien of Ishpeming and author of Ebb & Flow will present “In Praise of the Handcrafted Life: Writing as Process.” Finally, Deborah Frontiera, of Lake Linden and Houston, TX, and author of Living on Sisu, will present “IRS Record Keeping 101 for Authors.”

In addition, there will be a business meeting, a catered lunch, a social activity, and a book collection taken up for Alger County Kiwanis’ annual auction.

The general public may attend the meeting for a $10 registration fee. UPPAA members attend free of charge. Space is limited, so advanced registration is recommended. Membership details, benefits, and registration are available online at http://www.uppaa.org. A catered deli lunch is available for $8 per person with advance reservations required. For registration by mail, mail membership secretary Jenifer Brady, 431 Business 141 North, Coleman, WI 54112 or contact her at uppaa.membership@gmail.com or (920) 897-4416. Registrations online or by mail must be received no later than June 10.

The day prior to the conference, Friday, June 17, a U.P. Book Market will also be held on the lawn of the Peter White Public Library from 10 a.m. to 4 p.m. More than fifteen U.P. authors will be selling their books, and the public is invited to meet local authors and purchase autographed copies of their books. Activities for children will also be held.

Established in 1998 to support authors and publishers who live in or write about Michigan’s Upper Peninsula, UPPAA is a Michigan nonprofit association with over 75 members. Over 100 member books are posted on the organization’s website at http://www.uppaa.org. UPPAA welcomes membership and participation from anyone interested in writing and publishing books.

-END-

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Nicole Fende, author of How to be a Finance Rock Star

Nicole Fende, author of How to be a Finance Rock Star

Self-publishing can be a great way to bring your book to market. Done right it can generate a modest profit (sometimes even before you publish). Done wrong it can be one big money pit. Learn some easy to implement ways to get your book to pay for itself. Presented by self-published author and small business finance expert Nicole Fende, a.k.a. The Numbers Whisperer ™.

Nicole’s presentation was recorded live at the UPPAA 2014 Spring conference.

Click here to play the presentation using the Bandcamp Player

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Tyler R. Tichelaar

Tyler R. Tichelaar

Notes from Tyler R. Tichelaar‘s presentation at the Novelists Panel from the UPPAA 2014 Spring Conference

Plot and Character are equally tied together in creating a great novel. Neither one is superior to the other, while the Point of View, although perhaps not quite as important, is integral to both informing the reader about the characters, whether first or third person, as well as in its ability to advance the plot, which determines what the characters will or will not know about events and may or may not allow the reader to know more than the characters so the reader can often guess or have foreshadowing of where the plot is going.

Second rate authors of fiction usually make one of two errors:

  1. They write a book about a character that wanders all over the place and may be entertaining but the reader is left continually wondering “Where is this going?” Such writers tend to be writers, but not novelists.
  2. They write a plot-driven novel in which the characters lack development, and consequently, we can all guess what is going to happen. Terry Brooks, author of The Sword of Shannara, is one such author, and this fault tends to be more common among writers of “formulaic” novels, especially fantasy and science fiction, as well as crime and thriller type stories, although of course there are plenty of exceptions.

(more…)

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