Tax Tips for Australian Writers

“People who complain about taxes can be divided into two classes: men and women.”

~ Anonymous

Setting up your writing business correctly from the get-go gives you the peace of mind to get on with what you do best  — writing. And in 2019 to beyond there is no need for any professional writer to be managing their accounts from a shoebox filled with crumpled receipts and an excel spreadsheet.

This article is to help you avoid some of the heartache and headaches I caused myself when I first started as small business owner and thought it was a good idea to just get writing and leave all that boring financial stuff for another day. Oh believe me, that day always arrives! Though the content in this post is tailored for Australian writers, the advice is typical to any writing business anywhere.

Get setup with as a legal business entity

To legally receive payments as an Australian business you need an an Australian Business Number (ABN). And once your writing business turns over more than $75,000 each year you’ll need to register for GST and charge the additional 10% tax on your invoices.

Most writers starting out will operate as a Sole Trader which is the simplest business structure. You don’t need any formal business registration and you can use your own name as the business name eg, my business is called Melinda J. Irvine. As your business grows you might want to consider changing your business legal structure to a Partnership or Company.

The most important thing — make sure that you are setup correctly and can legally receive payments. Check my blog post Get Paid for Your Writing: Setting Up Payment Methods for more details about business structures and setting up a writing business for tax.

Use accounting software or apps

Once you’ve grabbed yourself and ABN and you’re setup for tax, make sure you start using some type of accounting system immediately (you don’t need to spend very much). Now you can track your expenses, easily reconcile your bank statements, and (most importantly) invoice your clients and customers. Having a decent invoicing system is absolutely essential if you are going to make money as a writer.

It might seem like a good idea to just use an invoice template in Word to bill your copywriting clients, the attendees at your poetry workshop, or the writer’s festival who has booked you as a speaker. But as your business grows you’ll misplace those invoices, you’ll forget to hit ‘save as’ and copy over them, and be forever in your ‘sent’ items hunting for something you think you sent but can’t quite remember.

I use a little Quickbooks app which costs only AUD$4.99 per month. It hooks into all my bank accounts (plus my PAYPAL account) as well as enabling me to send invoices and track payments. The best thing is every single bank transaction is flagged automatically, so I can see immediately what invoices have been paid as well as make sure all my deductible expenses are included in the tax reports.

When you’re a writer truly all you want to do is write. So take the time to setup your accounting and taxation records correctly, then it only requires a minimum of maintenance a couple of times a month. Writing is so much more fun than waiting on hold for an agent at the Australian Taxation Office to hear your stories about why your tax is wrong.

Schedule key compliance dates

Penalties and fines in Australia for late lodgement of tax and other compliance payments are hefty. Schedule all your key dates and set advance reminders. You’ll need to lodge an annual business income tax return and (depending on the structure and turnover of your writing business) may also need to lodge quarterly BAS statements, pay annual fees to ASIC, or renew your business name. You may also have trademarks registered on some of your books and their central characters. Don’t forget those due dates either.

I cannot over-emphasise the importance of getting this stuff right! I think back and cringe at all the writing time I wasted on the phone to the taxation office trying to have late fees rescinded. It’s just so much easier to be organised enough to lodge your paperwork on time, every time. Also, if you are registered as a company ASIC late fees are horrific (and there are no excuses). Even if you’re one day late, it’s “too bad so sad”.

Know your primary tax deductions

From the moment you begin your writing business you should take the time to gain a good understanding of your primary tax deductions; what you can claim and what you can’t. Here’s a few to get you started but an appointment with a good accountant (even if it’s only one appointment) is a worthwhile investment.

Home Office: electricity, gas, telephone, internet, cleaning, furniture, staff amenities (that’s you), computers, mobile phones, stationary. Remember though you can’t usually claim the whole house or the rates or the interest on your mortgage (do check with your accountant though because situations vary ). You can only claim the portion you actually used to help you earn your income (and that also applies to the electricity bill et al).

 Professional Development: writer’s meet-ups, networking, professional memberships (Australian Society of Authors, NSW Writer’s Centre etc), writing workshops, training courses, webinars. Anything that’s increasing your skills and keeping your writing at a professional level.

Tools of the Trade: Pens, journals, notebooks, computers and (my personal favourite) books. Be careful with books though because (like every tax deduction you claim) you’ll have to justify to the taxation office why that crime fiction thriller was essential to earning your income.

Here’s a little example: Simon a poet, makes his living publishing poetry books, speaking at writer’s workshops, and performing his poems at festivals. Simon could claim the poetry books he buys to read as a tax deduction. Susan however is a copywriter, she makes her living writing advertising and marketing content for clients. She also loves reading poetry. Sadly Susan can’t claim her poetry books on her tax (unless she can prove that reading poetry informs her professional writing practice in an essential way).

Get professional advice

This blog post is general information only and based on my personal experience setting up my own small business. I strongly advise anyone starting a writing business (or any small business at all) to seek the advice of a qualified accountant or financial advisor. Having your writing business setup correctly and efficiently will ultimately lead to more writing time. And that’s what we writers live for.

© 2018 Melinda J. Irvine

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• WritingBiz: this article was originally posted on my WritingBiz website and has been updated and transferred here. WritingBiz is now shutdown and operates here on my main blog.

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