Why Should I Care About Business? by Pepper O’Neal
I recently mentioned to an author friend that I was teaching a class on the business end of writing, and his comment was, “Why? Why would authors care about that stuff when all we want to do is write?” That’s actually a very good question, so I’ll tell you what I told him.
Unfortunately, when an author sells his or her first book, they soon discover that having a writing career involves a lot more than just being able to write. When I sold my first novella, Love Potion No. 2-14, in 2011 to an ebook publisher, I was thrilled. After all those years of hard work, I was finally going to be published in fiction. I’d been published in non-fiction for years, but fiction was my first love. And I was still dancing on the ceiling when I got the contract.
Now I didn’t know anyone at the publishing company. I had submitted my completed novella and they had accepted it. So I had some concerns that the contract asked for my tax ID, or social security, number and with identify theft so rampant, I didn’t think I should provide them with my actual social security number. So instead I set up an S corporation and got an EIN, or employer identification number, to put on the contract. That way I could protect myself should someone at the publishing company be unscrupulous.
Since selling that first book (I have five out now), I have learned that an S corporation is no longer the best idea. The IRS has decided to change the rules to their advantage, and now, if you own a corporation, you must pay yourself a salary as a director of that corporation because, after all, they claim, no one works for free. [Obviously, they know nothing about writers.J] So the directors of all corporations must now be paid a salary, even if the corporation is not making any money. And, of course, you must also pay the payroll taxes on your salary—again, even if you aren’t making any money and this so-called salary comes from your other sources of income should you have them. And income taxes—on money you haven’t really made—and the list goes on.
Well, I, for one, am not in favor of paying taxes on a salary I haven’t really paid myself, because, believe or not, a lot of writers do work for free—not intentionally, but we aren’t all lucky enough to be published, and even if we are published, we aren’t all best-sellers and our expenses often exceed our income. I don’t know about you, but I write be I can’t not write. I don’t do it because I think it will someday make me rich. It would be nice if it happens, but I’m not holding my breath. So last year I changed my corporation to a single-member LLC. That way, I not only don’t have to worry about the hassle of trying to explain to the IRS why I’m not paying myself a salary as a director of my corporation, but I also don’t have to pay a minimum excise tax to my state for the privilege of doing business there as a corporation. (Boy, they just nickel and dime us to death, if you don’t know what you’re doing, don’t they?)
In addition to all of that, even if we have the money to hire accountants and attorneys to handle the business end of our careers, we still need to at least be aware of what is involved so that we can keep a handle on this very important aspect of our lives. If we have even a vague idea of what the business end involves, we will know if we are getting good advice from our representatives. As Richard Bach once discovered, after losing several million dollars, giving absolute power over your finances to someone else, even a trusted stock broker or attorney, is never a good idea. That kind of power corrupts and you need to know enough about business to follow what is happening with your own affairs. Otherwise, you could be in for a very rude awakening one day.
MORE ABOUT PEPPER O’NEAL
Award-winning author, Pepper O’Neal is a researcher, a writer, and an adrenalin junkie. She has a doctorate in education and spent several years in Mexico and the Caribbean working as researcher for an educational resource firm based out of Mexico City. During that time, she met and befriended many adventurers like herself, including former CIA officers and members of organized crime. Her fiction is heavily influenced by the stories they shared with her, as well her own experiences abroad.
O’Neal attributes both her love of adventure and her compulsion to write fiction to her Irish and Cherokee ancestors. When she’s not at her computer, O’Neal spends her time taking long walks in the forests near her home or playing with her three cats. And of course, planning the next adventure. Her website is www.pepperoneal.com
Don’t Miss Her On-Line Workshop
WRITING ON A SHOESTRING BUDGET
This 4 Week Course Starts Nov. 3rd
Sponsored by FF&P
Find out more HERE