Author's Sales

Today we hear from Robin in Tennessee who has lots of questions. “I am a published author and would like to sell some of my books myself. How do I report this income to the IRS? Does the IRS consider this selling as a small business? And if so, will I need an employer identification number (EIN) or can I just use my Social Security Number? Do I need to obtain a business license to sell my own books?”

Dear Robin,

Isn’t that the most exciting feeling, being able to say you’re an author? It still gives me chills!

Living in Tennessee, which has no state income taxes for individuals, you’d think it would be a cinch to start selling your books.

Think again.

You actually have a couple of licenses to deal with in Chattanooga. Looking at your City’s website, there’s a
reference to City and County licenses.
http://www.chattanooga.gov/Finance/66_464.htm

They don’t look expensive, at least not initially.

The site also provides an address for a Sales Tax Number. When you sell books and other merchandise, you need to collect sales tax on the sales – and report the sales to your state, as well as IRS.

Then, do you need a Federal ID number for IRS? Not necessarily. Read IRS’s criteria.
http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

I like to recommend that you get one, since they don’t cost anything anyway. It will help you keep your business totally separated from your personal finances.

And how will you report this income to IRS? When you file your personal tax return, you’ll be using the long form, the Form 1040. You’ll include a Schedule C, Business Profit and Loss form where your book sales and purchases and other costs will be reported.

Oh yes, it’s a good idea to open a separate bank account for your business, too.

I know this sounds like a bit of a bother. But if you’re serious about being an author, you want people to be reading your books. Take your business seriously and your book sales will grow and grow until your books become bestsellers.

And remember, you can find answers to all kinds of questions about Author, businesses and other tax issues, free. Where? Where else? At TaxMama.com

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