“Can I write this off?”
Some version of that question lands in nearly every free consultation I have with a business owner, right after we’ve talked about price. It’s a fair question. A ghostwritten book is a serious investment, and anybody running a business wants to know how the IRS will see it.
I’m not an accountant, and I say so every time. What I can tell you is how the question plays out for my clients, what an accountant will want to know, and the one thing you need to tell your ghostwriter at the start if you plan to deduct it.
Is hiring a ghostwriter tax deductible?
It can be, when the book serves your business. The IRS standard for business deductions is that an expense must be both ordinary and necessary: ordinary meaning common and accepted in your industry, and necessary meaning helpful and appropriate for your business. The same IRS guidance notes that an expense doesn’t have to be indispensable to count as necessary.
The question comes up in my free consultation or the kickoff meeting. I tell clients to talk to their accountant, because I’m not an accountant or a lawyer, but that if the book is for their business, it could be deductible. Quite a few of my clients have deducted it. Some couldn’t, because it turned out to be a personal expense. If you plan to deduct it, tell your ghostwriter at the start: I need to invoice your company instead of you, unless you’re a solopreneur.
A business book written to attract clients, establish authority, support speaking or sell alongside your services fits that description comfortably for a lot of professionals. Books are common and accepted marketing tools for coaches, consultants, advisors, executives and experts, and hiring professional help to produce one is common too.
Whether it’s deductible is only the first question. How it’s deducted, and in which year, depends on details your CPA is paid to sort out. I’d much rather a client spend an hour with their accountant before we start than find out at tax time that the way they paid for the book cost them the deduction.
Is a ghostwritten memoir tax deductible?
A memoir written for your family, your grandchildren or your own satisfaction is generally a personal expense, and personal expenses aren’t deductible as business costs.
That’s true however meaningful the book is, and however much it cost. I don’t think that’s any reason to skip it. A family memoir pays off at the kitchen table, and I’d never talk someone out of writing one because the tax code won’t chip in.
The line can blur. A memoir that’s clearly part of a business, such as a founder’s story used to build the company’s brand, or a speaker’s memoir at the center of a paid speaking career, may have a business purpose your CPA can work with. A retiree’s life story for the family almost certainly doesn’t. If your memoir sits somewhere in between, describe exactly how you plan to use it, and let your CPA decide.
Is a ghostwritten business book deducted all at once or over time?
Most authors never ask this, and it changes the answer more than anything else.
Some book costs may be treated like marketing expenses and deducted in the year you pay them. Others may be treated as the cost of creating an asset that produces income over several years, like a product you sell. That can change how and when you recover the costs.
How you use your book shapes which treatment fits. A book you give away to prospects looks different from a book you sell for years through retailers and at speaking events.
Your business structure matters too, along with whether you’re paying personally or through a company, and the tax rules that apply to your type of entity. These are the questions to settle with your CPA, ideally before the contract is signed, so you can plan the timing of payments with the answer in mind.
What if my company pays for my ghostwritten book?
Then the expense is the company’s, and the company’s accountants will decide how to treat it. That can be simpler for the executive, since the cost never touches their personal return. The executives who get burned are the ones who let the company pay without asking what happens to the book if they leave.
It also connects to ownership. If the company pays, you need a clear written agreement about who owns the book, who gets the royalties and what happens if you leave. My article on company-paid ghostwritten books and who owns them covers that side in detail, and the tax and ownership questions should be answered together.
How are royalties from a ghostwritten book taxed?
Royalties and book sales are income, and they’re taxable whether the book was ghostwritten or not. How they’re reported depends on your situation: whether writing is part of your business, whether you receive royalties personally or through a company, and whether you sell books directly at events.
The ghostwriter doesn’t share in your royalties in a standard arrangement. The fee covers the work, and every dollar the book earns afterward belongs to you, as my article on whether ghostwriters get paid royalties explains. Tell your CPA how you expect the book to earn, so the income side is planned along with the expense side.
What records should I keep for a ghostwritten business book?
Keep everything that shows what you paid and why the book serves your business:
- ► The ghostwriting contract and statement of work, showing the scope and fee.
- ► Every invoice and proof of payment.
- ► A short written statement of the book’s business purpose: who it’s for, how it supports your business, and how you’ll use it.
- ► Invoices for editing, proofreading, design, printing and marketing tied to the book.
- ► Records of how you use the book afterward, such as copies given to prospects, speaking engagements, bulk sales and royalties.
That file gives your CPA what they need to treat the costs correctly, and it gives you a clean answer if the IRS ever asks what the expense was for. An author who skips the paperwork is betting they’ll remember, years later, exactly why they paid every invoice, and that’s a bet I wouldn’t take.
Are the other costs of publishing a ghostwritten book deductible?
The same logic applies. Editing, proofreading, cover design, formatting, printing, ISBNs, audiobook production and marketing for a business book can all be part of the business cost of the book. My article on the all-in cost of a ghostwritten book lists those line items, and the article on what your ghostwriter does and doesn’t handle explains which ones you’ll arrange separately.
Give your CPA the whole picture, including every invoice beyond the ghostwriter’s. The total cost of producing and launching a book runs well past the writing fee, and all of it belongs in the conversation.
What should I ask my CPA before hiring a ghostwriter?
Bring these questions to your CPA before you sign:
- ► Given how I plan to use this book, is it a business expense, and how should it be treated?
- ► Should I deduct the costs in the year I pay them, or recover them over time?
- ► Does it matter whether I pay personally or through my company?
- ► How does the payment schedule in the contract affect which tax year the costs land in?
- ► What documentation do you want me to keep?
- ► How will royalties and book sales be taxed once the book is out?
A CPA who works with authors, speakers or consultants will have seen all of this before. If yours hasn’t, ask for a referral to one who has.
What’s the first tax step before you sign with a ghostwriter?
Call your accountant before you sign the contract, and bring a one-paragraph description of what the book is for, since business purpose decides most of this. Then tell your ghostwriter how to address the invoices, to you or to your company.
It sounds like trivial paperwork. A business owner who loses a legitimate deduction over a misaddressed invoice has thrown money away for nothing, a loss that’s so easy to prevent.
Keep every contract and invoice in one folder, and keep a running note of how you use the book once it’s out: talks, client meetings, bulk orders. My ghostwriting services invoice whichever entity you tell me to, and the Book Discovery Intensive is a smaller first purchase if you’d like to test the investment before committing to a full book.
