That was nearly five years ago. As I’ve published more books and paying articles (and earning more money from writing), and as I’ve started making money as a writing consultant, things have changed since then. I’ve really had to run my writing like a business.
Here are some things that have helped me along the way:
The first thing I did in my to become a freelance writer was to start an LLC (a “limited-liability company”). I got my federal tax ID number, and I created a business checking account. I started filling out my W-9 forms as that business entity and had all my checks sent to me via my LLC. I might not have been making a lot of money, but I sure felt professional. Pryal Consulting is now an S-Corp, in case you were wondering, which basically means that my taxes are way easier and I have to worry less about stock and other corporate-y things. (Caveat: None of this should be construed as legal advice.) Having a corporation collect my book royalties and my freelance and consulting income allows me to do a lot of things, including-
I have my own 401(k)
The Pryal Consulting, Inc., 401(k) is my family’s retirement plan. Banks such as Fidelity would LOVE to help you set one up for free. But you can only have a corporate-style retirement plan if you have a corporate-style business. The benefits of having a 401(k) of your very own? You can set aside a much larger portion of your income than you can set aside into an IRA. You also have greater control over your retirement plan than you have over one you would have through an employer.
But the retirement plan isn’t the only account that Pryal Consulting owns...
Because I have a business, I have a business checking account, and I use that account to pay for my business expenses, which actually makes tax time easier. I don't have to mark expenses as business or not, because if I used my PC account to pay for them, then I know they’re business expenses. And as a freelance writer, I actually have a ton of little expenses that I’m sure glad I have a separate business card to pay for.
And to manage all of these accounts--
I own Quickbooks, and I’m super good at it.
There are a lot of bookkeeping alternatives to Quickbooks out there, and I recommend you try something until you find one you like. The secret? “Double-entry” bookkeeping. You don’t just want a computer program that will balance your checking account. You want to keep your books. Google “double-entry bookkeeping” to learn more about it. Basically, if you’re spending money, you want to know where that money came from. (And so does the IRS.)
Last, and perhaps most importantly, Pryal Consulting, Inc., just applied to Ingram for a book retailer account!
Sure I can buy my books at a discount using my author’s discount code, but as you all know, none of those purchases count toward my author sales. If I consign books, or sell them at festivals, none of those books count toward my author sales.
I want the books I buy, and the books I sell, to count toward my author sales. That’s why I applied for a retailer account at Ingram. The process isn’t complete yet, and it was indeed long and arduous just to get this far. (I’ll let you know how it goes in the next Pryal Style column.)
Katie Rose Guest Pryal is a novelist and freelance journalist living in Chapel Hill. She read all the time—and all kinds of books—from Booker Prizers to indie urban fantasies. Her novel, ENTANGLEMENT, comes out June 15. She is active on Twitter (@krgpryal), Facebook, and her blog - katieroseguestpryal.com.