024 – Kickstarter & Taxes with CPA on Fire Josh Bauerle

Get a pen and a pad of paper ready because in today’s session, Tyler asks CPA Josh Bauerle everything you ever wanted to know about Kickstarter and taxes…but were afraid to ask. A must listen for creators who see their work not just as a hobby, but as a business.

This session is sponsored by KrakenPrint.

Need a reliable printer for your next comic book or graphic novel print run? Then you need to unleash the Kraken. Head to ComixLaunch.com/Kraken for 5% off your entire first order.

Session Table Setting

This is a milestone episode.

In mid-July, when the ComixLaunch podcast launched, I made a 24 episode commitment to you guys?

Why 24? Because I knew that would take me to the end of the year… a great time to assess where things were at, whether this show was living up to expectations, and whether people were responding to it.

24 Sessions in, ComixLaunch has earned…

More than 4300 downloads
19 5-star reviews on iTunes
100 subscribers to the ComixLaunch creators e-mail list. (Enter your e-mail at the top bar of this page if you’re not on and want great resources emailed to you regularly.)
A handful of quality sponsors
10 students enrolled in the new pilot program The ComixLaunch Course
Most importantly, ComixLaunch is a sustainable endeavor, and primed for investment and big growth in 2016.

Big Announcement:

The ComixLaunch Podcast will continue as a weekly podcast for the entirety of 2016!

I’m committing to a full year’s worth of episodes.Hope you’re as excited as I am… Here’s what you can do to help the show. If you haven’t already, please give us a review on iTunes.

Go to: comixlaunch.com/review

And I want you to do this not for me, but do it for you and your fellow creators listening to this podcast… because here’s the deal: Reviews matter.

ComixLaunch will never be a huge blockbuster podcast… we’re a small niche (comics& graphic novels), of a small niche (Kickstarter) of a small niche (crowdfunding)… This is a show that’s never going to get millions of downloads like some podcasts out there…

We can’t compete on sheer size… but we can compete on quality. I’m working to improve, and I’d also love to improve the quality of the guests on my podcast… get the biggest names in comics and crowdfunding on this show for you to learn from.

This show gives me a platform to reach out and invite them… but what’s going to happen is they’re going to check us out… and one of the first things they’ll look to see is “is this show any good?”

Going to itunes seeing 20, 50, 100 positive reviews… that’s going to send a clear message that ComixLaunch is a show worth their time.

And today’s guest is an example of that…

I went out and got one of the absolute best people on the planet when it comes to clearly explaining the ins and outs of taxes

I reached out to him cold on behalf of you guys… and luckily enough, he said he’d love to come on the show.

Now, this episode is completely loaded with business and tax advice… it’s a jam packed hour, that anyone trying to make the leap from hobbyist to business person needs to hear.

So valuable, that I went out and paid to have the whole episode fully transcribed, so as not to miss any detail of the content.

Go to comixlaunch.com/taxes to get the full transcript of today’s conversation.

Today’s Guest

My guest today is a CPA, a series 65 licensed financial advisor, and creator CPA On Fire, a a tax and accounting firm focused on helping entrepreneurs, wantrepreneurs, sidepreneurs helping make their tax and accounting as simple as possible.

He is also a monthly recurring guest on Entreprepreneur on Fire, one of the most listened to podcasts on the planet, which is where I first discovered him and his incredibly helpful advice.

Welcome to ComixLaunch, Mr. Josh Bauerle.

What is Today’s Episode About?

Today’s session is a deep dive on Taxes and how they relate to Kickstarter.

Get the full transcript here — comixlaunch.com/taxes

Guiding Questions for Today’s Discussion

1. How does the IRS view funds raised on Kickstarter… and what does that mean for Creators interested in using the platform?

2. While there has been a single million dollar comic book project on Kickstarter, and more than 50 that have raised over $100K, most crowdfunding campaigns (74%) raise less than $10,000. Many are run by comic book hobbyists or new creators, and the Kickstarter will mark the first time they’ve ever taken in anything more than beer money for their comics work. Many might not even have set themselves up as an official business yet. Should they?

