Authors are freelancersIf you're a Book published you receive income from a freelance activity. Authors are freelancers according to the Income Tax Actjust like artists, lecturers, lawyers, doctors, translators or consultants. It is important to distinguish between the terms freelancer and self-employed. Freelancers are not tradesmen, for example, and membership of the Chamber of Industry and Commerce is not required. Tax obligations are simplified for freelancers, and as an author you can become a member of the Künstlersozialkasse for insurance purposes.
Can I be self-employed as a part-time writer?Very few authors can make a living writing. One more reason to start out as a part-time author and thus not take any financial risk. If your main job outweighs your main job in terms of working hours and income, you do not have to insure your work as an author independently. It's best to check with your health insurance provider. And don't forget to check your part-time work as an author with your employer. Before we take a look at taxes for authors, we'll briefly explain how a business registration is necessary.
Do I have to register a business as an author?In principle, authors do not have to register a business. However, there are some exceptions. For example, if you want to sell your books via your own online shop, you need to register a business. However, you do not have to register if you offer a few books for sale at a reading. It's best to check this with your tax advisor or the tax office. Even if you sell promotional articles or have your own Founding a publishing housethis is subject to trade tax. If you register a trade, you are obliged to pay the trade tax, to become a member of the Chamber of Commerce and Industry, to be entered in the commercial register and to keep double-entry accounts. What rights and obligations do you have to observe when it comes to taxes for authors?
Registration of activity and tax obligations
There are a few steps you need to take in order to become an author. You should contact the tax office and organize your tax return.
How do I register as a freelance writer?
An informal letter is sufficient for the tax office to register your writing activity. You will then receive a questionnaire for tax registration, which you must complete and return. You will then receive a tax number. The first step for the proper handling of taxes for authors is done.
Taxes for Authors: The Tax Return
In your first year as a freelancer, you usually pay your taxes in the following year, after you have filed your tax return and received a tax assessment. To be on the safe side, calculate 25 to 30 percent of your income. The tax office may ask for a projection of your turnover and set an advance payment. However, you will get back any tax you have paid too much.
As a freelancer, you are required to prepare a tax return and submit it electronically by July 31 of the following year. If you are unable to meet the deadline, apply for an extension in good time (usually possible until the end of September) - otherwise you could face a fine.
As a freelancer, you are not obliged to keep double-entry bookkeeping or a balance sheet. However, you have to prepare an income statement (EÜR) and fill out Annex S for income from self-employment. Tax software can help you here.
There are inexpensive and easy-to-use programs for electronic tax returns. Popular are for example the WISO software, Quicktax or Smartsteuer. These programs request relevant data by means of an interview and guide you through the tax return. A tax advisor also offers competent advice and help. You can deduct his fee, as well as the cost of tax software, from your taxes.
What is the small business regulation?
As a part-time writer or if your earnings are low, you can use the Small business regulation in the year in which you are entitled to it. This means that you may not earn more than 22,000 euros in the current year and probably not more than 50,000 euros in the following year. For example, you do not have to show sales tax on your invoices, but conversely you can also refund input tax for expenses. For authors, the expenses are usually kept within reasonable limits. A quarterly advance VAT return is also not required for small entrepreneurs.
Taxes for Authors: What can I deduct from my taxes?
As a freelance writer, you can deduct all the expenses that come with the job from your taxes. This starts with the pencil sharpener and ends with the laptop. This includes office and writing materials such as pens, pads and postage, the furnishing of the study from desk to printer and laptop to reading lamp and also the proportionate rent for a separate study. Also further education costs for specialist books or courses on writing schools including travel expenses and meal allowance can be claimed against tax. Likewise, your visit to the Book Fair fall under these expenses. Internet and telephone charges and a mobile phone are usually recognised by the tax office on a pro rata basis because it can be assumed that these are also used privately. Pension and health insurance are also tax-deductible, but there are limits here for part-time self-employed persons. What you can deduct as a freelancer, you can also find on the blog of Billomat.