Be regular and orderly in your life so that you may be violent and original in your work. Gustave Flaubert
Easter’s coming and so is the tax bunny. That means it’s time to gather together your tax papers and take them to your nearest tax professional. Or, if you’re adept at finance, it means organizing and filing your return. In another life long ago, I was a tax auditor. What follows is advice from those days and what I’ve learned since.
In some jurisdictions, writers and other artists have the opportunity to reduce income from other employment with the costs of their creative pursuits. I’ve blogged about this before but a reminder never hurts. Here are the good practises to develop an excellent file. These will help in preparing your tax return or defending expenses claimed in the event of an audit:
1. Keep all receipts for all expenses incurred during the year. If you drive across town to watch a horse race because your character breeds and races thoroughbreds, keep a log book of the kilometres travelled. Keep the receipt when you talk to the trainer over espresso and cinnamon buns. Make a note on the receipt of which project it pertains to. Get receipts for everything.
2. If you go to events or buy books at launches where receipts aren’t available, make notes of the date and cost. Take a photo of the event or keep a copy of the day’s agenda.
3. Keep all your receipts together in a single file, shoebox, or shopping bag. If you’re not the organized type, that’s as much as you have to do for the current tax year—just keep it together.
4. If you want the best work done on your tax file, take it to your tax professional as early as possible in the year. It’s always best to avoid the crush.
5. If you want to be diligent in your record keeping, you could buy some basic bookkeeping software or record everything on a big spreadsheet.
The more work done at your end, the less you will have to pay for the professional tax preparer to do it for you.
Last practical advice: don't mess around with the tax office. Keep your claims reasonable. When you start to make a good income from your creative pursuits, don't try to avoid the tax bite. It's a fact of life.
Yes this is prosaic work, like doing laundry or cleaning the cat litter tray but it’s essential. When it’s properly taken care of, it can save you money and a lot of stress.
How do you manage the business side of writing? Do you push it into a corner and hope it will go away? Or do you keep things in a neat accordion file, sorted by types of expenses?
Image from Wikimedia Commons: Evading the Toll by Thomas Rowlandson, created between 1805 and 1810, uploaded by DcoetzeeBot