A guest post by Brenda Lindsey.

You have finally finished that book you dreamed of writing. As you are showing off that first advance check from the publisher, don’t forget about Uncle Sam. He will want to see that check also.

WHERE DO I REPORT MY INCOME?

Yes, even if you don’t receive a 1099 statement from a publisher at the end of the year, you are still legally required to report writing income. Amounts received as income from writing books, including but not limited to advances and royalties, are generally considered self-employment income. The Internal Revenue Service will want to see it reported on your Form 1040, Schedule C. (The exception would be if you are fortunate enough to continue receiving royalties after you have quit writing. In that case the royalties are “passive income” and would be reported on Form 1040, Schedule E.)

In addition to tracking the income you receive, you will also want to keep track of your expenses. A good rule of thumb is any expense that you would not otherwise have if you were not in this business, is a business expense. Items such as the business use of your computer, ink or toner, paper, legal fees, subscriptions and office rent are some examples of ordinary business expenses you might deduct from the income on Schedule C. Other expenses would be things like travel, lodging, and meal expenses for attendance at conventions or seminars. Get receipts for everything, and don’t lose them. Or if you drive to a local book signing or conference, that mileage will be deductible. Make sure you write down the beginning and ending odometer readings as backup for the deduction.

WHAT IF I LOST MONEY?

After deducting all your expenses, you will arrive at your net earnings. If your expenses exceed your income (and they may), then you will have a net loss. Net losses can be used to offset income from other sources. You do not have to have net earnings from your business every year. The rule is if you have net earnings in three out of every five years, the IRS will presume you are in business to make a profit (a requirement to deduct expenses on Schedule C). However, if your business does not have net earnings for three out of every five years, you should be prepared to convince the IRS that you are operating a business and not simply pursuing a hobby. Hobby losses are only deductible on Schedule A as an itemized deduction and have more limitations.

WHAT IS THIS SELF-EMPLOYMENT TAX I’VE HEARD ABOUT?

Net earnings from self-employment are not only subject to income taxes, but they are also subject to self-employment taxes. These “self-employment” taxes are comparable to the Social Security and Medicare withheld as FICA from a “wage-earner’s” paycheck by his employer. The percentage withheld is 7.65% and his employer matches it by paying in another 7.65%, for a total of 15.3%. The employer provides a form to reconcile the withholdings and the match to the IRS.

When you are self-employed, you are your own employer. You must remit the total 15.3% as self-employment taxes. This is reported on your Form 1040, Schedule SE. (There is a cap of $117,000 on the amount of earnings subject to Social Security.) If you forget about self-employment taxes, you may be unpleasantly surprised when you file your income taxes.

(Continued Tomorrow)

Editorial Comment:

The Fictorians are aware that many of our readers are not United States citizens, and consequently conduct their lives and businesses under statutes and regulations that are markedly different from those in the U S A. Most of our posters for this month are American, and the few who aren’t are Canadian, so the perspective in this month’s posts will of necessity be somewhat limited. Nonetheless, if you are one of those readers from somewhere other than North America, as you read of issues in our laws and practices, perhaps they will make you mindful of things you should be aware of in your situations as well.

Guest Writer Bio:
Brenda is a Certified Public Accountant and has over 10 years in public accounting experience, specializing in taxes for small businesses. She is currently the Controller of New Gulf Resources, LLC in Tulsa, OK. She is not a writer, but she is a reader, and she is related to Fictorian David Carrico, so she has a connection with the writing life.

Five Facts Every Business Owner Needs To Know About The Law

March 3, 2014

Nancy

Business Nancy Greene The Writing Life 1 Comment

Welcome to Legal Month at the Fictorians!

Writers are business people. We own our enterprises and are responsible for them. While we often focus on the craft of writing on this site we felt a walk on the business side was necessary. We’re going to spend much of March looking at issues writers, and all business owners in fact, need to know about the law such as taxes, necessary record keeping, agents, contracts, indemnification and reversion clauses, copyright, creating your business, creating publishing company, and much more. An important note about this month: We’re not providing legal advice and if you have specific questions about the law and how it applies to your situation, please contact an attorney where you live.

Five facts about the law every business owner needs to know:

FACT 1 – Anyone can sue you.

Legal disputes are part of the cost of doing business. For the fiscal year ending September 20, 2012 (the most recent one I could find statistics on), the United States Federal Courts had 278,442 new civil law suits filed. http://www.uscourts.gov/Statistics/JudicialBusiness/2012.aspx While this number represents a decrease in filings from the previous year it’s still a respectable number. Keep in mind too that this figure doesn’t take into account new cases filed in a state court. While there are rules against frivolous or harassing law suits it is often difficult to show that any specific case was completely baseless and the other side should have known that their claim wasn’t legitimate when they filed.

Litigation is VERY expensive. A bit of prevention (and expense) can save you thousands on the back-end. A business lawyer’s job is to anticipate what could go wrong and try to give you the best possible protection in case the worst happens. Nothing is perfect though, and the more successful you become the bigger the target on your back. Which brings me to my second point…

FACT 2 – Becoming a Corporation is Inexpensive and Provides You with a Level of Protection.

