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Writing as a Small Business
January 14, 2:30 PM - 4:00 PM
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.
Keegan provides tax compliance, tax consulting, and planning services to small-business owners. She specializes in providing tax services for several not-for-profits. She is a member of both the American Institute of Certified Public Accountants (AICPA) and the Florida Institute of Certified Public Accountants (FICPA).
*Disclaimer: Do not rely on this brief summary for your business. Seek the advice of a professional.