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Don’t let this slip your mind. From the very beginning of any project where money is involved, do the due diligence, and learn the taxes in your area. Learn what you must to collect and pay sales tax, income tax, and business tax. 

Get a tax ID number. Get a business license. Find out whether you must pay your taxes quarterly, semi-annually, or annually. It makes a huge difference. And make sure you know where you must pay your taxes. Do you have to pay city taxes, county taxes, state taxes, or federal taxes; or all the above.

We use a rule of thumb at The Pyrateheart Press that works for us. We assume 50% of everything we earn will be taken by the tax man. This is the total over all the various tax entities we must pay here in California. In your state or area, it may be different. However, for us 50% is our benchmark. If we pay less than we keep the difference, but we haven’t found any other benchmark worth following.

Some say 30%. This often leaves out those irritating little fees you find yourself paying. Fees and the ultimate fines you will find yourself paying if you don’t file in the right place at the right time. This is a huge part of writing for hire or simply to be published.

Look at it like this, if you sell ten thousand books at $7.99 on Amazon the total is 79,900 dollars. Not a bad haul for a book. However, Amazon will keep 30% as a minimum. So, the $79,900 shrinks to $55,930. Now you take half of that for taxes and it becomes $27,965 take home for selling ten thousand books. 

Still not a bad haul. Do you pay the taxes at the end of the year? Doubtful. Most states and the IRS require you to file quarterly taxes if you make over a certain amount. You must – must – make sure you learn what your tax burden is. Otherwise, you will be hit with humongous fines at the end of the year. The tax man will get his – Period. Never forget that.

Say you turn everything over to an accountant to take care of. Let me be clear about this, it is still your responsibility and not your accountants. The IRS will not come after them for payment, they will come after you. Always make sure you know and understand the taxes you are responsible for.

Another note. Keep accounting books. Use an accounting software if you have the skills. Learn the skills if you don’t. Make sure you keep up to date records of every expense, every dollar you receive or spend. Writing is a business. Treat it like one and you will not be sorry. Besides, it looks good when you can print out a monthly report to see where your profits and losses were and what you actually spent your money on.

I’m Ross, The Editor-in-Chief at The Pyrateheart Press and I’m out.