thoughtfulI, 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.
October 14 2009, 21:23:10 UTC 7 years ago
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.
October 15 2009, 17:09:10 UTC 7 years ago
October 16 2009, 16:15:12 UTC 7 years ago
You will get used to this. You also will likely never lose your healthy respect for the process and penalties involved. If you know anyone else besides me who had to pay taxes in Switzerland, they can tell you the fastest way to make our system look benign by comparison. (Short answer: no withholding. And no charts to figure out how much you owe so you can be intelligent on how much to save.)
The stuff I don't bat an eye at anymore horrifies me, to be honest. My sister still reacts to it, and she works hospice as a social worker.