Seanan McGuire (seanan_mcguire) wrote,
Seanan McGuire
seanan_mcguire

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"Why aren't you rich yet?" -- reality and the single author.

I get this question a lot lately. "Why aren't you rich yet?" It sometimes travels in a pack with its two kissing cousins, "Haven't you quit your day job?" and "What do you mean, you can't afford to ________?" I don't punch people who ask these questions, because let's face it, the authors most people think of when they hear the words "professional writer" are Stephen King and Tom Clancy and the like, and they are rich. They live in the country of rich people's problems.

I, as yet, do not. I live in a different zip code altogether. While I'd love to move to their country someday, the odds are very low; they don't issue many passports, and they're very particular about their citizenship applications. For now, I live where I've lived for most of my adult life, in the country of the lower middle class, where shopping runs to Target are a reality, you thank the Great Pumpkin for five-dollar generic prescriptions (and recognize how lucky you are to have medical insurance at all), fifty-percent-off "eat it before the flies come" meat is sometimes the best excuse for a barbecue, and used book stores are a fiscal necessity, rather than a fun form of antique shopping. I'm not dirt-poor. I've been dirt-poor, I didn't like it, I hope to never do that again...but that means I don't quit my day job, and I don't take day-trips to Peru, or whatever other crazy rich person thing people are proposing today.

Publishing is a business. Almost every author, myself included, works on the royalties system, which goes like this:

Person A writes a book. Person B agrees to give Person A five dollars for the right to publish that book, with the understanding that Person A will not need to return the five dollars unless they violate the terms of their contract. This is called an advance. A certain percentage of the cover price of every book sold will be applied against this advance. Let's say six percent, which comes to just shy of fifty cents on your average mass-market paperback. Now, until the cumulative percentages from books sold come to more than five dollars, Person A will not be getting any additional payment. This is called "earning out." If the cumulative percentages never come to more than five dollars, Person A is basically done.

Once the cumulative percentages exceed five dollars, royalties become an option. Awesome! But remember, Person A's agent will still get a percentage of that royalty payment, and Person A will also be taxed on that income. (Self-employment tax is a nasty beast. Seriously, it's the monster under my bed these days, because the taxation on book payments is terrifying.)

Selling a book doesn't automatically make you rich, and I highly recommend that the first thing any new author does after selling a book is contact an accountant who works with authors, because otherwise, the self-employment tax is going to eat their lunch. Selling a book doesn't mean you can automatically quit your day job, and doesn't magically create medical insurance out of the air. John Scalzi once said that a smart author would marry someone with a stable job. I continue to support this as a sensible, if mercenary, approach.

This post brought on by a) the questions above being asked, yet again, and b) a lengthy discussion with my dentist about the incredible amount of work we're about to have done in my mouth, none of which would be possible without my medical and dental insurance. Finances are fun. Self-employment tax is not.
Tags: contemplation, cranky blonde is cranky
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  • 66 comments
http://jakonrath.blogspot.com/2009/10/kindle-numbers-traditional-publishing.html might interest you.

A month after your first major novel out is pushing it a bit to expect you to have a second home in Monte Carlo and a Yacht.

good luck with getting there
Very nice and compelling post. There are quite a few authors looking for that magical "sweet spot" of ePublishing right now. I'm involved with the Book View Cafe, a collective trying to do exactly that.

I do not want a second home in Monte Carlo. Or a yacht. And Vixy says I can't have a pony.

valdary

7 years ago

seanan_mcguire

7 years ago

vixyish

7 years ago

markbernstein

7 years ago

bardling

7 years ago

seanan_mcguire

7 years ago

bardling

7 years ago

natf

7 years ago

and used book stores are a fiscal necessity, rather than a fun form of antique shopping

I had this conversation with killernurd the other night when I realized that a foray into B&N with my best friend this weekend was the first time I'd been in a "real" bookstore in months.

AngelVixen :-)
(who was apparently quite amusing as she surfed said B&N, noting down intriguing titles to request at the library/pick up at the local secondhand)
And even that becomes a counter-balance thing. If five thousand people request my books through the library, that's only fifty to five hundred copies sold, which may mean I can't find a publisher for my next book. With newer authors especially, it's important that we get people into the "real" bookstores to vote with their dollars.

badkarma_one

7 years ago

seanan_mcguire

7 years ago

keristor

7 years ago

seanan_mcguire

7 years ago

badkarma_one

7 years ago

qnofhrt

7 years ago

bearhand

7 years ago

keristor

7 years ago

badkarma_one

7 years ago

angel_vixen

7 years ago

seanan_mcguire

7 years ago

seanan_mcguire

7 years ago

angel_vixen

7 years ago

seanan_mcguire

7 years ago

Dude. I hear you on self employment tax. One year I had to pay tax in two states, both self employment, on the same money.

I dearly hope you manage both wealth and fame at some point, and that writing only brings you good things, regardless.
Self employment tax is so the monster under my bed (replacing my previous bed-monster, the black hole at the center of the universe).

ladymondegreen

7 years ago

bercilakslady

7 years ago

dqg_neal

7 years ago

*headdesks repeatedly*

After doing the payroll taxes for a small business, and then having to *find* those dollars again to pay them (company tanked, and nothing I was ever capable of doing would have stopped it) - it's not for the faint of heart, this 'working for yourself' business.