You are almost always better off operating under a corporate umbrella rather than being a partnership or a sole proprietor. Corporations are considered separate “people” from their owners under American law. As a general rule a person suing a company can only collect their judgment from the company’s asset, not the owners’. Incorporating also allows you to keep profitable ventures separate from more experimental ones or ones losing money. It is fairly common practice for a real estate developer, as an example, to form a new company for every project that way if project X fails the business does not have to use its revenue from successful venture Y to pay off X’s debts. The owners merely pay off as much of X’s debts as they can with whatever assets X has left without jeopardizing their or that of their other ventures’ financial health. Is it necessary for a writer to have a new company for every book? Not generally. Writing is not generally considered a high risk enterprise.

Another advantage to operating through a company is the ability to give yourself a salary and issue yourself a W-2. Being a W-2 employee has several tax advantages. It also means you qualify as an employee and not self-employed when the time comes for you to get a loan, whether business or personal.

FACT 3 – You Are Responsible For The People You Hire.

Employees are a mixed blessing. They are fabulous because they let you do the things you love doing about your business – like writing – and delegate the things you like least or take too much time away from your main focus – for example, maintaining a website or social media presence. The also present their own special set of legal challenges. But I’m to not going dwell too long on theses since that’s a several post long discussions. Let me point out two though.

Your employees are part of your public face. Their acting badly reflects on you. Choose your agents, publicists, editors, lawyers, accountants, and employees with care. In this highly visible world a stray (or not so stray) comment on a social media site can bring down an empire. After all, it only took the Doctor six words to bring down an administration.

Ensure you classify the people who work for or with you properly. While it might be tempting to classify your helpers as independent contractors spend time with a lawyer to make sure they qualify under the IRS guidelines. Understand that all exempt (from United States Federal Overtime requirements) employees are salaried, not all salaried employees are exempt. There are also state laws governing when an employee must be paid overtime. Again this is a classification issue and some up front time with a lawyer can save your business.

FACT 4 – You Will Be Deemed to Know the Law and What Your Contracts Say Even if You Don’t.

Ignorance of the law is not a defense. Don’t sign any document you haven’t read. If litigation results a court will deem you to have known and understood a contract’s terms. Lots of nasty upsets can be avoided simply by reading a contract. Know what you’ve agreed to. If you don’t understand, I mean really understand, what you are being asked to sign, DON”T SIGN IT and seek legal advice first. Renegotiate the unacceptable terms. Sometimes walking away from a bad deal is the best you can do.

FACT 5 – Words Matter.

This last one shouldn’t surprise you. After all, who knows that words matter than a writer? Fellow Superstar Attendee Mignon Fogerty aka Grammar Girl once asked me if it was true that lawyers litigated over the placement of a comma. The answer is “sometimes” as comma placement can change a sentence’s meaning. I’ve litigated the meaning of “unique”, and “exclusive” and, yes, exactly what a clause modified (i.e. did the comma mean anything?).

Do not accept a word you do not understand. Contracts, especially older ones, use the word “witnesseth.” When I’ve struck the word and asked the other attorney what the term meant…well, let’s just say I manage to get it struck most of the time. Why? Because it’s unnecessary. “Witnesseth” means “to take notice of” rather than to “witness” a document. Since the word comes before the signature lines it’s a bit obvious that the person signing has “noticed” the document. We’re going to have posts focusing on specific words in indemnification and reversion clauses so I won’t belabor the issue about the meaning of words here.

Keeping these principles in mind won’t guarantee that you’ll never have a legal dispute. But they just might let you know when to seek professional help from lawyers or tax professionals.

I hope you enjoy the upcoming month, and come back for more great information.

Disclaimer:

The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney
to obtain advice with respect to any particular issue or problem. No attorney-client relationship has been created. Legal information is not the same as legal advice — the application of law to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.

Lovable Monsters

February 27, 2014

Tristan Brand

The Writing Life 1 Comment

I’ve loved my share of monsters.

As a reader, I mean. Usually, they’re the kind of monsters who kill bad people. But sometimes, even when they don’t, you can still understand them, empathize with them, and even connect with them, a topic that Colette and Nancy have touched on in their posts this month.

Then, I met a really nasty sort. A crippled torturer by the name of Sand dan Glokta who lurked within the pages of Joe Abercrombies First Law trilogy. Glokta is even one of the major PoV characters. He’s exactly the type of character that seems designed to be hated. Funny thing is, I didn’t hate him. In fact, he may be one of my favorite characters ever, and judging by discussions I’ve read online, I’m not alone.

The writer in me wants to know why Glokta is so compelling. On the surface, he seems indefensible. His sense of morality is anemic at best. Some of his victims may be deserving, but others are less so. There’s no obvious “save the cat” style scene early on to create likeability. Instead, I think Abercrombie uses a more subtle series of techniques that allows readers to connect with Glokta.

