Wednesday 20 August 2008

Getting an Accountant

A writing friend of mine contacted me recently and asked me whether I thought it would be a good idea for her to get an accountant. I said it would. Her circumstance are a little different from mine. She has a full time day job and writes-four hours a day. (Yes, four hours a day.) She has her first short story published in November. I, on the other hand, have been registered self-employed for eight years, have a 0.5 post which is about to become full time, have over 30 books in print and own eight properties.

Of course, I really need an accountant because of the properties. He charges me just over £1000 a year and saves me I guess about £6,000 or £7,000. He fills in my tax return for me. He knows what I can claim against tax for my writing expenses and my properties. If I only needed him for my writing, I guess I’d be paying him about £300 a year and he would save me a couple of thousand.

By rights, even if you are fully employed and paying PAYE, you should register as self-employed the moment you get anything published. There’s even an argument that says you should do that before you start earning from your writing, because you are actually incurring costs: that Arvon course, that conference, the heating and lighting in your work room. And yes, you do have to pay tax on your royalties. Some publishers, apparently at the request of the Inland Revenue, even ask you to invoice them for royalties – including a statement to say that you are responsible for your own tax arrangements. That is where your accountant can be really useful. And his / her bill is allowable against tax, too. It can almost get to the stage where you think with glee every time you spend something that you are going to get 25% - 40% back.

Just one word of caution, though. It can sometimes look as if you don’t earn a penny. Not so good if you’re trying to get a loan or a mortgage.

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