A lot of you are interested in the price of Self Publishing, mainly because you know deep inside that it ain't gonna be cheap, but you still want to weigh the pros and cons of the issue before deciding.
Printing costs are still going up, and it is getting harder and harder to self publish, AND there may be a cost to self publishing that you haven't realised. Worse, if you don't know about this, you could be heading for BIG trouble.
I will break this into two parts, and tell you which part you need.
First, why self publishing? If you want a copy of a book for yourself, or to give to friends, then part one is for you. If you are in business for yourself, or want to be, you had better read both parts, especially part two.
PART ONE: Cost of Self Publishing
I've covered the cost of publishing before here, so read that post as well. That really goes indepth into the why's and how much of printing, and choosing a printer.
The thing is, printing is expensive. Looking at comics, the big comic book companies are considering moving the price of a color comic book up to $4.00. A Print on demand color comic might have a base price of $8.00! Add a little for yourself, and honestly, who's gonna pay more than $8 for a comic book? Now, a graphic novel will be a little cheaper in comparison, but there is a lot more work involved in creating a graphic novel. You can save money with black and white books, or using cheaper paper, but you get what you pay for, and sometimes black and white is not an option.
To really save money, you need to print lots of copies of a book. If you go by a traditional printer, you have no choice but to buy at least 100 copies of a book... usually more. Print on demand is nice because you print how many copies that you need, but that can be very expensive on a per book basis. The base price of a book is fixed, so to make a profit, the base price plus your profit and costs must be competively priced to similar books out there. You just cannot do that with print on demand or vanity press publishing.
Actually, some print on demand places offer discounts for bulk orders, so you can save a little bit of money by purchasing a lot of books and then selling them yourself. This leads to the problem I bring up in Part Two.
PART TWO:
Something you in business will have to consider is Cost of Goods Sold, or COGS. What does this mean to a Self Publisher? Pay attention.
You dish out a lot of money to have 100 copies of your book published, and you put it up for sale, and wait for the customers to roll in. Honestly, even if you have a lot of fans clamoring for your work, only a small percentage of real fans are going to buy one of your books. So you sell 10 or 20 books if you're lucky, and have 80 books left over.
Guess what? You cannot deduct the price of those books as a tax deduction. (Speaking for USA residents only, that is.) Please do not make the mistake of thinking that buying books is a business expense, because you cannot deduct the price of printing a book until you actually sell it. This goes for most if not all goods sold, which is why you see so many big sales at the end of the year.
Because I self publish, I cannot offer deep discounts on my books, because I already sell them as low as I can. I want the books out there right now, rather than going for profit. Every time I create a new book I purchase the book in bulk for sale through my site. Because of this, I have close to a thousand dollars worth of inventory in the studio after 6 years of self-publishing. And each year I can only deduct the cost of the books that I have sold that year, not when I bought them.
Figuring out COGS is available on Schedule C of your annual 1040 tax form, and can be quite confusing at first. Simply speaking, a business MUST keep a physical inventory of their items for sale, as well as the cost of producing those items.
To figure your COGS for the year, you need the value of your inventory at the beginning of the year added to the cost of new items for sale, and subtract from that the final value of inventory at the end of the year.
Simply put: Costs of Goods Sold = Goods Available for Sale - Inventory at end of Year.
Conclusion:
The cost of self publishing can be higher than you think. You need to buy lots of books to sell competitively, but if you don't sell those books, that expense can weigh on you for some time.
Keep in mind that I am not a paid tax advisor, but COGS is something that you need to understand if you want to be in business for yourself.
Cheers, JOHN :0)
Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts
Wednesday, January 14, 2009
Monday, March 26, 2007
A Taxing Time Was Had By All
Once upon a time, the King's men would ride up to your house, take anything of value, and voila... your taxes where done. Oh, for the good old days, eh? :0)
Anyone who knows me has heard me moan about taxes. I actually don't mind doing them, and I even don't mind paying them, but oh, the time out of my life? That I mind. Some years it has taken me 3 weeks to do my taxes (for my business and home). That's a lot of time out of my life that I could be doing something else. Fortunately, I'm becoming more of an expert at taxes, and more importantly, a better record-keeper. Keeping everything organized really, really helps.
One problem though, for many of us, is understanding those darn tax forms. My business can be rather complicated, so each year I always find something new to figure out, and each year I find that I'm on my own. Oh, I've asked other Cartoonists, but mentioning taxes to a Cartoonist is like uttering a very bad word! Apparently, many don't worry about their taxes, and so don't want anyone asking about them. Others have their Brothers-in-law do them, so they honeslty don't know anything.
First of all, why is it always a Brother-in-law, and second, why don't people do their own taxes? I can't imagine being dishonest, and not doing them, or not doing them right. I simply don't have time for an audit, so I go over everything 3 times, and keep carfeul receipts. As for the others, I can't imagine paying somebody to do my taxes if I didn't understand them enough. That's like handing somebody a blank check!
Anyways, I didn't come here to lecture. You do what you want. I , however, want to point out the benefits of understanding Schedule C for you Sole proprietors and Self-employeds out there.
Admit it.... some of you have thought about doing your own taxes, looked at the forms, looked at the time, and said, "ah, forget about it." Some of you then pretend that you have no income, and others just add all their earnings to income and don't worry about all those deductions that they could be getting. Oh, foolish mortals! The first batch are heading for an audit, and the second are just handing money over to the IRS!
