Writing as a Small Business

Presentation Summary* by Art Crummer

With 15 years of experience as an accountant for CRI, Riggs & Ingram, LLC, it’s no wonder Lorie Keegan was able to use simple terms to outline accounting requirements for small businesses such as those of authors.

Salient features of her presentation included the following:

If you take in money at all, you must keep complete records. If your earnings are greater than $400 in a year, you must:

• prepare an income/expense report
• complete an end-of-year balance sheet
• report fully the details to the IRS

Under certain specific low-revenue situations, your activities may be considered a hobby (in which losses incurred cannot be included in IRS filings). Rules exist regarding the number of years you may show a loss.

Taxes must be paid on income minus expenses. You must choose how your income flow is recorded, cash vs accrual. Keegan recommended the cash method, and passed around a copy of IRS publication 334 which explains all details in simple layman’s language (free at https://www.irs.gov/pub/irs-pdf/p334.pdf).

If your business shows much activity, she recommends that you keep a separate bank account, pay all expenses from it, and deposit all income into it. Consider getting a federal ID number (it’s free). Types of expenses common for most writing and other small businesses  include conferences, travel, home office, and computers.

If selling online, know about the 1099-K requirements. If you have employees, details can become complicated; consider hiring someone knowledgeable to handle payroll. If you hire an independent contractor for certain tasks related to your business, you need to file a W-9; for employees, a W-2.

Keegan presented a useful summary of requirements for tangible personal property taxes and strongly advised documenting all tangible property of your business the first year, noting that if the total is less than $25,000, you will not pay any tangible taxes, so you won’t have to report anything until a year when tangibles exceed that total. Keegan said, “Once you receive an exemption certificate, you no longer need to file.”

She handed out a CRI table giving detailed retention-period requirements for a host of accounting and IRS documents.

Many other details are covered in a downloadable, free, startup-business guide available on the website CRIcpa.com.

And finally, there’s the question of who pays taxes for your business. One must consider the options:

• sole proprietorships (rules have changed recently),
• partnership (for two people or more, you use a K-1 form)
• corporation (perhaps an S corporation for an author’s small business)

Many detailed questions were answered in Q&A throughout this enjoyable and informative give-and-take presentation.