Starting a writing business

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  • Starting a writing business

    For those of you who make steady income as a writer, do you have a business?

    Do you have an Employer ID Number (EIN)? A registered DBA? Do you have a business checking account that you funnel all your income and expenses through?

    My head spins a bit with all the terms and options.

    Until now, I've had all the 1099s sent to me as an individual. But now I'm wondering what the most tax efficient model is.

    I'll be talking to an accountant soon, but I always like to research my options first.

  • #2
    Re: Starting a writing business

    You set up an S-Corp, then open a business checking account. From then on, your corp IS your writing entity, that's who they hire, not you. No more 1099s. Expect to write a check for about $800 to the state when you open it. Companies like E-Minutes make it pretty easy, and for a yearly charge they do all the paperwork with the state. Do all this in concert with your accountant so everyone's on the same page.

    The big adjustment for me was not having tax withheld automatically anymore - you get gross checks and have to make sure you keep enough in your account to cover a big, fat tax bill at the end of each year.
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    • #3
      Re: Starting a writing business

      Thanks so much, Professor!

      It seems like the main advantage of an S-corp over an LLC, or even a sole proprietorship, is the ability of the company to pay you in both salary and "corporate dividends." The dividend distributions being taxed at a lower rate.

      Everything online says S-corps are more of a pain, but I guess for writers it's worth it.

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      • #4
        Re: Starting a writing business

        the general thinking is that forming a loan-out corp becomes worthwhile when you're making upwards of 250k (some say 400). An accountant can also set you up and tell you when it'll make the most sense.

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        • #5
          Re: Starting a writing business

          Originally posted by ProfessorChomp View Post
          You set up an S-Corp, then open a business checking account. From then on, your corp IS your writing entity, that's who they hire, not you. No more 1099s. Expect to write a check for about $800 to the state when you open it. Companies like E-Minutes make it pretty easy, and for a yearly charge they do all the paperwork with the state. Do all this in concert with your accountant so everyone's on the same page.

          The big adjustment for me was not having tax withheld automatically anymore - you get gross checks and have to make sure you keep enough in your account to cover a big, fat tax bill at the end of each year.
          Are you able to write off enough to compensate the tax bill? And how does this differ than filing 1099? I've been a freelancer for years and was always able to get money back despite having no taxes taken out of my checks (some of them, anyway).

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