I was wondering if someone could give me a little bit of advice. The reason I am a writer and not an accountant is that words make sense to me but numbers don't.
Luckily, they do make sense to my lovely husband and with the help of a great little accounting package which is free called QuickFile he is happy to keep track of all my magazine sales.
The question I want to ask is a simple one and I would be grateful if someone could enlighten me, please. Here it is:
If a magazine accepts a story from you, but they don't pay until publication, do you enter that sale in your accounts as the day the story was accepted or the day you receive payment? This is most relevant, when the story is accepted in one tax year but payment isn't made until the next.
It would be interesting to know how other writers manage their accounts and if there are any other accounting packages that they would recommend to others.
Under traditional accounting methods you should include the amount when it is advised, not wait until received. You will have to do it this way if you haven't yet done your return for 2012/13.
ReplyDeleteHowever, HMRC are introducing the option of using cash basis accounting from the 21013/14 tax year. Basically this means if you've paid for or received the actual money, it goes in. If not, then it doesn't.
This assumes you earn less than £79,000 from your self-employment and aren't a limited company and the various details are here https://www.gov.uk/simpler-income-tax-cash-basis/overview
Brilliant thanks for that, Bernadette. For 2012/13 I've been including the amount at the time of sale - which seems to be the right way form what you've said. However, adding it on payment seems to make much more sense.
DeleteRightly or wrongly, I've never declared income until I've received payment. After all, you can't pay tax out of money you don't have!
ReplyDeleteThat is a very good point, Frances.
DeleteGlad you asked the question, Wendy - I'm with Frances on this!
ReplyDeleteNow I'm in a bit of a quandary, Rosemary. I think I've done it the right way but I think your way makes sense as I've sold a lot to mags who don't pay until publication - which could be months after the sale.
DeleteI'm with Francis too, money is declared when it's in my account ... good luck with it!
ReplyDeleteThank you, Marianne. There definitely seem to be two schools of thought here. It appears that the correct way is to declare it once you have been advised of he sale... but as we have seen, there seem to be variations. I am a bit of a stickler for rules, though (no wonder I was prefect ha ha) Keep your views coming, everyone.
DeleteI have no idea, so thanks for asking the question, Wendy!
ReplyDeleteWe're all a bit rubbish really, aren't we, Sam! I think maybe we ought to listen to Bernadette, though, as she trained as an accountant... or maybe we should hire her!
DeleteI don't count FF sales as sales until they send a proper purchase order.
ReplyDeleteAnn On.
I don't get those, Ann On. Maybe that's my fault as I don't send them invoices. (Having said that, for the last two sales I have received a Remittance Advice attachment in an email which might be the same thing.) For the others I've only had acceptance emails and then money in the bank!
DeleteI thought you had to declare it once you'd invoiced it, but maybe I'm just making that up..!? (someone needs to write an article on this - I've thought that for ages!!)
ReplyDeleteAre you offering, Helen?
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DeleteI think that's right, Helen, but as so many mags don't require invoices I take acceptance to mean the same thing although strictly speaking it isn't. And in the case of a mag like TaBff, for example, when you don't know how many pages it will be, then you do have to wait for either publication or a purchase order, so can't include it until the amount has been advised.
ReplyDeleteOf course, the other problem with adding the sale into the accounts on the day of acceptance, rather than once you get payment, is that with magazines that pay by the page, you can guess what your payment might be but you can't be sure (depending on how big the pictures are!) If you put the wrong amount in, it mucks everything up. Those of you who invoice FF - how do you invoice if you don't know the amount?
DeleteSorry, Bernadette - didn't mean to repeat what you just said. I was replying to the post you removed!
DeleteHa! I deleted the first comment as I wanted to include the stuff about TaB, so we must have been having that thought at the same time. Spooky!
DeleteInteresting discussion. I used to do it the correct way, as per Bernadette, when I first started, but for the last couple of years I've changed because of delay in payments. Also some mags buy a story in one financial year and pay for it in the next. So it seems to make more sense this way. Thanks for raising it.
ReplyDeleteHmm, it seems there is a popular way and a correct way. It is the delay between sale and payment that causes the problem, isn't it, Della.
DeleteYou're supposed to show it as owed once they've comitted to buying it and then if they don't pay up you claim back the tax next year as an unpaid debt. The new system sounds much more sensible.
ReplyDeleteI think the new system sounds much more sensible too, Patsy.
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