The Business of Writing: Taxes

Book stuff:

• The Movie Magic series (Bespoke & Bespelled, Savory & Supernatural) is getting AUDIOBOOKS very soon! I've been sitting on this for a while, and I couldn't be happier about the actors cast to play Marnie/Amalia, Rider, and Kingston. And by that I mean at one point I flailed so hard I nearly fell off my bed.
• Ask Cassandra is selling in pleasing quantities and I have had a number of readers reach out and say that they've really liked it, which is just so lovely! Bonus points for everyone who loves Aerope, my favourite prickly mother. Should you like to formally attest to your enjoyment and also feed the Algorithm, please do leave a review on Goodreads or your favoured review site/retailer where you bought the book!

Life stuff:

• I am sewing a bunch! The Romance Writers of New Zealand conference is coming up in a month and I have ambitious 'fit plans, including some fifties and Regency designs.
• It's been cold and dreary winter weather but the sun came out today to bless my first day of end-of-term holidays. I'm sitting cross-legged on my bed with the windows open, a little chilly, but sun-soaked. Mmm.
• Taxes!!!

On the whole, I very much approve of taxes. We live in a society. I benefit from that society, and I wish to contribute to it, and I do believe, that despite its many faults, democratic governance is a good way to manage collective funds for the good of the people. Tax is a practical way to gather those funds.

On the other hand, while I am happy to pay my share, and regard tax avoidance as a deeply shameful abdication of one's collective responsibility (do not get me started on Ayn Rand) I also want to make sure I am not paying more than I ought. And that requires admin.

A note for Americans and other poor souls - most employed New Zealanders don't have to formally file taxes. At the end of the financial year, the Inland Revenue Department counts what people have had deducted from their regular income and compares it to what they should have paid. The result is usually "that looks fine". If there's a refund due, it's paid automatically. Most people get a tax summary that says "we don't owe you anything and you don't owe us anything" and then they presumably spend the next twelve months not thinking about it.

I, in addition to being a person, am also a small business (correctly: a sole trader), and I do have to think about taxes. I am taxed on my self-employed income, including royalties. I claim GST (goods and services tax) on the services I provide, and then I file a GST return every two months, (whereupon I usually get a refund). I have business expenses, and I get to claim those against my tax obligations.

I used to do this by creating an excel spreadsheet every year. I'd spend several days adding everything up, checking my maths, remembering that I had a bunch of receipts in a safe place somewhere, wondering if I could claim part of my phone bill (yes), and squinting at my credit card transaction list, trying to remember if I'd bought that burger while I was at a writing conference (allowable business expense) or the day I'd got home (nope).

Then I would hope that I had saved enough out of my royalties to actually pay my tax bill and my student loan obligations. My usual method was to throw 40 percent of everything I got as book income into a dedicated savings account, occasionally use it to pay for expenses, and do the anxious atheist equivalent of pray that I'd got it right and would have money left over at the end of the year.

Mostly this form of prayer was checking my maths to a shall we say obsessive degree. I am competent enough with everyday maths, but this is the kind of thing where the spectre of getting it wrong is very scary, and I have got it wrong in the past, and had to call the IRD and humbly explain that I would need a payment plan. They were very kind and helpful, but the call was still not a fun time and I would not like to repeat it.

After a while, I hired an accountant to do the actual filing, but I still had to do the spreadsheet myself and save out the tax myself, and it was still stressful. Now I use a service called Hnry, and it removes a great deal of stress for me by calculating my tax obligation on every transaction and then sending the rest to my bank account, to spend or save at will. Moreover, I can upload my expenses (which I do monthly) by screenshotting the applicable receipts or invoices, which is WAY easier than having a folder I empty out once a year.

Hnry does add some stress in that, while the service is specifically aimed at sole traders, it is not specifically aimed at authors, and authors have some weird stuff going on. In many ways, I am operating within a financial model that was invented in the early 19th century, and it hasn't always changed with the times. My kingdom for a button that calculates international withdrawal tax on my royalties in line with the applicable treaties!

So that's my tax situation. It will likely always be a little annoying to deal with, but it has got progressively easier.

And the best thing? Every book I buy for myself is a legitimate research and development expense.

Dear reader, I buy so many books. The day I learned I could claim some of that money back was one of the happiest days of my life.

I hope that you are having happy days, and staying warm/cool, as applicable. Enjoy your upcoming weekend!

Karen.