If you're a serious professional, and have never even looked at a Schedule C, then you're going to be giddy as a schoolgirl when you realize that all of your art supplies, office supplies, educational materials, and so much more are deductible! Sure, paper clips are cheap, but all of those little expenses add up. My business expenses were well over a thousand bucks this year, and that is a very conservative estimate. By not filing a Schedule C, you're telling the world that your career is actually just a hobby, and you're losing out on all those deductions that you could be taking.
The flip side of taxes? On the back of Schedule C is a little box called Cost of Goods Sold(COGS). That box says that you can only deduct the actual cost that you pay for goods, and ONLY when you sell those goods. For me, and other Self-publishers, that means that we might pay 6 dollars a piece for 100 books, so our COGS is $600. If we sell 10 books this year, then we can only deduct $60 for our COGS.
And that means that we have $540 of inventory sitting around!
These numbers are fictional, of course, but you get the idea. If you pay for books, or t-shirts, or anything that you want to sell, then you better get off your butt and do something to sell those things.
So here is today's lesson for the Self-employed. Why should we a) Pay our taxes, b) be honest about it, and c) do them ourselves? Simple. By doing so you get a very clear look at your
business, and all of it's strengths and weaknesses. You might see areas for future deductions, or
find that you're being wasteful in some areas, or, like me, you might find that focusing on your
freelance career has left you with a very large inventory of books to sell!
If you have $0 in advertising, and $1000 of inventory, it's not difficult to see where you might
need to focus. And that goes for the rest of the tax forms, as well. By doing your taxes right this year, you could go from small time to big time in the next year.
Even if you pay somebody else to do your taxes, it really wouldn't hurt to understand the forms, and in doing so, understand you business.
Cheers, JOHN :0)
Helpful links:
http://news.nase.org/nase_about/schedulec/TOC.asp
http://www.junewalkeronline.com/
Both of these links have their strengths and weaknesses, but together you get a pretty good idea of how to run your business, keep records, and do those taxes.
Anyone who knows me has heard me moan about taxes. I actually don't mind doing them, and I even don't mind paying them, but oh, the time out of my life? That I mind. Some years it has taken me 3 weeks to do my taxes (for my business and home). That's a lot of time out of my life that I could be doing something else. Fortunately, I'm becoming more of an expert at taxes, and more importantly, a better record-keeper. Keeping everything organized really, really helps.
One problem though, for many of us, is understanding those darn tax forms. My business can be rather complicated, so each year I always find something new to figure out, and each year I find that I'm on my own. Oh, I've asked other Cartoonists, but mentioning taxes to a Cartoonist is like uttering a very bad word! Apparently, many don't worry about their taxes, and so don't want anyone asking about them. Others have their Brothers-in-law do them, so they honeslty don't know anything.
First of all, why is it always a Brother-in-law, and second, why don't people do their own taxes? I can't imagine being dishonest, and not doing them, or not doing them right. I simply don't have time for an audit, so I go over everything 3 times, and keep carfeul receipts. As for the others, I can't imagine paying somebody to do my taxes if I didn't understand them enough. That's like handing somebody a blank check!
Anyways, I didn't come here to lecture. You do what you want. I , however, want to point out the benefits of understanding Schedule C for you Sole proprietors and Self-employeds out there.
Admit it.... some of you have thought about doing your own taxes, looked at the forms, looked at the time, and said, "ah, forget about it." Some of you then pretend that you have no income, and others just add all their earnings to income and don't worry about all those deductions that they could be getting. Oh, foolish mortals! The first batch are heading for an audit, and the second are just handing money over to the IRS!
If you're a serious professional, and have never even looked at a Schedule C, then you're going to be giddy as a schoolgirl when you realize that all of your art supplies, office supplies, educational materials, and so much more are deductible! Sure, paper clips are cheap, but all of those little expenses add up. My business expenses were well over a thousand bucks this year, and that is a very conservative estimate. By not filing a Schedule C, you're telling the world that your career is actually just a hobby, and you're losing out on all those deductions that you could be taking.
The flip side of taxes? On the back of Schedule C is a little box called Cost of Goods Sold(COGS). That box says that you can only deduct the actual cost that you pay for goods, and ONLY when you sell those goods. For me, and other Self-publishers, that means that we might pay 6 dollars a piece for 100 books, so our COGS is $600. If we sell 10 books this year, then we can only deduct $60 for our COGS.
And that means that we have $540 of inventory sitting around!
These numbers are fictional, of course, but you get the idea. If you pay for books, or t-shirts, or anything that you want to sell, then you better get off your butt and do something to sell those things.
So here is today's lesson for the Self-employed. Why should we a) Pay our taxes, b) be honest about it, and c) do them ourselves? Simple. By doing so you get a very clear look at your
business, and all of it's strengths and weaknesses. You might see areas for future deductions, or
find that you're being wasteful in some areas, or, like me, you might find that focusing on your
freelance career has left you with a very large inventory of books to sell!
If you have $0 in advertising, and $1000 of inventory, it's not difficult to see where you might
need to focus. And that goes for the rest of the tax forms, as well. By doing your taxes right this year, you could go from small time to big time in the next year.
Even if you pay somebody else to do your taxes, it really wouldn't hurt to understand the forms, and in doing so, understand you business.
Cheers, JOHN :0)
Helpful links:
http://news.nase.org/nase_about/schedulec/TOC.asp
http://www.junewalkeronline.com/
Both of these links have their strengths and weaknesses, but together you get a pretty good idea of how to run your business, keep records, and do those taxes.
Subscribe to:
Posts (Atom)
Posts
