The Fiscal Basics of Writing Full-Time

                Since we’re at the start of a new year, and coming up on time for taxes, this seemed like a good moment to look at the fiscal/business side to being an author. Some of this has been touched on in other blogs, but I felt like it was time to create a one-stop introduction to the major concerns you should think about before starting your own business, aka being a full-time writer.

                This is by no means meant to be a comprehensive guide to the subject, every topic listed could probably fill entire books of their own by smarter people. The goal here is to make sure you’re aware of the hurdles and planning/researching as you move toward self-employment. Nobody likes a costly surprise, even less so when you’re trying to get a company off the ground.

 

The Payment Schedule

                Amazon pays out on a three-month delay, meaning you’ll get the earnings for January in your April payment. Most publishers are going to give you reports quarterly at the most, with payments coming 2 – 4 times per years. That varies by publisher, mind you, so this is one that is extremely specific to you as an individual, and one you really need to be aware of.

                Know what money is coming to you, and when. Plan for it, because this job tends to payout in spurts, so having an idea of your income pipeline is really vital to make sure you’ve got funds for the next round of edits, covers, etc to keep production moving along. This seems simple, but if you’re coming from a career with a rigid payment schedule or cash payouts, adjusting to think in long-term income can take some getting used to.

 

Taxes

                No one is taking taxes out for you. Not Amazon, not Patreon, not your publisher (probably). That means when April comes around, you need to be able to cut a check for about 1/4th (obviously this changes slightly per person) of what you made on your books. Didn’t put that money aside or make quarterly payments? The IRS doesn’t care, they want that green and they want it now.

                I’ve worked contract jobs outside being a writer, and this is one that kills people of all ages if they aren’t braced for it. Remember your taxes and put the money aside as it comes in. I know most of us are accustomed to it coming out of the paycheck, but that’s just not a perk you get when you run the company. Unless you know how to set that up, I guess, although then why the hell are you reading an intro blog to the topic?

 

Health Insurance

                Here, you can also read the entry as  “major essential costs that will no longer be provided by someone else”. Going on your own means, outside of spousal/family options, you’ll have to get your own health insurance. If your company provided any sorts of perks, free cell service, gas stipends, anything like that, you need to take stock of them. Remember that once you’re out, all of it goes on your shoulders. That’s scary enough when you have a firm grasp of the situation. The last thing you want is to be ambushed by some serious continual expenses you forgot to factor into the budget. Do the research, and be ready when you make the jump.

 

Retirement

                For once, I’m here with a bit of good news. You should probably adjust how you are viewing your retirement options, once you make the shift to full-time. Authors have few fiscal advantages, however one of them is that our work continues to earn once its released. A book will pay royalties for the entirety of its life, be they from release day or forty years down the line. Should you count on making tons off of them? Heck no, especially if this is a point where you’ve decided to stop writing and retire. However, it does mean your income won’t suddenly vanish the day you quit, unlike the folks working hourly.

                Now, you’ll also lose access to things like 401k matching and company retirement incentives, what remain of those anyway, so keep in mind the royalty money is more of an off-set than pure gain, but at least it means you can calculate a slightly more forgiving income stream in your golden years.

 

Longevity

                This one doesn’t necessarily relate to income directly; however, it connects to production schedule, which will indeed have an impact on your bottom line. Longevity simply means getting an accurate sense of how much you can write, and for how long. I mentioned a few weeks back that there isn’t a “right” production schedule since some authors put out a small book every month while others go for novels every few years, with plenty in-between. That’s still true, but there’s another aspect to consider.

                How long can you support the output schedule you fall into? That’s not to say you have to choose one you know you could sustain into old age, even if you’re capable of doing more now. It just means you need to be aware of how much you can produce before the quality or your career satisfaction begins to dip. Maybe you do a book a year now, but can feel the strain of it, so you know that in five years you want to dial back to a book every two years. That means you need to keep an eye on your income cycles early on and start figuring out when that schedule change would become viable. Know your milestones and when to start testing your changes so you can course correct as needed.

                Ultimately, the goal is to stay in the black and enjoy the job enough to keep doing it. So long as a schedule change keeps both of those boxes checked, don’t be afraid to move things around. Most of us do this hoping for a career, so keep the long-term view in mind, and be ready for the next set of challenges in your path.