Those of us who write for medium, vocal etc will receive a 1099 at the end of the year. We have to declare what we earn from these sources as income. If we run this as a business, then we attach a Schedule C to our tax returns.
Before you do any of this, I would suggest that you apply online at www.irs.gov for an employer identification number. If you run your writing operation as a business, then you can claim things such as, accounting, marketing, new laptop, cost of internet, cell phone, and many other items as expenses off your taxes.
The advantage to having a Schedule C is the income and or losses follow through to your personal tax returns. Now if you’ve published a book like I have, then you also get a 1099 from Amazon and all your book distributors. Remember you must account for gains and or losses on the exchange of foreign currency. You also have to account for the fees that they withhold, hopefully they give you a break down.
If you purchase books for events such as a book signing or other event, remember when you sell the books you are not to collect sales tax because Amazon has already charged you the sales tax a delivery fees. So don’t charge taxes again. Keep your invoices from Amazon that shows you paid those taxes so if you are ever audited by the city and or state, you have proof of payment and you don’t get charged again with penalty and interest. Keep all receipts of purchases in case of an audit, if you make this a business entity. I would create files for Office Depot, Staples, leasing companies, cell phone company etc. It would also help if you put on the receipt what the purchase was for.
When you do your Schedule C it is pretty straight forward and if you have complex issues I usually have to go to a Certified Public Accountant because of the foreign currency sales and value added taxes. I would much rather pay the $350 for my tax returns to be right than to owe. In the above picture is an old Schedule C from the 1040, which should be self explanatory when you have to do taxes. It is simple and straight forward. If not then you can always use ask a CPA function on Quickbooks and they will help you.