A writer regularly receives payments from her agent fairly immediately after they are paid to him be the publishing company. She has up to this point declared these monies in the tax year in which they arrived. I suppose that basically fits the definition of a 'cash basis' accounting system.
However, the rest of her return is really based on an accrual accounting system. But, I'm not quite sure how to account for the royalties and the advances.
Given that she never invoices for the paid to her by her agent, is it wrong to use that date when she is paid as the basis for accounting?
In the case of royalties, are you supposed to take the royalty period provided by the publisher (in one case Jan-Jun), and divide it 50:50 across two tax years?
Thanks for reading
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Get the frigging royalty statements from the agent. These aren't magic payments; the publisher will have calculated them and provided statements showing their calculation.
You can then allocate the royalties to the correct period using those statements. Even easier would be to use a 30 June year-end.
Advances are usually treated as income when paid, assuming that they are made on the basis that they are non-recoverable but recoupable out of future royalty income.