Home Business Tax Savings

Authors and writers should be aware of how to save on taxes and will need to do a bit of homework. You might feel that you don't earn much from your writing and therefore don't bother with it much. But remember, drop by drop the ocean is made. So a small saving now can result in a huge one tomorrow.

Here are three ways in which you can really save on taxes if you're making substantial money writing.

1. As per the U.S. Internal Revenue Code, you pay more if you earn more. Also if you have a fluctuating income, you pay more taxes even if your average income is the same as another individual’s with a steady income. So that means if in a period of five years, you and author X make the same amount of money, you may be paying three times more in taxes than author X because of your fluctuating income. So what do you do? You need to smooth the inflow of your income. Ensure that you do not receive too many huge advances in the same year. Try to spread out your payments over the five-year period.
   
2. Another technique to save on taxes is sto establish a limited liability company and elect it as an S Corporation. This surely helps you avoid quite a good amount of tax.
   
3. Another thing you could do to save on taxes is to move to a place where they do not charge any state income taxes and thun reduce your total tax bill. States like Texas, Nevada, Alaska, Florida, and Washington don't charge state income taxes from their residents. One of the advantages of writing is that you can be located anywhere in the world. In this age of new technology, you can write from anywhere you are. You do not need to be in physical proximity to your clients. So it is wiser for you to be based in a place that does not charge any tax on your writing. However, keep in mind other taxes such as taxes on royalties. Ensure that you do not end up paying more tax on royalties to save a little on state income tax.