One of my first recommendations to any new or aspiring self-publisher is that they treat their writing like a business. I insist that they establish at least a sole proprietorship and create a home office dedicated to the writing, publishing, and marketing of their books. Why? Well, for one thing, having your own business allows you to take valuable business-related deductions on your income tax. So it will surprise no one to find a whole chapter early in “The Second Mouse Goes Digital,” devoted to keeping records and explaining the deductions an author may claim.
It was also not much of a surprise when shortly after I published my book, the internet broke out in a rash of rumors about what the new tax bill was going to do to destroy the livelihood of independent authors. The worst of these predictions was that authors would no longer be able to claim deductions for their home offices.
Were the rumors true? No, of course not. At most, the new law simply strengthened the rules already in place and promised to enforce them strictly. And what were the rules? Despite the governmental double-talk, there are only two rules to follow.First, a home office must be used regularly and exclusively for business purposes. The office does not need to be a lockable separate room; you can use a closet, a part of a room separated in some way from the rest of the room, or any identifiable space. But you can’t get away with slapping a laptop on the end of the dining room table once in a while and pushing it out of the way when it’s time to eat. Nor can you call it an office if you only use it once in a while when you are bored.
Exclusivity is an important part of that definition. If you use the desktop computer to pay bills as well as to write the great American novel, it’s not a home office. You can’t let your teenager write her term paper or play games on your computer when you are not using it. Apparently the cat can walk across your keyboard, leaving gibberish behind, but for other family members, the rule is definitely “Paws Off!”
The second rule is that your home office must be the only fixed location of your business. You can’t claim to have a home office because you hate the drive to your employer’s office building. This is the part of the law that upset several academics. If you have an office provided by your company, you are expected to use it. If you are writing a scholarly monograph as part of your effort to gain tenure, you may work on it wherever you choose, including the local Starbuck’s. However you cannot claim to have a home office just because you have set up a comfortable place to write that monograph on weekends or late at night. That kind of writing is a part of your employment, and you have a fixed location for that employment there on campus. If, of course, instead of writing scholarly monographs, you spend your free weekends and evenings drawing manga comics, then create your own company and draw away. Just be sure to keep your regular job and your creative fantasies on separate computers.
So there it is. I still advise every self-publishing author to set up a company, create a home office, use whatever it takes—up to but perhaps not including razor wire—to keep the rest of the family away from your creative space, and then start keeping your records. Identify every purchase that goes exclusively to your use in your office, file folders holding receipts for postage, your other business expenses (the editor, the cover creator, the layout specialist), and the cost of the books you purchase for resale. Then you can deduct away!