Does an author's advance go to the author's agent, if they have one, who then take their share before passing the rest on to the author? I'm hoping to have my first book published in a few years time and was wondering how I'm going to work out my finances. Would you advise me getting an accountant? Do authors have to fill in a self-assessment tax form? I'd be grateful if someone could enlighten me on how authors are paid and manage their expenses.

Many thanks

Keeley

I don't know if it always works like this, but yes, my agent receives the money first and then deducts her commission before transferring the rest to my account.

I am completely clueless about tax and really struggled to do my tax return for the first time this year, even with an accountant - there is absolutely no way I would have been able to do it alone.

My advances and royalty cheques all come through my agent who has deducted his own share.

Other things I get paid for, such as journo pieces, are paid directly to me.

I too have an accountant, because I'm not very organised...I just send him receipts of everything I earn within the given period and everything spent. He works out the tax bill for me.
However, if you were more organised than I, the on line self assessment is, I understand, not too bad. One thing you do need to watch for though, is advances from abroad where you need to make sure they haven't deducted any tax, otherwise you can end up paying twice.
HB x

I do my own self-assessment and it's not too bad (probably because I don't earn much!). Agent (same as Helen's) deducts his 15% plus VAT. I'm not registered for VAT so can't claim that back at the moment. It's important to remember when you're filling in the tax form to put the entire amount of the advance earned, not just the advance minus the agent's cut.

The first form is usually long but if they can see that your tax affairs are simple they will send you a much shorter version the following year. I find it useful to stick 25% of everything I earn into a tax account so as not to find myself caught short.

Don't worry - it really is quite easy to do the form online and it guides you through step by step - you can save your input and return to it later, you can also print out your return and use it to help you fill in the next one, etc etc.

<Added>

and when I was panicking about the first form, Emma pointed me in the direction of a very good leaflet from the Society of Authors which pretty much explains everything.

Wot everyone else said.

There are some odd corners of tax law for authors, because our income comes in such odd shapes, so a general accountant may need to do some homework. The Society of Authors leaflets still come in handy therefore, so you can say, 'So what about Averaging?' and your accountant says, 'I don't know, but I'll find out...' Specialist accountants aren't hugely much more expensive than a good ordinary one, and might be worth it. The Society have a list.

It is well worth being VAT registered, if your turnover (not income) is in the zone where you can but you don't have to, but TBH I've always shied away from it because I can't face doing the books every quarter. But I know I lose money I could get back, because as authors we pay much more VAT (e.g. on agent's commission) than we can earn. And apparently the flat rate system is very simple indeed to do.

The Society of Authors now has a free tax helpline which goes through to one of those specialist accountancies, all in the price of the membership.

Emma

<Added>

"I find it useful to stick 25% of everything I earn into a tax account so as not to find myself caught short."

Not just useful, I would say essential, unless you have plenty of income from other sources. If you spend all the money you earn as it arrives, you'll need to be able to whistle up some hundreds or thousands from somewhere else when you have to pay the tax bill.

Don't forget that once you're a self-employed writer (which you just have to tell the Revenue you are, before you have a contract or anything) you're basicall a business. So you're taxed on the PROFIT you make: income minus expenses. In the early years you may well make a loss - expenses and little/no income - and that loss can be carried forward, to set against income that rolls along in future years. This is where accountants come in handy - I wouldn't know where to start, but it can save you a fortune in tax.

So keep receipts for all those things the Society of Authors leaflet tells you are allowable expenses!

Mine also goes via my agent and he deducts his percentage before passing it on.

So far I've done my own tax OK. If you are employed as well as earning from writing, then you can earn quite a whack from the writing and they'll just collect what you owe via your tax code ovre the follwoibng year - very painless. That's what they did with me for the first couple of years.

Last year I earned slightly too much for this, but it was still very easy - you just ask to be sent the 'self-employed' pages of the self-assessment form (even if you are also employed), and fill in what you earned from writing in a box, plus any expenses you incurred (if any) in another box. Just two numbers on two boxes. I am a total dunce and had no trouble - honestly. Then they write and say 'you owe us £X by Y date'.

The only tricky bit is (cough) not having spent it all by then.

Rosy

"How are authors paid?"

Irregularly and badly

LoL Jem. And painfully true.

Emma