If you really want to succeed as an author, you have to think about more than just writing—you have to treat your career like a business.
That means you’ll need a business plan, complete with a target audience, marketing plan, and a clear deadline for your writing projects.
Once those are in place, you also have to think about the more mundane parts of running your business as a writer: setting up the right company structure, accounting, taxes, and more.
After all, you’re writing books not only for the love of writing but also to make money, right? And any time you’re making money, you’re acting as a business.
Thankfully, setting up a writing business really isn’t very difficult. There are a few steps that need to be done carefully and some details to pay attention to, but once you get the structure in place and get used to a few routines, you’ll be in good shape for years to come.
Do yourself a favor and think of your author career as a business from the very beginning. Set it up right at the start and you’ll have an easier time as you grow and expand your career as a successful, profitable, best-selling author.
Here’s a few things to keep in mind as you get started in your writing business…
When you start your business, the first thing you need is a structure. There’s a lot of different choices, with no one option being the best for everyone, so you’ll want to check out the different structures until you find that perfect Goldilocks match.
For most independent writers, the sole proprietorship is the way to go. It’s simple, easy, and doesn’t involve any extra forms or filings to fill out every year. There’s only one owner—you!—and very little extra work. You just report all your writing income on your regular personal tax return.
Of course, being the only owner means you’re essentially the business and the business is you. So it means that you’re responsible for anything that happens with your business, good or bad. Did you make six figures as a writer this year? Good for you! Just remember that you’re going to have to report that on your taxes.
What about the less-positive side of things? Did you get scammed by a disreputable service provider and lose $10,000 on unsold paperbacks that are sitting in your garage? Because you and the company are the same thing, you have more financial responsibility for the debts there than if you’d used a slightly different business structure.
An alternative that offers a little more protection—but also requires a little more work—is the LLC. The limited liability corporation can have several members, but it can also have just one—again, you. It offers certain tax protections for your personal assets, meaning that if the company loses money, your house and car, for instance, are safe because they belong to you, not the LLC.
However, operating an LLC also requires you to file some forms both when you start the business and each year that you operate, and it often requires paying an annual fee to your state.
Choosing an LLC can be a really smart decision if you’re planning to grow your writing business considerably. If you’re structured as an LLC from the start, it’ll be easier to hire people later on when your career is booming and you need some help. That’s because the company will technically be the one hiring, doing payroll, and all that—you won’t be writing the checks out of your personal account.
Basically, it’s just safer and easier to set up an LLC if you plan to grow your writing business significantly, because you’ll be structured like most other small businesses and in a position to expand as needed.
How do you choose which structure is right for you? Consulting a lawyer or tax advisor with small-business experience is the best way to go. You can also check your state’s tax website for information on how to set up a sole proprietorship or LLC.
Once you have a structure and you’ve filled out the required paperwork, which is often as simple as a single page stating your name and “DBA,” or “doing business as” name, if you’re using one, you’ll need to figure out where you’re going to work.
Many writers who are just starting out don’t have a dedicated space for their writing business. That’s fine—plenty of successful careers have been launched from the kitchen table, the couch, or the coffee shop! But if you’re trying to plan for success, it’s easier if you have some routine and a comfortable space that you use just for writing. Avoiding distractions makes it easier to concentrate on your writing and practice good time management.
Most professional writers use some variation of a home office. But this can’t just be sitting at your dining room table with your laptop—at least, not if you want to deduct your home office on your taxes. To do that, you need to use the area exclusively for work.
If you can set aside a spare bedroom that you’ll use for work and only for work, you can deduct a proportional amount of your mortgage or rent, taxes, utilities, etc. on your taxes.
If you can’t devote part of your living area to work, you might want to look into coworking spaces. These shared facilities let you pay a fee to get access to a certain type of space in the coworking area. For instance, you might get your choice of “open desks,” or pay a little extra for a desk reserved just for you. Some coworking spaces offer “drop-in fees,” where you can pay to use the space for just a single day. This is a great way to see if the space is right for you before you get a monthly membership (kind of like trying out a gym before you join).
These shared offices have the bonus of letting you be around other people—a must for staying sane as a writer—while also offering copy machines, internet, coffee, and other perks. Many have conference rooms that you can book as part of your membership or for a small additional fee; this might not seem important when you’re starting out as a writer, but as you grow and build your career, it might end up being helpful to have a place to meet clients or conduct Skype calls without having distractions around.
Best of all, you can deduct your monthly membership fee on your taxes!
Which brings us to the next thing you’ll want to set up right…
Once you’ve established your official business and gotten set up in your workspace, you’ll want to keep track of all your business-related spending.
Unlike “hobby” writers, who can only take deductions up to the amount they brought in from their writing in a given year, professional authors can take deductions against any other income, including whatever you might make from a day job.
In other words, you can “offset” your day job salary with deductions from your writing business to lower your overall taxes. Pretty great, right?
But to do this, you have to keep great records. Every time you spend money on your business, keep the receipt (either in a paper file or by scanning and saving it on your computer). At the end of the tax year, you can sort these expenses by category and deduct them on your taxes.
Examples of allowed expenses for writers are things like a new computer you use only for work, a piece of software you’ve used to write with, plane tickets for a research trip for your next book, conference fees, printer ink, paper, and more.
In a business context, it’s never a good idea to mix funds. While we’ve all heard stories about people financing their startups with their personal credit cards, this can cause a really confusing jumble at tax time. You’ve gone through all the trouble of setting up a writing business to support your success as an author, so why would you risk mixing up your personal and business accounting?
It’s best to take the time to set up a separate business bank account. Most banks will allow you to have a few different checking and savings accounts, and will even let you link them for easy deposits and transfers (for instance, to quickly pay yourself a salary out of your business earnings by transferring the money to your personal checking account). All you’ll need is the paperwork you filed when you started your business and your bank can get you set up in a flash.
Services like Mint and Freshbooks can link to your business bank account and help you keep track of income, expenses, invoices, and more. You can then pay yourself by moving money from your writing business account over to your personal account, marking the payment appropriately in your accounting software.
When tax time rolls around, you just pull up an income statement for the previous year, and the software will give you a breakdown of your income, expenses, and withdrawals—often, it’ll even break down those expenses into the IRS’s preferred categories for easy entry on your tax return!
So really, when you look at it, starting a writing business isn’t so hard after all. You just need a formal business structure, an official place to work, really good record-keeping, and a way to separate your various income sources so that you can file things correctly at tax time.
With these business elements in place, you’ll be free to focus more on your writing, which is the most important part of your author career!
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