4. Seek professional help
After a decade of my equally self-employed husband and I doing our own taxes to “save money,” I now understand that a real-life human tax accountant is an imperative—nay, priceless—part of a long-term financial planning strategy. In addition to adding years to our marriage, our accountant pointed out significant deductions we were entitled to as self-employed people who worked from home, and he helped us understand how we could afford health insurance, as well. When we had a child, our accountant was back to bodyguarding our modest savings account, indicating the percentage of our child’s daycare that we could write off as a business expense and other portal-to-another-world deductions that we otherwise wouldn’t have known about.
In short, the years I went without a tax accountant actually cost me money, and I would recommend that all writers hire one (I am going to do this) as soon as it makes cents.
But when is that? “If you’re no longer eligible to file a 1040-EZ tax form, that means you have income beyond a certain limit and that you’re entitled to more sophisticated deductions,” explains William. “At this point, it’s time to engage a tax professional. It’s also time for a discussion around what is the best entity form for you to take, a decision that will depend on your level of income.”
In layman’s terms, what this means is that if your income starts to roller-coaster (your book was turned into a TV show one year, or it sold like wildfire), you might want to protect yourself from the new tax codes put in place by the Trump administration by establishing one of three entities: an LLC (in which you and your business are united; the business’s profits are your profits and vice versa), an S Corporation, which is kind of like an LLC except that the income is taxed differently and in a way (if you’re up for the paperwork) that can bring you extra deductions, or a C Corporation, which is a separate living entity in and of itself that requires paychecks and a W2 and all kinds of other highfalutin stuff. Discerning which entity is right for you will depend on your level of income: LLCs are for the bronze-level earners, C Corps are for the golds. Unless you’re trained in tax or business law, you should pay a professional to help you understand which form is right for you. “Seek tax counsel,” William urges. “You don’t want to realize that you have been overpaying your taxes for years because there is no getting that money back.”
Whether you end up engaging a financial advisor or a certified financial planner, make sure that that person is a “fiduciary.” What that means is that they have signed a fiduciary oath that they won’t personally benefit from selling financial products to you. A fiduciary has your best interests at heart, rather than their own. They profit from your personal investments, so if they’re not helping you make money, they’re not going to get paid.
How will I get health insurance as a writer?
I have no idea, so let me know if you find out.
More seriously, the health insurance hurdle is one of the primary reasons that writers don’t get to write as much as they deserve to. Very few writers can afford private insurance, which puts people in a situation where they either have to take a job that they don’t want so that they can have health insurance, marry someone for health insurance, or risk illness and/or a serious accident by going without.
You might be able to find group health insurance (or information as to how to find it) through these organizations: the Authors Guild, Freelancers Union, the International Women’s Writers Guild, your local chamber of commerce, or the National Writers Union. PEN America has a resource page on its website with a lot of lesser-known organizations to help writers (and other entertainment workers) find health insurance they can afford. There are also ways to get health insurance by using loopholes in the American government. Under current tax law, self-employed people can deduct health-insurance premiums for themselves, for spouses, and for any dependents they might have. But how do you prove self-employment to the IRS? Constant documentation will be your friend in this noble quest. Some freelancers have the bad habit of mixing their personal and business expenses, so one thing you’ll need to do is to establish a separate business bank account (and debit or credit card) for business expenses alone. You’ll also need proof of wages paid for services falling in your line of work, and past tax returns proving that you’ve been producing income in this profession for some time.
That previously mentioned change in tax codes sees many self-employed people finding it financially advantageous to turn themselves into small-business entities in order to prosper from a 20 percent deduction of business income on personal tax returns for pass-through entities. The New York Times columnist Neil Irwin has an informative article on this subject called “Under the Trump Tax Plan, We Might All Want to Become Corporations” that explains how the savvy can game the system by taking advantage of “the huge gap between the tax rate paid on individual income . . . and the low rate on business income the president proposes, of 15 percent.”
Many of these same corporations can be used to acquire health insurance plans for their employees (and if you started your own corporation, you would be your own employee), but I wouldn’t advise starting a company to obtain health insurance without consulting a business-law expert versed in the current tax codes first. The Business Formation section of the DIY legal-guidance website, Nolo, can help you find a business law attorney in your area, and they have helpful articles on health insurance in an English even a writer can understand.
IMHO, the short answer is yes, until you don’t have to. I have a friend who has never published a story or essay she wasn’t paid for, and I have about a hundred friends who have only recently started to get paid for their published work.
I started out publishing anywhere that would have me, online mostly, for nothing, and I was only too happy to do so. (It’s worth mentioning that I had a corporate freelance gig at the time that made it easier for me to write for pleasure, regardless of what, or whether, I was being paid for a specific piece.)
Online writing was a positive experience when I was setting out: it helped me build relationships with editors and readers; it gave me clear feedback as to what was resonating; it established the kind of book-length projects that readers, agents, and editors might expect from me down the road. I found my current agent because of my online writing: she’d been following some of my humor columns and short stories, and wanted to know if I had something larger to share. It so happened that I did, and the rest is happy history. But do I write for free now?
The answer is rarely, and when I do it’s an occupational necessity. When you begin to publish books, you’re called upon to promote them, and this can take the form of blog posts, short essays, interviews, and other promotional items. There are exceptions, of course, but it’s ethically dicey for writers to be paid for work that promotes something they have published, so a lot of these promotional pieces will be completed for free. Regarding other requests for uncompensated writing, these are the questions I personally run through as I make my way to yes or no:
Will the assignment be emotionally draining?
When I’m assessing how much time a given assignment will take me, I’m not just thinking about the time that it will take me to research, write, and revise the piece. That’s physical time, real time, and finding it is a question of organizational management. But budgeting your emotional time is equally important. A negative collaboration can reverberate in your psyche long after the work is handed in. But how do you factor in emotional time when you might not know the editor you’re working with, or the author you’re interviewing? Pay attention to your initial correspondence. Does your interlocutor seem scatterbrained or passive-aggressive? The type to leave you for weeks without a returned email, or to request eleventh-hour edits? How many rounds of revisions will it take before you see eye-to-eye on the piece, and will you want to poke your eye out when that time comes?
If you’re not getting paid for something, it should either better you in some way (make you happy, bring you knowledge, forge important new relationships),