Whether you realize it or not, as an author you are a business owner. Your book may be the heart of your business or it may be one spoke in a wheel of services you offer, such as consulting, coaching, online training programs and speaking.
Regardless of the focus of your business, understanding key business basics can help you get on track for long-term success while providing ways save big during tax season.
The following are important components for small business success:
Business License – An official business license should be obtained through your local county business offices. It’s an inexpensive investment—typically under $100—and is renewed annually. A business license makes your business official and legal with the county where you live.
Fictitious Business Name Statement – When you set up your business, you will assign it a name. By law, that name must be officially registered with your local county office, as well as published in a local newspaper. Doing so provides you with a Fictitious Business Name Statement, the purpose of which is to allow others to protest the name if it’s already in use. You file for this at the same time as you apply for a business license.
Before filing your business name, be sure to search the government trademark database to verify it hasn’t been registered elsewhere. It’s also a good idea to do Internet searches for the name. It’s not illegal to use a business name that hasn’t been trademarked, even if it’s in use somewhere else, but ideally you should choose a name that is unique so that you don’t run into issues in the future. Your Fictitious Business Name Statement is also required to set up a business banking account.
Resale Certificate – If you plan to sell books or other physical products, it’s wise to obtain a resale license, also known as a seller’s permit. This is obtained through your county and allows you to purchase products (like your books) at wholesale, without paying sales tax. Conversely, you are also required to collect sales tax from your customers for physical product sales made in the state where you live. Currently, there is no Internet sales tax, though that may change in the future. Sales tax reporting varies by state but most accept quarterly or annual reporting. It’s not as complicated as it may sound!
Banking – A business bank account is essential for tracking expenses and keeping your business finances separate from personal finances. The IRS has all kinds of guidelines requiring businesses to keep finances separate, so this is an important step in protecting your business and your personal assets.
Accounting – As a business owner, you can take advantage of a variety of tax breaks for expenses pertaining to your business. That means you can write off things like your investments in producing your products (books),, for example. It may also include expenses like office supplies, website hosting, mileage on your car, business-related travel, training courses, memberships in professional associations and even utilities used in your home office.
Because of the complexities of tax law, it’s wise to meet with an accountant or certified tax planner early on so you can understand the guidelines for your unique circumstances. Doing so will also clarify what kind of receipts and records you’ll need to keep to justify the tax credits—many of which are fairly lucrative The advantages of write-offs are almost always worthwhile and provide incentive for making your business an official entity.
Have a Vision for Your Business – It’s also important to determine what your goals are for your business. Are you operating part-time with the hope of turning it into a full-time business? Do you envision growing your business to the point that you need to hire staff? Do you want to build your business with the long-term goal of selling it as an asset?
Whatever your goals, there are many resources available to help educate you on the process of starting, growing and running your business. Our friends at VSP Individual Vision Plans have authored a free report that can help answer additional questions, like how to keep yourself covered and your vision clear while self-employed—an often overlooked step. You can download the report here:
Making Self Employment Work for You
By the way, members of the Nonfiction Authors Association receive savings on an Individual Vision Plan from VSP. And when you enroll, you’ll save an average of more than $200 a year on vision care services. There are more than 36,000 doctors in its network and multiple plan offerings are available to meet your individual or family needs. Enrollment is open year-round, and your coverage is active as soon as five days after enrollment.
To learn more about VSP Individual Vision Plans, you can visit the website here.