What are the advantages of formalizing your creative endeavors as a business?
Should creators set up their business BEFORE they launch their KS or after, or does it matter?
Many creative types get scared by this stuff… high level, what are steps that go into creating a formal business for the independent artist/self-publisher?
Any tips or best practices?
Any rules of thumbs for when it makes sense for a creator to formally incorporate or form an LLC vs. just being a sole proprietor?

3. Kickstarter funds raised are treated as income… however, if you are a business, your expenses of running and fulfilling the campaign will lower your tax burden, correct?

What kinds of campaign costs might a comic creator be able to deduct?

Book printing costs?
packaging costs?
Contractors (hired artists, colorist, editors, letterers)?
What about training – Take a local course to improve their skill as a colorist, or take the ComixLaunch Course to learn how to run and execute an awesome crowdfunding campaign?

What can’t they deduct?

What about his her time in the form of a page rate?

4. What kind of records should a Kickstarter creator keep and how should they keep them?

Ex. is a credit card statement with a record of the printing bill enough… or do you need to actually print out the invoice and save somewhere?
What about contractors invoices?
Any tips or best practices for creators to help track their project-related finances?

5. One of the most vexing things for a small publisher like myself (and one of the reason’s I’m super jealous of the EOFire business model which is mostly digital) is how to account for inventory when it comes to taxes?

What is my tax liability for excess/unsold physical inventory (books) left at the end of the year?

For example. Let’s say I raise $10,000 on Kickstarter to fund a print run of 1000 hardcovers. I spend:

$6K on printing the 1000 books.
$2K on packaging and postage to send 500 books to the backers who supported the campaign.
$1K on advertising the campaign.
$1K on contractors – editor and colorist.
On balance in this scenario, my revenue raised was $10K and my total expenses after fulfilling the KS was $10K, so I’ve essentially broken even…
However, at the end of the year, I’m left with 500 books in inventory, which I can ideally sell online, at comic conventions, or to retailers the following year…
In this simple scenario, what is my tax liability for this year?

6. Many Kickstarter creators want to be able to budget their campaigns down to the dollar… yet there’s a lot of confusion around how to factor taxes into their budget projections. Any tips for making budgeting and planning with relation to taxes easier for creators?

7. Taxes are filed annually, based on the calendar year. However, many times a Kickstarter run at the end of the year might not be fulfilled until the following year.

For example, if I raise $20K in December of this year, and don’t pay for printing and shipping until March of next year, is there any way I can avoid paying taxes on the full $20K (my total 2015 revenue), when most of those funds might be allocated for real fulfillment expenses, but that just won’t kick in until next year?

Or, should I always try to make sure that my expenses offset my revenues in the same calendar year, to avoid paying more taxes?

ComixLauncher

It’s time for today’s ComixLauncher.

A ComixLauncher is a short, actionable activity you can and should do right now, or immediately after listening to the show. They’re all activities I’ve done myself, and will get you one step closer to a successful ComixLaunch. They’ll transform this Podcast from a passive, lean back activity centered around Tyler James, into an active, lean-forward activity centered around YOU.

ComixLauncher 024:

Schedule a meeting with a CPA.

Many of you will launch successful KS in 2016… could double or triple your revenues… make sure you’re prepared.

Wrap Up

Hope you enjoyed this session of ComixLaunch with Josh Bauerle.

Be sure to grab that PDF from comixlaunch.com/taxes

Have You Subscribed, Rated, or Reviewed ComixLaunch Yet?

If you’ve enjoyed this Session of ComixLaunch, I need you to do me a favor… actually, I need three favors. Please Subscribe, Rate and Review ComixLaunch on iTunes.

They’re the rocket fuel this show is running on, and the sooner you do it, the more powerful your action will be. Don’t wait to give us some love!

>>> CLICK HERE TO LEAVE A REVIEW ON iTUNES <<<

Provide a rating, 1-5 stars and leave an honest review.

This can be done in less than 2 minutes and could make HUGE difference to the show.