Forming a pdf company--your experiences?

[Bardsandsages]

No, buying D&D books is NOT a safe deductible expense. You are in a hobby industry, and the IRS always looks more closely at hobby businesses. I write horror fiction, but I can't deduct every horror book I buy or every horror movie I go to. The deduction must both have a clear relationship to your business AND not be something you would have bought anyway. (This is something many folks who try to deduct their wardrobes as uniform expenses get into. If it's clothing that is not officially a uniform and can be worn outside of work, you can get pegged for trying to deduct it.) In fact, unless you can prove you are actually running a business, and not just trying to make a little cash off of your hobby, you could be opening yourself to an audit.

http://www.irs.gov/businesses/small/article/0,,id=99239,00.html

And this is one of the reasons why you need an accountant at the very least if you intend to run a business. You cannot depend on forum posts to keep you legal!

 

[Fifth Element]

No, it isn't. PDFs have costs to produce -- payments to writers, artists, etc.

Uh, yeah, being a PDF publisher, I realize that. The marginal cost of a PDF copy, however, is practically nil. Which was my point. If you're giving away CDs with one of your PDFs on it for promotional purposes, you would be able to write off the cost of the CD, but the actual cash cost of each PDF file is nil.

Of course, if you created the PDF solely to give away as a promotional expense, any amount you spend to actually produce the PDF should be deductible.

 

[Fifth Element]

No, buying D&D books is NOT a safe deductible expense. You are in a hobby industry, and the IRS always looks more closely at hobby businesses. I write horror fiction, but I can't deduct every horror book I buy or every horror movie I go to. The deduction must both have a clear relationship to your business AND not be something you would have bought anyway. (This is something many folks who try to deduct their wardrobes as uniform expenses get into. If it's clothing that is not officially a uniform and can be worn outside of work, you can get pegged for trying to deduct it.) In fact, unless you can prove you are actually running a business, and not just trying to make a little cash off of your hobby, you could be opening yourself to an audit.

http://www.irs.gov/businesses/small/article/0,,id=99239,00.html

And this is one of the reasons why you need an accountant at the very least if you intend to run a business. You cannot depend on forum posts to keep you legal!

Good advice. Though the hobby/business distinction's relevance mostly has to do with claiming losses. A startup business often has losses. If a taxing authority finds your "business" is actually a hobby, these losses will simply be denied. They don't mind you paying tax on your income from a hobby, but they won't let you claim a loss from the same.

 

[mcathro]

I've been watching your company for a while and your philosophies are spot-on. I'm inspired by your progress and admire your drive.

Anyone would do well to listen to your advice, and see how it applies to their own company.

/concurs with Cathix on Skortched Urf.

Bret, go for it.

Thanks for the new comments and suggetions! Mark, I was going to email you sooner or later for that advice.

Thanks guys, I feel like a cheap immitation of EF Hutton!

 

[FraserRonald]

Thanks guys, I feel like a cheap immitation of EF Hutton!

Cheap? Says you!

 

[Bardsandsages]

Good advice. Though the hobby/business distinction's relevance mostly has to do with claiming losses. A startup business often has losses. If a taxing authority finds your "business" is actually a hobby, these losses will simply be denied. They don't mind you paying tax on your income from a hobby, but they won't let you claim a loss from the same.

Agreed, though the problem comes up a year later when they do a random audit and suddenly decide you were never entitled to those deductions, and now you owe not only taxes but penalties for not paying those taxes!

Granted, a good accountant can normally get the penalties waived, but it's always better to avoid the IRS's attention to begin with, than have to fuss with them after the fact.

***stealths back below the radar of evil IRS villians***

 

[Cassandra]

Especially consider that D&D books generally have no open content; how does buying a D&D book help you earn income, if you are not legally able to use anything it contains?

This past weekend, I bought a Ptolus adventure at a convention's charity auction, bundled along with another book. The module clearly states that Ptolus is needed to run the adventure. I don't own Ptolus, and never expect to. Other than possibly mining it for ideas (for which I already have plenty of material), this module is of no use to me personally. As a publisher, on the other hand - the person who does our layout was quite excited to see the interesting things they had done with sidebars and boxed text. (She's been examining a lot of modules in preparation for our eventual plan to produce adventures for our Vatican horror game.) That was totally a business expense.

 

[Cathix]

This past weekend, I bought a Ptolus adventure at a convention's charity auction, bundled along with another book. The module clearly states that Ptolus is needed to run the adventure. I don't own Ptolus, and never expect to. Other than possibly mining it for ideas (for which I already have plenty of material), this module is of no use to me personally. As a publisher, on the other hand - the person who does our layout was quite excited to see the interesting things they had done with sidebars and boxed text. (She's been examining a lot of modules in preparation for our eventual plan to produce adventures for our Vatican horror game.) That was totally a business expense.

Regarding Ptolus, I was extremely enamored of the margins and sidebars as well. My-T fine use of space.

 

[Fifth Element]

This past weekend, I bought a Ptolus adventure at a convention's charity auction, bundled along with another book. The module clearly states that Ptolus is needed to run the adventure. I don't own Ptolus, and never expect to. Other than possibly mining it for ideas (for which I already have plenty of material), this module is of no use to me personally. As a publisher, on the other hand - the person who does our layout was quite excited to see the interesting things they had done with sidebars and boxed text. (She's been examining a lot of modules in preparation for our eventual plan to produce adventures for our Vatican horror game.) That was totally a business expense.

Yes, if you have legitimate reasons to claim something as an expense, then it's an expense. That's different than saying all your RPG purchases are business expenses simply because you are a publisher, as asserted earlier.

 

[Cassandra]

all your RPG purchases are business expenses simply because you are a publisher

Game publishing = too busy to play games = no need to buy RPG material for personal use = all RPG material is a business expense.

At least, that's how it's starting to look around here.