The beginning of a new year means that it is time to begin working on 2010 taxes. When I first began writing to make money, I attended a seminar that gave some tax advice for writers. I also learned several valuable tax tips when, for a short time, I sold Mary Kay. It may sound funny, but my Mary Kay leader was a whiz at showing us how to organize tax materials and maximize write-offs.
This is how I do it:
1) This process begins with going through all of my mounds of papers that I keep in my office/dining room. Although I try and keep tax stuff semi-organized throughout the year, it never fails that I find some stray receipts when I carefully go through every piece of paper.
2) I divide all of this paperwork up by the month.
3) All of the paperwork goes into tweve large manilla envelopes, labeled by month.
4) For each month I add up totals of:
Books sold by state (we border Virginia, so I'm often selling books in another state)
State sales tax
Wholesale books I purchase from my publisher
*I put a sheet of paper with these totals inside of each envelope
5) I write each month's summary on the back of the month's envelope. This summary includes:
Money Collected minus Expenses
State Sales Tax
6) Finally, I do a summary sheet for the year. This shows yearly totals for the 3 categories shown above.
Now, the next part is is easy. My husband farms, which leads to a very complicated tax return. for that reason, our acountant comes to our house to sit with us and do our return. The envelope system is one that I have used for the past three years. It seems to work for us and our accountant. After our tax return has been file, I stack the envelopes and keep them in the attic. Any of you other writers have tax tips?