What NOT to do for yourself — Your taxes. 2016-08-06T13:37:46+00:00

taxes

 

Even more valid and vital now, especially as foreign authors are expected to collect and pay European VAT, now, too. — t.

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I’m a huge proponent of DIY, especially for anchored authors, which makes me self-contradictory as you can probably attest if you’ve been following this blog for long, because I’m also a proponent of saving time.

DIY is anything but time-saving.   As soon as you drop back to doing anything yourself, you’re giving up time to do it.

There’s a good rule of thumb for figuring out when to do it yourself, and when not to:  you figure out (even roughly) how much you earn per hour, and if the service you are considering doing yourself is worth more per hour, then knock yourself out.  If it’s worth less, get someone else to do it.   It’s literally not worth your time.

However, there are some times in an anchored author’s life when it pays to do it yourself even when your time is worth far more than the services you’re eschewing, because it gives you the control, flexibility and speed you need for your life to work.   Two of them I’ve spoken about just recently are:

  • Building and maintaining your own website
  • Running and distributing your own newsletter

The only way you get to have someone else do it for you is if you have lots of money coming in and can have a dedicated team doing it to your exact specifications, which puts you into a whole different stratosphere (and me your new best friend!)

One thing lots of people do themselves and which anchored authors really should not do themselves, is tax returns.  We’re smack in the middle of tax season for Canadians and Americans (April 30), and I’m feeling light-headed because I turned mine into my accountant two weeks ago, so now it’s his problem.  Australians are staring their tax season in the face as it approaches (June 30) and I think so are the Brits.

For countries all over the world, there is a tax season, and it inevitably arrives far too soon.  If you’re like me, every single year you swear you’re going to stay on top of your receipts and royalties, and have everything organized so that this year you won’t have the mad panic you had last year.  Yet, every year you end up cramming to get your tax return preparations done in a sweaty two or three days just before the deadline.

I don’t know that I can provide any sort of solution to get you around that particular bullet – I’m still working on dodging it myself.

But I do have one piece of advice.  If you’re still using H&R Block or some sort of tax preparation service that costs around $100 – one of those shopping mall specials that appear for four weeks around tax time – then I would strongly urge you to consider finding a real accountant, one that has some experience working with authors and royalties, and paying the extra for your new accountant to prepare your tax return.  You’ll pay extra for the tax return preparation, but you’ll save money in the long run.

Yours is a particularly complicated return because you have a day job and royalties, plus expenses that went into earning those royalties.  Depending on the country you’re living in, you may also have a goods & services tax return to offset against that income.  If you’re really lucky, like me, you’ll be able to add layers of complication to the return because most of your royalty income is earned in another country or countries, while the expenses used to earn that income are raised in your country of residence.

This may sound like an unlikely scenario for you, but as e-books and on-line bookstores become more common, and the location of those bookstores becomes less important, in five years time you may find yourself dealing with a publisher/bookstore outfit located in Russia that provides a huge slab of income for you…and you’ll need a good accountant who knows what to do with those numbers.

I switched over to a certified accountant last year.  I paid more for the professional services, yes.  But I got a larger tax return (by $1,000+ Canadian dollars), and a larger GST return, just in the first year.  I also received advice on how to structure my bookkeeping for this year that would make my tax return preparation bill cheaper for this year, and further advice on what to spend money on (and what not to spend money on) that would help offset taxes throughout the year.  In addition, because the accountant considers me his client, if Revenue Canada challenges my tax return, he will represent me.

As far as I’m concerned, it’s so worth the money.

Oh!…and put your refund into your escape stash.  You remember what that is, right?

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1.10pm update:

This post was (naturally) written a few days ago and scheduled.  Yesterday I signed off my completed tax return.  My return was triple was it was last year, and the cost was one third less than it was for last year’s preparation cost.

I rest my case.

t.

First appeared on Anchored Authors in April/May, 2009

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