First, introspection. Immediately upon being introduced to Glokta we find him asking himself, why do I do it? This motif continues throughout his character arc. Many of us find ourselves, at some point in our lives, questioning what we’re doing, trying to figure out how we got there. Glokta’s inner reflections also give us hope that he might redeem himself still. That he might realize what he’s doing is wrong. They turn him from a monster to a flawed human.

Second, he’s understandable. Once a famed officer and accomplished duelist, Glokta was captured by his enemies and tortured for two years. The experience left him badly crippled and in constant pain. Returning home, he found himself turned away by many of his friends and left with few options, ended up joining the inquisition. Though we might find him morally repugnant, we can still imagine how bitter the world most look to Glokta, filtered through so much bitterness and pain, for we all have our own dark moments where we contemplate, if briefly, doing dark things.

Third, his enemies are worse than he is. The old adage ‘the enemy of my enemy is my friend’ is an adage for a reason. Glokta serves as antagonist to some truly vile people. In comparison, he seems downright heroic at times, as he fights against deeply rooted corruption and powerful organizations.

Fourth, Abercrombie makes deft use of authorial sleight-of-hand. Whereas we get many pages of Glokta reflecting on things and plotting against his enemies, torture is given relatively few, if any at all. Abercrombie often fades to black before the worst parts, especially early on in the series. This speaks to the power of editing. Just as in reality shows, real people can seem heroic or villainous depending on which few minutes of the day we see them, so can characters in books.

Fifth, tone. The world in the First Law is not a happy one. The novel sets different expectations from the start. The characters are all heavily flawed. There is no immaculate hero for us to set Glokta next to. His pain, his shades of gray, even his acts of evil, fit well within the world.

Not all readers will enjoy a character like Glokta. I’m sure more than a few are so repulsed by him that they wouldn’t finish the series. But, as Abercrombie and other authors like George R.R. Martin have shown, there’s clearly an audience for such characters. They take a great deal of mastery to write without alienating your entire readership, so I wouldn’t advise writing one lightly, but if you do, study Glokta carefully. And maybe you’ll find yourself loving a monster too.

Making the Fear Personal

February 26, 2014

Leigh Galbreath

Character Craft & Skills Horror Leigh Galbreath Storyline The Writing Life No Comments

Over the last month we’ve been looking on the darker side of things, and at the way love and terror go so very well together. And they should, really. They are the most basic and universal of human emotions. They are intertwined and hardwired into our psyches, a part of the survival instinct that keeps our species alive and multiplying. They transcend culture, class, and temperament.

For instance, people feel envy over different things and react to it in different ways. I may never sympathize with someone enraged by some slight or another, even though I may understand it on a logical level. But someone who is terrified?

Absolutely.

The funny thing is that, many of us silly humans, seem to still feel that our emotions are unlike anyone else’s. “No one else can understand my heartache or my terror,” we tell ourselves. “They can’t know what I feel. Not really.”

Well, actually, yes, they can. That’s the basis for group therapy, after all, but we do like to feel like we are all the beautiful, unique snowflakes our mothers told us we were, don’t we?

From a writer’s perspective, the universality of these emotions and the vaulted position people like to place their own emotional experiences rather works in our favor. Love and fear are so ingrained in the human psyche that it’s hard to write compelling fiction without tripping over them both while gazing off into the clouds of our imaginations.

Fear is probably the first and most vital of emotions. The need to not get eaten by something big and bad, after all, is the primary instinct of most creatures on this planet. The fear of death, failure, disappointment, loneliness, and pain is prevalent across the fiction board. Fear is the root of tension and plants doubt in every protagonist in just about every book ever written. Small or large, incidental or monstrous, we all recognize the people we’re reading about when their fears are put on the page, and we all hope they overcome their fears somehow, even if (or especially because) we often cannot overcome our own.

At the same time humans are pack animals, and so it’s no surprise that we feel the need to include the binding emotion of love in our stories. The characters don’t necessarily have to be involved in the affair of the century. They simply have to care about something or someone. A character who cares for nothing, is…well…rather boring, to be honest. The anti-hero, Riddick, doesn’t care about anything or anyone when we first meet him in Pitch Black, but it is through his slow turn toward caring for the individuals around him that he becomes human to us, someone to sympathize with. I don’t think anyone could ever say that his caring strays to the romantic—the man is, after all, a psychopath—but his attachments motivate and drive him through multiple films. He changes from a monster himself, into one of us.

Or rather, I should say, his attachments mixed with the inevitable fear of losing those attachments, is what motivates him. It all comes back to the fear in fiction, doesn’t it? Loving or needing something might be readily recognizable, but it’s the fear of losing those things or of them turning against us, that really makes it worth reading.

Anytime love and fear end up on a page, we’re using the universal to make a moment personal. We give the readers something almost subconsciously familiar, made interesting by being seen through someone else’s eyes. We show a window into emotional lives that, at first blush, looks nothing like the reader’s, but in actuality uses their personal experiences to pull them further into the story.

We writers often struggle to write something compelling and moving. It’s nice to get a free-bee every so often.