1. Record Your Writing Activities in a Day Timer or Calendar
When it’s tax time, you have many other things on your mind besides remembering a year ago how much time you spent writing, researching or marketing, and when you submitted your stories or articles, and to whom. But you may need this type of information, so try to jot it down as regularly as possible.
2. Keep a Portfolio and a Log of Your Submissions
Keeping records of all your work (published and unpublished) is one way you can double-check that you have documented all income and expenses related to each piece. My Submissions Log* includes columns to record postage expenses (outgoing and SASE), and boy, did that come in handy this year. It is also a good way to prove to the Canada Revenue Agency (CRA) that you are actually working at your writing business, if they ever inquire or do an audit.
3. File Copies of Electronic Receipts and Payments in One Place
When I receive a copy of an electronic receipt or some kind of notification via email or online, I make a pdf copy of it and save it in my computer’s Writing Expenses folder. My electronic Writing Income folder contains scans of cheques, cheque stubs and related emails or documents. (I try to have all my paper documents scanned as well, as a backup.)
By the way, if you want to be relatively paperless and don’t have Adobe Acrobat to make a pdf of a document, I recommend downloading a free alternative called CutePDF.
4. Claim Your Writing Expenses as Deductions
I do diligently keep all my receipts in one folder, and I do enter all information onto my Expense Spreadsheet* at tax time. (Using the previous year’s spreadsheet as a template for the new year makes things very easy!)
Some examples of expenses you can claim as deductions to your writing income include:
- Office supplies, postage, writing or reference books
- Memberships, subscriptions, contests
- Courses & conferences
- Magazine samples or publisher catalogues
- Webpage fees: annual domain mapping and registration
5. Claim Business Use of Home Expense
I calculate my Business Use of Home expense for my writing business, and although it isn’t a significant savings, I still claim it. Setting up the use-of-home spreadsheet* with the formulas took a while, but now it’s easy to punch in the numbers each year.
6. Check out the Canada Revenue Agency Website
I find CRA’s website useful and easy to understand. They have loads of information specifically for small businesses. Start here, at the business topics help page .
7. Report Consistently
I have been told that CRA likes to see activity documented in the tax year it occurred in order to see that the writer is consistently working at the business. So even for a year when I have little or no writing income—when it would be tempting to save the time and trouble by not filling out all those forms—I still indicate my expenses, to let the government know that I’m still working at making money writing.
April 30th is just around the corner, but I hope these tips will take the sting out of your tax time this year.
*I am happy to share my log and spreadsheet templates!
Posted by Ramona