Hope you found someone wonderful and can pay them in pumpkin cookies.

Also, the first thing I ever learned at the age of 16, and met Marian Zimmer Bradley, Katherine Kurtz, Sondra Marshak and Myrna Culbreath...was that they either were fiscally supported by a family member, or worked as a security guard until they sold their sixth book, and maybe not even then. The writing didn't cut it - they did it because they could (and enjoyed doing it), because it did help to pay the bills, but it certainly didn't happen FAST.

Rich. Good grief. My sweet aunt's petunias.
Self-employment taxes horrify me. But yes, I have a fabulous accountant (even if she doesn't take payment in cookies).

kyburg

7 years ago

People are asking you that already? I mean, sheesh. I assume at least some of the people asking you that are being ironic, surely. There's a reason for the phrase "starving artist" after all.
Unfortunately, "starving artist" has the connotation of "given the choice between food and art supplies, this person chose art supplies." Most people don't realize that authors are just as likely to be struggling with their finances as the guy selling his paintings from a blanket on the boardwalk.

seanan_mcguire

7 years ago

kyburg

7 years ago

Heh. We're on intimate but totally unfriendly terms with self-employment taxes. Husband is a farmer and I've picked up some odd free-lance copy-editing jobs around here and there. And when you consider the fact we pay for our own health insurance - by far our largest expense, costing even more than groceries - it becomes...daunting, sometimes. Rich. ::snerk:; At least I won't have unreasonable expectations if I get a book deal!

But I have to tell you, I'm halfway through Rosemary and Rue and *loving* it. You _deserve_ to get rich off your writing and I wish you loads and loads of luck!!
I'm so glad to hear you're halfway through the book! Yay!
We are currently living off my philosopher-husband's PhD scholarship and some savings, and by 'savings' I mean 'tax rebates from when we were both working government jobs in addition to our respective tertiary and creative endeavours.' Very hopefully, his thesis will eventually lead to post-doctoral goodness, as it'll be a good while before I earn any royalties. The fact that either of us is in a position to make money doing what we love is fantastic, but when you tell people that you are a writer married to a logician (which 90% of new acquiantances insist on hearing as 'magician', which leads inevitably to disappointment), you can practically see the thought bubble above their heads yell STARVING ARTIST ALERT!
Logicians are magicians!
Huh. I'd always assumed that an advance was, well, an advance on expected profits - in other words, that it was basically a loan and if the book didn't sell enough to cover the advance you could end up in debt to the publisher. I'm glad that's not the case, at least.

The self-employment taxes are a major reason I've not obtained a small business license and attempted to turn a profit on my crafts - it's just plain not worth the hassle.
It's not a loan, providing I keep up my side of the bargain (provide a finished manuscript, provide a publishable manuscript, etc). If I default on the contract, the publisher is totally within their rights to request that the money be returned. This is to keep authors from, y'know, taking the money and running.
I get this question a lot lately. "Why aren't you rich yet?" It sometimes travels in a pack with its two kissing cousins, "Haven't you quit your day job?" and "What do you mean, you can't afford to ________?"

BWAHAHAHAHAHAHAHAHA! Aren't the delusions of others just grand? xp
I like delusions better when they involve monkey-pony monsters.

hoppytoad79

7 years ago

My first year with Self-Employment Taxes was also the first time I ever had to work out a payment agreement with the IRS. Because I did my taxes as usual on April 14th and screeched "I have to pay WHAT!?!?!?!?"

Now I do my taxes in January, so that I can sneak up on that nasty figure with a couple of months lead time.

Although I still have the pay stub from working a haunt show that year, because under "Job Description" it read "zombie".
...best pay stub EVER.
Perhaps it's because my father is a published author, but this strikes me as a really strange question to ask. To me it seems like "Because I haven't won the lottery yet." is the only answer.

Mind you, I'm also rather intolerant of people who don't think things through before asking questions.
That is so going to be my answer from now on!

I'm developing a serious dislike of people who ask questions without first checking the FAQ to see if those questions have been previously addressed.
Self-employment taxes are sick and wrong. I was just having this conversation with someone earlier today, because it came that I was an independent contractor, and they decided that that meant "conslutant" and that I was insane for trying to work through culinary school instead of just sucking at the teat of IT forever. Until I explained stuff like paying both halves of Social Security and how my tax forms are like 50 times more complicated than theirs.

Hooray for having a day job that doesn't make you insane, and here's wishing for the day when you can happily quit it and move to rich people country.
Tax forms are one reason why I work through an "umbrella company" (they employ me, so as far as the revenoo are concerned I'm 'employed', and they do all the accounting). OK, I still have to pay both the employer's and employee's taxes etc., but my hourly rate covers that. I don't know whether that sort of 'umbrella' exists in the US, though (I'm in the UK).

"conslutant"

That may be a typo, but it's sometimes how I feel about whoring myself round job agencies, and I'm going to steal that word *g*...

linenoise

7 years ago

seanan_mcguire

7 years ago

linenoise

7 years ago

kyburg

7 years ago

Some people live in their own little fantasy worlds. Seriously.
And they never let me visit.