A practical ‘author housekeeping’ blog
today, folks. I’m assuming that, just for once, you don’t need my advice on
rhythm, rhyme, teddy bear usage etc.
Instead I’d like to comment on the news
this week.
“What?” I hear you say. “Has this blog
changed tack? She’ll be mentioning celebrity shenanegins in a minute!”
Don’t worry. I have no intention of revealing the many secret shocking things I know about famous people.
It was the Panama leaks that got me
thinking, specifically the news that the Duchess of York had some sort of hidden
offshore company to store the earnings of her ‘Little Red’ picture books.
Er…I
can’t remember them, to be honest, but nice to hear she made a few quid, if she
did.
(Aside - You never know with newspaper reports that celebs have earned loads from
writing. Occasionally I’m told such reports might have a tiny touch of PR and therefore may not be entirely
accurate…).
But anyway, the papers went
on to describe the Duchess’s finances as ‘chaotic’, so that is more proof that
she’s a creative professional, surely! Bless.
But we really mustn’t be chaotic, people.
Most writers are some way down the earning tree and therefore have to pay tax
in the normal way, and that’s where I can help with some sage advice based on
my own experience. You may spend your days having fabulous creative thoughts, but a small portion of your time must be spent getting your accounts up together if you earn money from writing.
The UK tax people have been very interested
in me over the years, and that’s good to know, isn’t it? As a self-employed
author I may be a small-scale ‘sole trader’ but I could be stashing away the
loot, after all. I've been tax investigated twice. On both occasions I had just had a baby and my earnings had plummeted. My accountant thought that might have triggered the investigations, though it's impossible to find out. Perhaps I was hiding earnings away in the nappy bin? They had a duty to find out.
They could just as easily swing their never-sleeping eye over
to you, and if you live in countries elsewhere I expect you have your own version of our UK tax
friends.
For the first investigation I did not have
investigation insurance, and it cost me £1,000 in accountancy fees. During a UK
investigation you are interviewed more than once in a small room, like the sort of room you
see on crime shows, and you need your accountant with you - and that costs
money.
First piece of advice: In the UK you must get yourself investigation
insurance if you have self-employment earnings. Check your position in other
countries. You can get it from an accountant or, in the UK, from the Society of Authors if you are a member. Very weirdly, days after I wrote this blog I got an email from the SoA - if you want to go on their scheme for next year and you are a member you have to join by April 27th and it costs £12.
Second piece of advice: You must keep your author earnings accounts
up together and, unless you keep really accurate weekly records of all your incomings and outgoings, keep your work earnings separate from your personal spending accounts in some way. In
the UK the tax investigator will want to look at work accounts going back five
years, and all your personal accounts, too. If you can’t separate the two easily it
gets complicated. I do keep mine entirely separate, and it was still complicated. You
must account for every payment that has gone into your personal account going back five years. Unless you
can prove otherwise it can be assumed to be work earnings you failed to declare. In other words, if Grandma once gave you a birthday cheque, for example, you may have to prove it came from her.
If you live in other countries, you may not get these investigations, but I'm sure the advice still holds true - Keep your work accounts tidy.
The thorough UK taxman did catch me breaking the rules.
In the first investigation he found one thing wrong - a packet
of Opal Fruits and a £4.50 toy golf set on a petrol receipt that I had put
through my accounts. I was rightly given a telling-off.
In the second investigation the tax lady
said I’d claimed too much for travel because ‘writers don’t go out’, and though
I’d recently written a series of round-Britain history books she wasn't having it so I was fined a
small amount. If I wanted to argue, she
pointed out, she would take it upon herself to fine me for an assumed five years of over-claimed
travel. So best not to. I can't tell you how much travel UK authors are actually allowed to put into their accounts, by the way. Nobody can tell you. It's up to a tax investigator to judge. Perhaps I should have offered mine an Opal Fruit...
So listen up. If you want to stay calm
enough to write, you must keep evidence
of your earnings in perfect order, ready for anyone to see.
Don’t neglect this dull and tedious side of
writing.
Unless your assets are offshore, in which case don't worry. You
can do what the **** you like.
Moira Butterfield
@moiraworld
www.moirabutterfield.co.uk
Latest picture books:
The 'Everybody Feels..." series by QED
I Saw a Shark - Ginger Fox