Common Tax Mistakes Authors Make
Feb 05, 2014
As you rush to complete your business tax returns and submit them by April 15, don’t get in such a hurry that you make mistakes. Before you send in that return, run through this list of common tax mistakes authors make:
1) Poor record keeping: Studies show that business success follows good record keeping. Without detailed records, you will not know if you are making a profit or a loss, nor will you know what is selling well. Be sure that you have a record of all book sales you have sold yourself, and sales taxes collected from the sales. Also be sure you have reports of royalties earned from your publisher.
2) Failure to count your inventory: It’s very important that you count your inventory at the end of the year so that your cost-of-goods calculations are correct. You may end up paying too much in taxes if you underestimate.
3) Incorrect tax deduction: An incorrect tax deduction can mean that you are paying too much in taxes or not enough. It can also cause you to get audited by the IRS. A good way to avoid errors is to use tax return preparation software, but even that is no guarantee you won’t make mistakes. The best thing to do is to go to the IRS website http://www.irs.gov and learn what deductions you are allowed to take, or you can have a tax professional assist you in what deductions you are entitled to.
4) Doing your own tax return: By publishing a book, you have now formed a business, and should consider getting professional help with your tax return. Center your attention on what you do best which is writing and selling your book, and let a tax expert do what they do best which is tax returns.